A long-exposure shot of a woman in a white dress doing an improvised dance on stage.
Image credit: Ahmad Odeh on Unsplash

In this interview, the CEO of a California-based CDFI offers her observations on what her work as a theater director has taught her about nonprofit management.

This interview has been edited for clarity and length.

Steve Dubb: Can you talk about Working Solutions, the CDFI you direct, its areas of focus, and how the CDFI has grown and evolved over time?

Sara Razavi: Within the CDFI [community development financial institution] space, we are a nonprofit loan fund. We have a relatively small asset size, just under $20 million. When I joined it was just under $5 million. We’ve increased our asset size and our staff. That story I’m proud of, but it’s also indicative of the industry.

Our focus area has always been microloans. We’ve deployed over $50 million in small-dollar loans of less than $25,000 each across the Bay Area. We have served over 3,000 businesses.

On top of that, we administer grants and couple all of this with technical assistance. Our focus is [on] startup and early stage. We define startup as less than a year in business, including pre-revenue; [the] early stage is less than five year in business. About 50 percent of our portfolio is startup and 80 percent (inclusive of startup) is early stage. And we work with the communities that CDFIs traditionally work with. For us, over 65 percent of lending is to low-income borrowers, and 85 percent of borrowers are low-to-moderate income. Over 60 percent of our loans are to women business owners, and over 85 percent are to BIPOC owners.

SD: At a National Community Reinvestment Coalition Conference last year, you mentioned you majored in sociology and theater. That does not seem to be a typical background for a CDFI leader. Can you talk about how you made that journey and came to your present position?

SR: I don’t know if my journey is normal, but certainly there does seem to be some interdisciplinary play in the field, where you either have a finance and business background or you fell into the field and fell in love with social impact.

For me, I came here with my family when I was 10. Like many immigrant communities, the idea that we would make all these sacrifices and then do the arts—it was just assumed that you would never do that.

I thought I was appeasing my family by tagging on sociology. But they wanted a harder science. I started to do social impact work and was in it for about 10 or 11 years when I decided to get a business degree [master’s]. And I tried really hard to pivot out of nonprofits, but I had it really pegged in my mindset. So, the fact that I found the CDFI space is really cool.

For a long time, I kept the theater talk limited. But I find I draw on it quite a bit because theater is such a collaborative art, and I am talking more about the collaborative nature of theater. And how good theater does not happen by any one person alone. And an organization does not run by one person alone. If you think about that, my interdisciplinary learning might not be out of the norm and hopefully becomes more the norm.

There are MBA programs that are doing improv classes. Part of it is trying to be flexible and not assuming you have to lead the conversation all the time.

SD: At the same conference, you noted that running a CDFI is a little bit like directing a play. Could you talk about what it means to manage a CDFI as if you were a theater director and the staff were actors?

SR: As I came to this organization, many CDFIs were started as kitchen sinks. But as an industry matures and as an organization matures, this is where the business degree comes in. You need to have strong functional lanes. You are building out. You can’t be [a] jack-of-all-trades. You might do that in a five-person, 10-person, or 15-person team, but as you start to grow and professionalize, you’re going to have different lanes and different functions.

For me, similarly in a theater setting, you might have a small production where you are the playwright, actor, and director. It probably is not going to be as great as it would be if you were able to bring in individuals with specific skills.

So, in practical terms, I walked into the CDFI. We were a five-person team. There was an executive director at the time and everyone else kind of did everything. Ten years later, we have distinct functions of finance, which includes accounting, operations, and technology. We have fund development, which also includes not only lead generation but capitalization for the subsidies that we require. We have a partnership manager [key program officer]. And we have a chief lending officer—under whom all the lending decisions are made. Meanwhile, I see myself as CEO looking across the organization, and looking outside at our opportunity to influence legislation or policy.

It matters who is at the table and for staff to know why they are at the table. So, the CFO, of course, speaks to the sustainability of the organization, and to how we can capitalize this work. But he’s an executive. If he’s only talking about money, we wouldn’t be as mission-driven as we are.

