Prioritizing Racial Equity in Municipal Bond Markets


  • Lourdes Germán
April 15, 2022 - (3 min read)

As the United States has reckoned with systemic racism in its cities, practitioners and policymakers have wondered how the $3.8 trillion municipal bond market addresses—or fails to address—race and equity. The municipal bond market is one of the largest pools of private investor capital flowing into America’s states and localities, shaping the character of the built environment and directly impacting the social determinants of health and equity in communities.

To center equity in municipal bond-funded investments and measure how social determinants of equity change over time, NLC, the Public Finance Initiative (PFI) and a range of partners are undertaking a bold new initiative. Supported by a $4 million Robert Wood Johnson Foundation grant, this critical effort will further identify the factors in a municipal bond issuance that signal progress toward racial equity and income equality to investors and other stakeholders.

Throughout 2022, we will convene city, state, county and public authority leaders in focus groups to explore how they are elevating racial equity as a core and important criteria when making infrastructure investment decisions, funded with municipal bonds.  By listening to issuers across America, we have an opportunity to understand how and whether they are using infrastructure investments as important interventions to disrupt long-held patterns of inequality and segregation.

Our goal is to take what we learn and develop tools that help issuers enhance how they are centering racial equity when accessing the municipal bond markets. We also hope to develop a program of work that enables issuers to effectively leverage the issuance process to drive stronger equity outcomes, help them measure how conditions of inequity are changing because of municipal bond investments and support them in reporting impact and progress to investors, community members and other important constituencies. Future project outcomes may also include a racial equity framework, data tools, research, technical assistance for low-resource jurisdictions, additional guidance on evaluation practices and other data-driven and impact-focused interventions.  

This bond markets and racial equity project is a first-of-its-kind investigation into how public officials can center equity in bond issues in targeted ways that lead to improved social determinants in their communities. Ultimately, we look forward to enabling more conscientious fiscal decisions, elevating bond markets as an equity vehicle, and supporting issuers in their impact journeys. Initial lead project partners and more information about the project appears in this case study.   

We want to hear directly from leaders like you on what you need to elevate equity as an important criterion in the capital investment process and learn how you are approaching the municipal bond issuance process where you have used that market mechanism to raise funding.

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About the Author

Lourdes Germán

About the Author

Lourdes Germán is Executive Director of the Public Finance Initiative at the National League of Cities.