Q) I’ve been thinking about my bank account lately, and I don’t mean just worrying about how small it is. I’m wondering what my money is doing for my community. My bank has a local branch, but it’s a global corporation that invests in all sorts of things I want nothing to do with. It would be great if whatever savings I have could be used for good purposes closer to home. Is this too risky for me to consider? How can I learn about better banking alternatives?
A) Good news! You can safely put your money to work where you live. In your town, the Louisville Community Development Bank (MoreThanABank.com) is “dedicated to revitalizing inner city neighborhoods in Louisville, Kentucky, through targeted home and business loans.” It offers a full range of banking services.
This bank is part of a larger movement commonly called Community Investing. By providing hardworking individuals and organizations with the financing they need to help themselves, community investing offers solutions to many twenty-first century challenges, from inner-city decay to habitat destruction. Anyone who remembers banker George Bailey’s service to his hometown in the movie It’s a Wonderful Life realizes that community banking is hardly a new idea. It boils down to investing money in the people who are making the community a better place to live.
We found out about your local bank by searching CommunityInvest.org. This site provides information about myriad Community Development Financial Institutions (CDFIs), including community banks and credit unions as well as community loan funds and international microcredit programs. These organizations catalyze a lasting sort of self-help that’s built on individuals working together to solve their own problems. Your CDFI investment can help revitalize a community, alleviate poverty, empower individuals and families, and provide access to capital for those traditionally confined to the economic sidelines.Not a bad social return to any natural investor’s portfolio.
Community banking offers a way for virtually anyone to bring their values into their financial lives. Even if you have only a checking account, you can find a bank or credit union that reflects your sense of community while it holds your hard-earned paychecks. Savings accounts and small beginning investments such as CDs and IRAs, also available through community banks and credit unions, are exciting ways to take the first steps toward investing without sacrificing, or ignoring, your principles. Most of these vehicles pay standard market rates and provide comparable FDIC deposit insurance. In other words, you can make just as much money, and it will be just as safe at a community bank or credit union as it would be in a mainstream corporate bank account.
Community banks are committed to specific, targeted needs in their own areas. Some focus on low-income housing, others on woman- or minority-owned businesses; many become active in the nonprofit sector by making initial loans to programs such as homeless shelters or health-care organizations. In many cases, the beneficiaries of community banks would not ordinarily be served by mainstream banks; these loans often serve as crucial first steps to entering the economic mainstream.
For conscious investors seeking to improve their hometowns with immediate and even participatory social results, community banking constitutes an important investment option. George Bailey would be happy to know that in this era of global corporate banks with few ties to local settings, some banks remain committed to recycling their financial resources within the communities in which they operate.
Q) On a recent trip to Ithaca, New York, I saw people using some sort of money they printed themselves. What a great idea! Is this something I could start in my own town?
A) Many communities around the world—including Lyon, France; Fremantle, Australia; and Ithaca, New York—have established their own local currency systems. Currency activists say that you can, too! (Don’t worry, it’s quite legal.)
Local currencies are not exactly new—in the United States an estimated 300 communities had their own script during the Great Depression. Today there are dozens of systems in this country and hundreds operating worldwide. Many different systems are being experimented with; some print unique (and beautiful) paper bills that are exchanged like cash; paperless systems use a computer to keep track of transactions.
The chief motivation behind all these systems is the desire to strengthen local economies. Members of the system agree to trade among themselves, so resources circulate within the community. Historically, local currencies also have served as a safety net, allowing commerce to continue during times of economic crisis. One of the biggest benefits is the way these currencies help build a stronger sense of community.
In Ithaca, a person can use Ithaca “HOURs” (each HOUR is worth $10) to dine at fine restaurants, hire a babysitter, buy firewood and groceries, or go to a movie. More than $65,000 of Ithaca HOURS have been issued to thousands of people, including 370 businesses. Creating this currency has stimulated millions of dollars worth of trade.The grop offers a “starterkit” (IthacaHours.com) to help other communities launch their own currencies.
HAL BRILL AND CLIFF FEIGENBAUM are co-authors of Investing with Your Values: Making Money and Making a Difference (New Society, 2000). Brill is president of Natural Investment Services, a Registered Investment Adviser in Paonia, Colorado (NaturalInvesting.com). Feigenbaum is publisher of the award-winning GreenMoney Journal (GreenMoney.com), a socially responsible consumer publication. Green Money is a registered trademark of GreenMoney Journal/Cliff Feigenbaum. Used with permission. This material is for informational purposes only. It is not a solicitation to invest.