So, that’s where the collaboration comes in. I think strategic planning is how I think of this work. I bring everyone to the table, make sure they know to inform around their function, but because it’s a collaborative vision I hope they also speak freely of what they might see because they have the lens of being another person around the table trying to think as a team.

The other part is partnerships. So often partnerships are dead in the water or take a long time to launch. In my experience, a big part of that is that folks don’t know why they are at the table.

I was talking with a potential partner yesterday. If we both come to the table and think we’re both doing everything great, then what’s the point of partnering?

You have to actually concede that there is something that you could be doing better.…They can step into that if you can commit to providing an element that they may be doing OK but could do better. In short, both might want to specialize to move forward. That might be common sense to someone who has run partnerships.

But at the core of it, that’s theater. If the director starts reading the lines, then what’s the purpose of the actor being there? The actor is adding value in that collaboration by doing what they do better. Similarly, if the actor starts to pretend and give a lot of direction to themselves or other actors, that confluence of responsibility ultimately affects the production.

Giving folks a general direction and permission to explore and giving them space to also fail is not unlike what you do as a good director.

SD: Can you talk about the coaching aspect of directing and managing?

SR: In theater, your responsibility as a director is to take a moment; that moment could be a scene or an act or the entire play….You might have an idea of how it will play out. Where are the peaks? Where’s the pause? You can communicate to the actor, but the whole purpose of rehearsal is to explore and see what else comes up.

Oftentimes in theater, you talk about choices. Like: “That was a good choice. Can you try something else?” So, the actor might read it very sad. Great. “Good. That’s what’s written on the page. But how about if you try disappointment?” Or you build to something; you start happy. Those nuances are what we consider performance and good acting.

As a director your job is not to assume that you have figured it all out; it is just to give direction. Try it this way. Just give ideas.

It’s similar with coaching. From your position, you might see something individuals themselves can’t. For example, with my chief lending officer, I actually don’t know all of the nuances of lending. There would be no purpose for him or me if we were both doing each other’s jobs. I just challenge him. Have you thought it about this way? Have you considered this? Last time, you tried it this way. This time let’s remove some of the barriers. You tend to (and this happens a lot with lenders) be really careful. Great. Can we carve out some set-aside dollars of decision-making where you are less careful than usual?

So, what we have talked about is giving him a pot of capital where he can “make mistakes” and that is trying to create some innovation around some good practices that we want to have in hand but sometimes might be limiting—for example, a firm’s debt-to-service ratio, or how much capacity they might have for repayment, or their management history.

Venture capital does this a lot. There’s the science of it and there’s the art of it. If you lean too much on art, you are probably going to keep leaning too much on people you like or who are like you. But there’s a bit of room for that mix and that magic, and I do find in management that giving folks a general direction and permission to explore and giving them space to also fail is not unlike what you do as a good director. If all the acting choices are safe, you are not going to discover anything.

SD: How do staff respond to your philosophy of giving people general direction and permission to explore and potentially fail, with safety for folks to do that?

SR: One is I admit their expertise. I try to be a thoughtful partner. I try to ask thoughtful questions. You don’t have to be an expert to ask thoughtful questions.

And I try to make sure they see the value I bring—both directly as their supervisor but also in the larger scheme of things. Am I bringing dollars to the table? Am I bringing visibility to the organization? If I am doing that, then that gives staff permission to stay focused in their functions. You’ve got to pull your weight and then we comment on each other, that’s number one.

Based on that, my responsibility as CEO is to give general direction. For example, three goals might be: I’d like us to offer ITIN (Individual Tax Identification Number) loans for borrowers without Social Security numbers, to expand our footprint, and to increase our dollar amount.

How do you get there? That’s the permission to explore.

You might go as incremental as the next time we meet or over the next six months. And then, if it’s taking too long, you check.

Part of it is owning that people hear things differently. I thought I was very clear and direct, but the reason it’s taking long may be that I oversimplified my thinking. They tell me the nuance and we figure it out. Or vice versa, I realize they were overcomplicating, and I try to simplify it.

I was in a human resources training one time. They gave us a piece of paper and gave us step-by-step instructions. At the end they asked us to put up what you created. And half the room put a traditional paper airplane. Half the room had a box. They give the same instructions to everyone, but you’re going to hear things differently.

