Published on March 30, 2021

What are Socially Responsible Banks? Best Ethics & Benefits

‘Voting with our dollars’ means putting our money toward the projects that matter most to us. Socially responsible banks allow individuals to align their values with institutions that finance socially beneficial projects. Whether you want to support black-owned businesses, local communities, or small businesses, socially responsible banks help you to do so.

There are thousands of options for socially responsible banks, most of which are just as safe as “big banks” thanks to FDIC or NCUA insurance. These banks use their social impact to fund projects that benefit the local community and global environment. The most crucial factor to consider is how the bank chooses to invest and the projects that they finance.

Ethics of Socially Responsible Banks

GABV (The Global Alliance for Banking on Values)

The Global Alliance for Banking on Values (GABV) is a global network of banks, credit unions, banking cooperatives, and microfinancing institutions. GABV banks use their influence to finance sustainable economic, social, and environmental development.

The members of GABV finance sustainable development all over the world, from Paraguay to Nepal. For example, Ekobanken Bank in Sweden offers a lower interest rate for struggling farmers. This collaborative network allows like-minded leaders to carry out values-based banking.

B Corp Certification

A B-Corp certification verifies the social and environmental performance, legal accountability, and public transparency of an institution. Companies must achieve a minimum verified score on the B Impact Assessment, which looks at its impact on its employees, clients, community, and environment. The non-profit B Lab then publishes the company’s report on bcorporation.net.

B-Corp members work toward reduced inequality, reduced poverty, environmental protection, better employment opportunities, and more robust communities.

CDFI (Community Development Financial Institutions)

The US Department of the Treasury gives the CDFI Certification to socially responsible banks. Overall, the CDFI community’s mission is to empower and develop communities that lack resources. A bank can qualify for a CDFI Certification if it targets its financing to low-to-moderate-income neighborhoods and communities of color.

No Hidden Fees

One of the most frustrating aspects of banking are the hidden fees: ATM fees, monthly fees to maintain the account, overdraft fees—the list goes on. With most socially responsible banks, they’re fully transparent about any fees they charge. Reducing the risk of hidden fees can save you a lot of money in the long run.

Ethical banks usually don’t charge you to keep your money. Instead, they view it as privilege. That means there’s usually no minimum first deposit or other extra fees.

Customer Support

When you have hundreds of thousands of dollars in your bank account, the last thing you want is slow customer support. Socially responsible banks make a commitment to openness and communication with their customers. Excellent customer service helps to secure their business model, which is vital for sustainability.

Most ethical banks will be available on weekdays and weekends with limited hours. Reaching them via phone, chat, or email is always an option.

Racially Inclusive Bank

Racially inclusive banks are essential for increasing representation and economic mobility for people of color (POC). Minority Depository Institutions (MDI) or racially inclusive banks are led by Black, Latino, Native, or Asian-Americans. To be certified as an MDI by the FDIC, a bank needs to have 50% of the voting stock owned by POC. Alternatively, a majority of board members are POC, and the bank serves communities of color.

Greenwood is an example of a racially inclusive bank, as we are majority owned, managed, and operated by Blacks and Latino people.

Environment-Friendly Bank

Environmental sustainability is becoming increasingly important to many people. B-Corps, members of the GABV, and institutions that don’t finance fossil fuels are all examples of environmentally friendly banks.

The primary way to distinguish socially conscious banks is to look at their financing. If they finance projects that are helpful to the environment, such as wind power, that could be a motivator to bank with them.

Benefits of Choosing a Socially Responsible Bank

Low Fees & High-Interest Rate

Since they’re not solely concerned with turning a profit, a socially responsible bank can offer low fees for their services and a high-interest rate on savings. Ethical banks charge little to no fees.

Some of the best socially responsible banks offer an annual percentage yield (APY) of 1%. Over time, your savings can build thanks to these consumer-friendly policies.

Helps in Spending Money Wisely

Socially conscious banks help you to “vote with your dollar” or create a better planet with your spending. Banks inherently have a massive social impact since they use their funds to finance specific projects. By partnering with an ethical bank, your money goes away from funding fossil fuels and corporations.

Some banks, such as Aspiration, also track your purchases to give you a personal sustainable impact score. The “Aspiration Impact Measurement” or AIM score helps you align your spending with your values and shop at like-minded businesses.

Helps in Connecting With People Who Shares Your Value

Rather than just a place to store your funds, a bank can be a chance to connect to like-minded people. By joining socially conscious banks that support the causes you feel passionate about, you’ll be banking with people who share your values.

For example, Greenwood supports the community by giving a monthly grant of $10,000 to Black and Latino businesses. By joining Greenwood, you’d be banking with people who also want to help Black and Latino communities.

Insured Deposits

Banking responsibly does not have to mean putting your money at risk. Socially responsible banks protect up to $250,000 of deposits through either the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Share Insurance Fund (NCUA).

Most socially responsible banks are a member of either the FDIC or NCUA, and will proudly say so on their website.

What Makes Greenwood a Socially Responsible Bank

Feeding Food Insecure Families Through Goodr.

With every new Greenwood account, we give five meals to a food-insecure family through Goodr, a neo-food-bank organization. Goodr provides surplus food to communities in need, reducing greenhouse emissions from landfills and helping low-income families in need.

By partnering with Goodr, we’re trying to take action to reduce poverty and decrease inequality in local communities. You can also directly contribute to fighting hunger in the United States.

We Round Up to Support HBCUs.

Every time you purchases something with your Greenwood debit card, the change can go to a good cause. You can give spare change to any historically black college or university (HBCU) through UNCF via the round-up program.

Roundups for HBCUs help to support education and economic mobility for our communities of color. You can also choose to give round-ups to the NAACP, which champions civil rights for Black and Latino people.

We Give a Gift of $10,000 Each Month to a Black or Latino Business.

One of Greenwood’s trademark features is that we grant $10,000 to a Black or Latino-owned business each month. This initiative helps to keep dollars circulating in Black and Latino communities.

Sponsoring the Greenwood Cultural Center.

Greenwood is a sponsor of the Greenwood Cultural Center (GCC), which offers exhibits on African-American heritage. The center also gives free educational classes to foster cross-cultural exchange. When you bank with Greenwood, you’re helping to sponsor the GCC’s summer and after school programs for youth as well.

Conclusion

Switching to a socially responsible bank is a chance to align your finances with your values. When looking for a socially conscious bank, look for the B-Corp Certification or GABV membership first. Then, consider other important personal matters: helping low- to moderate-income families, Black and Latino communities, or environmental initiatives.

Banking with Greenwood is perfect for those who seek to support Black and Latino individuals and businesses. To be a part of a socially responsible bank that fosters prosperity in our communities, join our waiting list today.

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