The Impacts of Moving Your Money
Feb 22 2010
By Elizabeth Ü
Moving your cash out of big banks and into local banks and credit unions is one way to move your money, but even this choice doesn’t address one of the major issues I have with banks, regardless of size: how are they lending the money I’ve deposited? Can you even find out if their lending practices align with your own values?
Two years ago, I embarked upon an effort to move my money away from Bank of America (where I had my checking account) and ING Direct (where I had the bulk of my cash savings, both in a savings account and in several laddered CDs), and into banks whose activities I felt were more aligned with my own values. In the case of Bank of America, I simply could not justify spending the majority of my waking hours working at RSF and thinking about how to invest in companies that were solving social and environmental problems, while much of my own savings were helping contribute to those problems.*
I didn’t have the same concerns, per se, about ING Direct – partially because I couldn’t find any information about their policies – though it was clear to me that there were other places to park my cash that were putting it to work in ways I knew I could feel good about.
Here were the guiding principles I used in looking for a checking account:
- First and foremost, I wanted a bank that I had some kind of personal connection to, whether directly or through my professional connections, but I did want this bank to offer mobile banking services, that was one of the main things
- I wanted to find a small bank that was committed to social and environmental values in some way.
- I preferred to bank locally, not because I frequently visit the branches, but because I wanted to ensure that my bank’s Community Reinvestment Act (CRA) activities were benefitting my local community (CRA encourages “depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound operations.” Click here to search CRA performance ratings for specific banks or states); and
- I wanted to be able to view my account activity and balances, pay bills, and view cancelled checks online.
After a bit of research, I moved my checking account to New Resource Bank, which is based in San Francisco. Mark Finser, who is Chair of the Board of RSF, is also Chair of the Board of NRB, and RSF was an early investor in the bank. I had also worked with the bank’s Initial Founder & Vice Chairman Peter Liu on several projects related to sustainable agriculture through Roots of Change, so the personal connection was well covered. Best of all, when I call “customer service,” I talk to Jennie, who helped me open my account two years ago and always remembers who I am!
As far as their lending goes, according to Peter Liu, “We have been active lenders in the areas of clean energy, green buildings, and green consumer products. We also make classic local community banking loans and work with our borrowers to help them find ways to green their building or operations. We also use our specialized knowledge for tailored or innovative products to finance solar systems or sustainable foods companies.”
Regarding my savings, I was deeply inspired by the composition of the RSF Donor Advised Funds’ Liquidity Portfolio (see Taryn Goodman’s recent post), and had initially hoped to mirror that. Unfortunately, as an individual with limited capacity to manage such a complicated portfolio, I soon realized I’d be better off finding one financial institution to steward my cash, based on the following:
- Because I had chosen a bank for my checking account, I wanted to join a credit union (credit unions are member-owned and non-profit, and both these features score high on my values meter), and preferably one that defined “community banking” in terms beyond just banking in the local community – ie, one that also addressed ecological issues.
- Assuming I could find such a credit union, I wanted to find a more simple solution to laddering CDs that would help maximize my interest rate, while minimizing the amount of work I had to do to keep track of what was happening. Plus, I wanted to leave room for liquidity in the event that I miraculously found a home to buy.
And so I recently opened an Emergency Share Fund Account at the Permaculture Credit Union in Santa Fe, an investee of the RSF Donor Advised Funds’ Liquidity portfolio (as is New Resource Bank), in addition to having a close lending relationship with the RSF Social Investment Fund. Many of their loans offer discounted rates for sustainable projects and most of their mortgage and property loans have what they call “sustainability features” (ie, solar panels and water heaters, composting toilets, rain catchment, solar water heaters, roofing materials that reflect sun in summer and keep the heat in during the winter, etc). Personally, I am most excited about the fact that they can offer loans for off-the-grid buildings that don’t qualify for conventional mortgages. The type of account that I opened was perfect for my needs: because the funds are parked there indefinitely, I get a higher interest rate, but I can take them out in case of an “emergency” such as a home purchase, major life change, etc. Whenever I’ve called, Eileen and Don have been incredibly helpful and responsive – far beyond my expectations!
Now, I’m no investment advisor, and I imagine that if I had one, they would likely caution me against much of the approach I’ve outlined here… I find that I tend to have priorities that are very hard for many traditional investment advisors (or elders within my own family) to understand. Which is why I feel so grateful to be part of the RSF community, where we can dig into difficult questions like: what is true wealth? How can we redefine a portfolio theory that has values at its very heart? In short, how can we transform the way the world works with money?
*(RSF grantee Green America keeps tabs on the track records and policies of the big banks here. For more information on how banks are contributing to climate change, check out the “Banks, Climate Change, and the New Coal Rush” report from RSF grantee Rainforest Action Network, which was published as part of their global finance campaign.)
Elizabeth Ü is Manager of Strategic Development at RSF Social Finance.
Moving your cash out of big banks and into local banks and credit unions is one way to move your money, but even this choice doesn’t address one of the major issues I have with banks, regardless of size: how are they lending the money I’ve deposited? Can you even find out if their lending practices align…