Part of the permission to fail is recognizing this. “I didn’t mean that. Let’s step back and try to reword or rework what was said.”

One other thing to note: All those points—general direction, permission to explore—assume that you are not behind some crazy deadline. If the show has to go up tomorrow, you tell them what they have to say, you tell them what spot they have to stand on, and that’s that.

But if you have the traditional rehearsal period—or in the case of partnerships and collaborations and work, you have a fiscal year and a strategic plan period—then you shouldn’t be behind those eight balls. You should create the runway for that conversation.

SD: One priority of yours has been diversifying the board and staff. How has that been done and what has been the impact of that?

SR: First, you have to have trust in diverse individuals as leaders. I am grateful that the board saw that when they hired me. I often joke I check all of these boxes: a queer woman of color and immigrant.

Once you have defined the function, you look at your criteria for recruitment. Do they need a four-year degree or is that assuming privilege and prohibiting some populations who are in a state of transition, who need this to grow their career? So, you hire for aptitude, not for experience. If the board were looking to hire a CEO who had been a lender, I was not that. The board’s ability to take that risk, I am grateful for it, and I return that favor.

We often have hired folks for whom this was their first time in the role. Thankfully, we have an extremely simple product. And I think I was giving that as the reason. But I don’t think that should be the reason. You can teach your product. Hopefully, you have enough staff who know it well enough to be able to transfer that knowledge.

I think that a big part of diversity, equity, inclusion, and belonging is just being mindful of who is at the table and who is not—both at a board level and at a staff level.

It’s not easy when you’ve got that much diversity because you don’t always have a common language between yourselves. We have invested in executive training to have some common language in the organization. Just in our executive staff, if you look at that team, we got diversity of age, backgrounds, and lived experience. And sometimes, someone says something flippantly and another person reads it adversely. We have to step into curiosity. We have to assume best intent. And we can’t take anything for granted. That’s exhausting sometimes, but I think it has made us a lot stronger for it.

SD: What have you learned from the staff in the process of managing?

SR: Whenever a project fails, whenever there is an initiative that doesn’t quite take off, my instinct is to figure [out] what derailed it. Where was that miscommunication? What was an issue that didn’t quite land?

So, for example, in the most recent Emergency Response Program from the CFDI Fund, we received a significant grant through that. We were one of the few microlenders that received a large sum. Ours was $4.1 million. We deployed most of that in a year and a half, which I think is why we were given that grant—to get it out. It is very specific to census tracks and those who were affected by Covid. There is a correlation absolutely with communities of color.

When things don’t go right, it’s not because folks are actively trying to sabotage….If we can pause—and be compassionate…we can figure it out.

I have heard other organizations really over-programming this product. You have to do this and in three months’ time then you will do that. I asked our team: Can we just simplify this? My team was given the directive to couple the loans with grants and to do it as quickly as possible and to not belabor that.

But it took a while to get that program off the ground. I could have pushed hard and got really upset. We designed something where if you don’t qualify for a loan, you get a larger grant and if you do qualify for a loan, you get a smaller grant. Staff got really hung up on what if somebody abuses the process—and submits a lackluster application to get a grant. That’s a fair concern. But if we think about best intent, most people are trying to abide by the rules.

So, that was a process and that was a learning experience. We decided: Let’s set aside our worries. Let’s legitimize how large that abuse actually is and size the problem, and then let’s continue to create, rather than create a program that serves the lowest common denominator.

That is an example of adjusting and thinking through. When things don’t go right, it’s not because folks are actively trying to sabotage the experience. They just have their own hurdles. If we can pause—and be compassionate about that with each other—we can figure it out.

Do I wish it was faster? Absolutely. Do I wish they didn’t have those worries? Absolutely. Sometimes I think, from a leadership perspective, team members feel I’m driving too hard, and if I just knew their day-to-day problems, I wouldn’t be so driven about the number or goal. But it’s a both/and. Someone needs to drive, and someone needs to say when it’s a problem, and they both can be respectful of each other.

SD: You noted once that running a CDFI is a small business. What do you see as the key similarities and differences between CDFIs and the small businesses you lend to?

