Socially Responsible Banking: Put Your Money Where Your Morals Are


    You’ve made a commitment to living a healthy life and building a strong community. You buy locally grown and organic produce and drink Peace Coffee. You recycle. You walk and ride your bike when possible. You advocate for clean neighborhoods, better schools and equal opportunities for all. But when it comes to banking, do you choose a corporate giant headquartered thousands of miles away and not at all familiar with your community?

    Shouldn’t your bank’s values echo your own? We at University Bank think so. As part of the socially responsible banking industry, we know that consumers aren’t only looking for a place to cash their paychecks. They want a bank that listens to their needs, supports their dreams and plays an active role in strengthening their communities.

    When my father, Bill, bought the St. Paul-based University Bank in 1995, it was not only overwhelmed with operational problems and severe regulatory concerns, it was losing the trust of customers and the local community. Located in the diverse Frogtown neighborhood, the bank served a low-income population that the former management saw as a liability. We chose to see the neighborhood’s opportunities instead.

    My father is known throughout the Twin Cities for his passion and generosity toward underserved communities. During his long career as a mortgage banker, entrepreneur and community advocate, he strived to help all customers, especially those with limited resources, reach for success, both as individuals and as business owners. A graduate of the University of St. Thomas, he has been honored by his alma mater for using his entrepreneurial spirit to serve others and improve the community. He also saw the potential University Bank had to jump-start the Frogtown neighborhood. When my dad called me in Los Angeles, where I was working at Citigroup, and asked me to join him in this ambitious undertaking, I jumped at the opportunity to try to make a difference back home.

    Inspired to become "the leader in improving our urban community," University Bank began a series of initiatives to invest in economically challenged areas in the Twin Cities.

    Beneficial programs

    The following programs benefit our institution, local residents and business owners:

    • Houses to Homes – When rising rents and a plethora of old, neglected homes sprouted in the Twin Cities, further depressing impoverished neighborhoods, University Bank developed its Houses to Homes program in 2000. We found renovators with proven success in buying, fixing and selling homes in disadvantaged communities and provided the financing necessary to rehabilitate homes throughout the area. We aimed to renovate 1,000 homes within five years, but by June 2004 we had already exceeded that goal by rehabbing 1,041 houses. With 1,220 homes completed as of June 2006, University Bank has not only helped families find a safe place to live, but we’ve made the neighborhoods safer, as well.

    • Urban Revitalization Fund – Buoyed by the success of the Houses to Homes initiative, University Bank established its Urban Revitalization Fund (URF) in 2002. The URF is a socially responsible deposit fund that allows customers to achieve a "double bottom line" – their money earns competitive interest rates while having social impact within local neighborhoods. Customer dollars support projects that create affordable housing, develop small businesses, aid non-profit organizations and provide vital community services. Since its creation, the URF has reached $60 million in deposits, demonstrating the difference customers can make just by banking with a socially responsible financial institution.

    • Neighborhood Lending Partnership – When other resources fall short, University Bank helps individuals and families purchase or upgrade their homes and businesses with its Neighborhood Lending Partnership. This loan guarantee program the bank pioneered with the city of St. Paul, which has provided more than $10 million in funds to date, has helped numerous customers rehabilitate residential and commercial properties and contributed to the success of several small, minority-owned businesses in the area.

    • Community Development Financial Institution (CDFI) – University Bank underwent an extensive accreditation process to gain Community Development Financial Institution (CDFI) certification. A program run by the U.S. Department of Treasury, CDFI certification recognizes specialized banks and credit unions that work in market niches underserved by traditional financial institutions. As a CDFI, University Bank is distinguished from the pack of large corporate banks with its unique range of financial products and services tailored to economically distressed markets.

    • Diverse Clientele, Diverse Professionals – At University Bank, we want all of our customers to feel like we have a stake in their success, and clear communication is the key to helping them meet their personal and business goals. With close to half our customers identifying as ethnic minorities, we’ve made it a priority to hire professional staff who speak their language and understand their customs. We have four full-time employees who speak fluent Hmong, the language of many of our customers, and are in the process of translating several of our brochures into the White and Green Hmong dialects.

    Investment opportunities

    If your bank doesn’t offer similar services, consider a switch to a socially responsible bank, or consider socially responsible investment opportunities. There are many ways you can put your money to good work both locally and globally.

