Cold Hard Cash for Social Impact

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July 13, 2009

By Kelley Buhles

Ever wondered what your money is doing while it is sitting in your bank account? Currently the world’s largest banks are funding the world’s most destructive industries. What that means is that the average person’s checking account helps to finance dirty coal plants, destructive oil extraction, and unsustainable logging operations.  What are the alternatives to using these large banks, you might ask?

RSF is faced with this same dilemma in deciding where to keep our cash accounts. Currently, RSF primarily banks with Citibank. They have offered us the flexibility and service we have needed to build our organization. In addition, Citi was the first bank in North America to adopt environmental policies addressing biodiversity, indigenous rights, and climate change.  Unfortunately, Citi is also one of the leading funders of the coal industry and coal is the single biggest cause of global warming.

At RSF we are committed to becoming 100% invested in mission-aligned companies and funds. As we work toward this objective (currently, our portfolios are about 60% mission-aligned), we are constantly looking for ways to make our financial transactions more direct, transparent, and personal.  To further these goals, our investment committee recently voted to move roughly half of the cash deposits in our Donor Advised Fund Liquidity Portfolio from Citi and into community development and environmentally oriented banks.  After conducting rigorous due diligence, we have identified eight banks and credit unions around the country that are low risk, offer competitive returns, and are mission-aligned.

We are happy to announce that we recently made investments in four of these institutions. Our accounting team, who facilitated the investments, had their own personally transformative experience while going through this process. They reported at a recent staff meeting that while Citi doesn’t blink an eye at a few million here and there, these four banks expressed joy and gratitude for receiving our investments, making the transactions and new relationships much more meaningful to our staff members.

Below is more information about our four recent investments:

$1 Million CDARS* with Southern Bancorp

Southern Bancorp Mississippi is operating 23 banking centers in Mississippi and Arkansas.  It was formed out of an initiative to end decades of economic decline in rural Arkansas by creating new trends of investment in people, jobs, business and property. The bank launched nonprofits to address affordable housing, grassroots community development and asset creation in order to build resources in the rural communities it serves. The bank currently focuses on the fast growing crop market and offers mostly small business and consumer loans (over 40% of its loans are less than $10,000).

$2 Million CDARS with OneCalifornia Bank

OneCalifornia is a hybrid bank/foundation created with the OneCalifornia Foundation acting as the bank holding company. This innovative structure allows the Bank to pursue programs that benefit the community, such as credit enhanced loans to less-proven borrowers, by having the foundation act as the program sponsor. The Bank engages in programs and grants to eliminate discrimination, encourage affordable housing, alleviate economic distress, stimulate community development, and increase financial literacy.  To date, OneCalifornia Bank has financed the largest private solar installation in the state.

$250,000 account with Latino Community Credit Union

The Latino Community Credit Union was created to address violence against Latinos in North Carolina. Without access to savings or checking accounts, Latinos were essentially “walking banks” and were frequently targeted by robbers. Since its formation in 2000, the Latino Community Credit Union has grown to $65 million in assets with 51,000 members. And since launching its mortgage lending program in 2004, the credit union has had zero delinquencies in its mortgage portfolio and keeps all its loans on its own books. The credit union has also identified new ways to assess risk without utilizing a formal credit rating and offers credit builder products to its users.

$1 Million CDARS with Legacy Bank

Legacy Bank is the only certified community development bank in Wisconsin and the only bank in the country to be founded and led by African-American women. The bank concentrates on distressed neighborhoods in Milwaukee, one of the top cities for subprime and predatory lending. Additionally, Legacy focuses on serving the unbanked, particularly minorities and women in areas of high economic distress, and provides financial education services and workshops. Legacy Bank is one of the fastest growing community development banks in the country!

*CDARS stands for Certificate of Deposit Account Registry Service.  These investments allow organizations to place deposits up to $50 million and still enjoy full FDIC protection of their funds.  For more information, visit: www.cdars.com.

RSF is proud to have begun moving our cash investments into mission-aligned banks and credit unions such as the ones mentioned above.  We will continue to transfer our funds into similar vehicles until we achieve our goal of having 100% mission-aligned investments.  Reaching that goal is part of RSF’s daily efforts to transform the way the world works with money at every level of our operations, and we are excited to see the impact these and future investments will create.

Click here to learn more about the RSF Donor Advised Funds and click here to learn more about the DAF Investment Portfolios.

Kelley Buhles is the Program Manager of Philanthropic Services at RSF Social Finance.

• Published by Kelley Buhles
• Categories: Deals, Donor Advised Funds, Ecological Stewardship, Education & Arts, Investing, Lending, Money
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