SR: Most CDFIs don’t run themselves like businesses and I wish they would. One key facet would be resource management. You do not have enough resources to do everything you want to do. So, one way to consider it is to say I am going to be the best of everything, but I am only going to do a small amount. Serve a five-course meal and only do so many of them. Or I am going to really scale a single burger and have a very simple menu.

We often ask for business plans. A big part of business planning is market analysis. Who else is out there doing the exact same thing? Or has the same mission? Or the same idea as you? Can you complement each other? Are they a true competitor? Or is the market so large that you can actually continue to serve everybody who wants to be served and do it well?

Resource management is probably the hardest thing. I was just talking with another local CDFI and griping about small-scale requests-for-proposals and small-scale grants. I can appreciate the desire to spread the risk to multiple community-based organizations.

But they are spreading the money so wide, that these contracts are not at all sustaining. I was griping to this entity, and they were throwing up their hands and saying this is what it is. This is the state of being a community-based organization. We have to suck it up.

But I said if we organize and all say this is too little to provide meaningful services, then they might rethink the strategy if there is, in fact, a strategy. Too many CBOs, too many CDFIs want to be very responsive to the need but are not doing a true assessment of their resources to think about what their highest purpose is, and what is the best, most effective way they can deploy their capital.

It is completely understandable, and yet it requires discipline to say if I am going to be doing this in a meaningful way, I have to be selective in what I say yes to. When our businesses don’t do this, we tell them that, “You’re at risk of running out of money. You are at risk of running your teams to the ground.” That is the critique we give to them and the technical assistance we provide, and then our own leadership sometimes is not following those principles.

SD: Can you talk about “code-switching” and how that shapes your work as a CDFI director?

SR: In our planning for our next five years with our executive staff, this has come up for us as a value that a CDFI and certainly our CDFI believes we have. Because we have to sometimes be in rooms with corporations and private foundations and, in general, circles with high-net-worth individuals—or certainly higher-net-worth individuals than those we serve.

On the other side, we also have to be in rooms where our values are to meet the community where they are. And this goes back to, again, as communities who have experienced adversity and that through who we’ve hired we’ve been intentional of making sure are around our table. We value meeting people where they are and respecting their lived experiences. They may not have the financial terminology or the business language. But they are incredible entrepreneurs. They are very savvy [about] how much budget they have. They have just had to make harder choices because they have more limited resources.

That is important in thinking about our code-switching. With bankers, if we don’t use the right terms, we are either not going to get that loan or that capital or not as much of it. And if we do, it’s going to feel like a charity case and not like a partnership, which it actually is.

Similarly, in a room with our clients, we want to make sure we respect them and don’t undermine [them] unintentionally by using some language that they feel is disrespectful because it assumes they should either know or are less than because they don’t know.

We know what to ask for. That, to me, is improvisation over strategy—when you know your role and your audience.

SD: Any more reflections you would like to add?

SR: I think of diversity as a composition to fully frame what you are trying to set up. I think about the word composition quite a bit. What’s the composition of our board? What is the composition of our staff?

I am also reminded of an article that NPQ published on improvisation over strategy. To me, that’s rooted in being skilled in improvisation. If you just say, “improvisation over strategy,” you will be flailing your arms. But if you bring together a talented group whose skills you either build up or give them permission to develop their skills because you give them confidence that you are doing your part and you’re holding that other space—then that works beautifully.

Improvisation over strategy is how we survived Covid. If we had been committed to just loans and loans and loans because our strategic plan had said we had to get to $50 million in disbursements by the end of 2024, we would have been yet another CDFI that did PPP [Paycheck Protection Program].

We didn’t. We intentionally said we [were] not going to do PPP because the market we serve is pre-PPP. What PPP offered was still more complicated than what our borrowers needed. What they needed was capital and capital injections in the form of grants.

So, we knocked on doors, and, even then, we knocked on doors not to raise capital, because we saw others doing that, but to say: “How can we be an administrator of this fund?” We are a lender. We know what to ask for. That, to me, is improvisation over strategy—when you know your role and your audience.

If you don’t know your role and audience, you’re going to try to be everything to everybody. And you are going to design a show that is not interesting to anybody.