    Here are just a few thoughts to consider:

    • Choose a CDFI – The first CDFI bank in the state, University Bank is among 31 certified CDFIs in Minnesota. According to the Coalition of Community Development Financial Institutions, at the end of fiscal year 2003, Minnesota CDFIs had more than $200 million in financing outstanding to 1,654 customers, including small businesses, affordable housing developers, community facilities, microenterprises and individual customers.

    Banking at a CDFI-certified bank is very similar to banking at a traditional institution. You choose from a variety of checking and savings accounts, apply for mortgages and auto loans and obtain a bank-affiliated credit card. But rather than merely sitting in an account, your money is put to work strengthening neighborhood revitalization projects, supporting new businesses, and educating immigrants on how to manage their finances responsibly in an unfamiliar environment.

    CDFI status isn’t limited to banks, however. Many non-profit organizations are also certified as CDFIs. In Minnesota, these include groups like Habitat for Humanity of Minnesota, the Greater Minnesota Housing Fund and the Development Corporation for Children. You can make a difference by supporting these types of non-profit organizations.

    • Find Investment Opportunities that Reflect Your Values – After several Wall Street scandals in recent years, many investors have directed their money to mutual funds, stocks and bonds that offer a double bottom line. These socially responsible investments, such as Pax World Funds and Domini Social Investments, not only benefit the size of consumers’ wallets, they also benefit the greater community. The Social Investment Forum reports that $2.16 trillion in assets are now in managed portfolios using socially responsible investment strategies that champion everything from affordable housing to environmentally friendly business practices.

    But even with that impressive figure, many investors are still skeptical that socially responsible investing makes financial sense, asking "Will I really make any money from these types of funds?" Indeed, a high financial return and social responsibility can co-exist. Consider this: From 1995 to 2003, assets involved in social investing grew 40 percent faster than all professionally managed investment assets. And when evaluating the return on your investment, remember that it need not be defined only in dollars. For a company with socially responsible environmental standards, for example, consider how the ecosystem benefits from its practices, whether that means less run-off to pollute local streams or fewer animals who lose their homes due to ill-planned construction projects.

    Now for the most important question: How do you get started in socially responsible banking? It will take a little research, but you can make an informed decision on banking by following these steps:

    • Evaluate whether your bank fits the socially responsible model. Socially responsible banks meet three important criteria. First, they hold an Outstanding Community Reinvestment Act (CRA) rating, which indicates they far exceed the credit needs of their communities. Second, they are certified as CDFIs by the U.S. Department of Treasury. Finally, they offer socially responsible deposit funds, like University Bank’s Urban Revitalization Fund. The Internet will help you assess whether your bank fits the bill. You can look up any bank’s CRA rating at, and you can download a list of CDFI-certified institutions at

    • Determine how you’d like to help your community. It’s time to do a little soul-searching and ask yourself how you’d like to make a difference in your neighborhood. Would you like to see more affordable housing in your community? How about attracting more small businesses and non-profits to the area? Or perhaps a cleaner environment with more parks and green space? Once you identify your priorities, ask around and see how the banks in your community are getting involved in these areas. At University Bank, we surveyed our customers last year to discover which community issues concerned them the most. When the surveys were tallied, affordable housing stood out as the most pressing challenge. As a result, we strengthened our Houses to Homes program to help more families realize the dream of home ownership. Socially responsible banks can pursue many worthy community projects, but limited resources can prevent them from becoming involved with some programs that may be important to you, so find the bank whose priorities align with your own.

    • Draw upon the wisdom of your neighbors. Survey your friends, local small-business owners and, most importantly, your neighbors to see where they bank. Ask them if they are satisfied with their banking experience. Were their banks committed to not only their individual needs, but also the needs of the community? Just as they referred you to that great baby-sitter or real-estate agent, your neighbors can also steer you in the right direction when it comes to banking.

    Many people don’t see banking and social activism as partners, but we think the two can – and should – go hand in hand. After all, why should you divorce your moral life from your financial life? Socially responsible banking offers a win-win situation for both consumers and the community at large, and the satisfaction you’ll gain from it is the greatest return on investment you’ll ever reap.

    Resources on socially responsible banking options:,,,

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    David Reiling
    David Reiling is the former president of University Bank and currently the CEO of its parent company, Sunrise Community Banks. Contact him at (651) 265-5600 or e-mail [email protected]. Copyright © 2006 David Reiling. All rights reserved


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