Ethical action: Investing in institutions that prioritize building others’ futures

A loss of confidence in large mainstream financial institutions following the GFC has furthered interest in local financial institutions that serve the needs of people and communities directly and transparently.

In 2011, the proposal by a US bank to charge customers a $5 monthly fee for having an ATM card, led to an initiative called Bank Transfer Day. People were urged to move their money out of the big Wall Street banks and into credit unions. On the designated day US$4.5 billion in new deposits were transferred from banks into credit unions.

In the US there is a range of different types of community-based institutions that specifically direct investments in ways that will benefit communities and environments. These include the Maine Organic Farmers and Gardeners Association and the Cooperative Fund of New England. Further information on a growing range of community finance institutions is available Slow Money.

Australian banks closed more than 2050 branches in the 1990s, leaving many rural communities without banking facilities. Two rural communities developed a partnership with one of the smaller banks now known as Bendigo and Adelaide Bank. This bank works with local communities to help them establish a Community Bank® branch as a locally owned and operated franchise. Nearly AUS$20 million has been paid in dividends to more than 70,000 local shareholders, with an impressive AUS$75.5 million returned to community projects.

Other institutions specialise in the delivery of financial services for social enterprises, charities, and community organizations. Charity Bank relies on funds from charitable trusts, other banks, and deposits from individuals willing to take a lower return to lend to worthy causes and Community 21 is an Australian banking service specifically for not-for-profits.