Reaching Socially Responsible Investors
Some of the best sources of deposits for Community Development Financial Institutions (CDFIs) – banks, minority-owned banks, and other financial institutions whose primary missions are to lend and provide services in distressed areas – are socially responsible investors who invest in CDFIs because of their commitment to a social investment agenda. You can read a case study to learn more about how socially responsible investors make a difference in their community while protecting and growing their money.
Even Promontory Network members that do not carry the CDFI designation can use Insured Cash Sweep®, the ICS®, and/or CDARS® to attract socially responsible investors – because the full amount of funds placed through ICS® ReciprocalSM or CDARS® ReciprocalSM transactions stays local and can be used to fund loans that strengthen their own communities1 – an important point for many bank customers.
Socially Responsible Investors
- Large corporations
- Small business owners
- Public funds
- Wealthy individuals
What’s Important to Socially Responsible Investors
- Maintaining high fiduciary standards
- Protection of FDIC insurance or some other assurance
- Keeping funds in their communities
Advantages of Insured Cash Sweep and CDARS for Socially Responsible Investors
- Peace of Mind: Access to multi-million-dollar FDIC insurance on funds placed into demand deposit accounts (ICS), money market deposit accounts (ICS), and/or CDs (CDARS).
- Time-Saving Conveniences: The ease of working through a single relationship, and not having to track collateral on an ongoing basis.
- Ease of Financial Reporting: Avoid having uninsured deposits to footnote in financial statements.
- Helping Underserved Communities Grow: Promontory Network members that are also CDFIs often find Insured Cash Sweep and CDARS powerful tools for attracting large deposits from socially responsible investors, including banks looking for Community Reinvestment Act (CRA) credit.
"As a small community bank, we don’t have an endless supply of funds. But with CDARS, we are receiving much larger deposits, which means we have more money to lend. It’s clear that the underserved and disadvantaged communities we serve are benefiting from it."
Robert M. McGill, Chairman/CEO
Neighborhood National Bank
San Diego, CA
Limits apply. When deposited funds are exchanged on a dollar-for-dollar basis with other banks in the Network, the relationship institution can use the full amount of a deposit placed through ICS or CDARS for local lending, satisfying some depositors’ local investment goals or mandates. Alternatively, with a depositor's consent, the relationship institution may choose to receive fee income instead of deposits from other participating institutions. Under these circumstances, deposited funds would not be available for local lending.