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Why Banking Matters

 When we think about ways to be more conscious consumers, our focus tends to be on how we actively spend our money -- like supporting brands that keep plastic out of their supply chains. However, our dollars have an impact even when we're not the ones spending them -- like when they're sitting in our bank accounts, seemingly minding their own business. But banks are not to be overlooked! They are in fact the business that gets most of your money.


Banks often get a bad rap. We associate them with greed, corruption, being “too big to fail,” and are sometimes frustrated by how they have used their power in ways that don’t align with our values. The truth is, banks get all their power from us because they get their money from us. So that power is ultimately in our hands, and we can use it to fund actions and projects that we believe in and promote a better world.

The truth is, banks get all their power from us because they get their money from us.

How?
First, it’s important to know how banks work: Banks use money deposited into accounts to make loans. So when you put money into a savings or CD or Money Market account and earn interest on it, the bank is basically paying you to be able to use your money. Then they take that money and loan it to other customers, charging a higher rate of interest than what they pay depositors, and that difference is how they profit. They also make money by charging a variety of fees with which many of us are all too familiar.


The cool thing about having your money in a bank as opposed to keeping it hidden under your mattress or buried in your backyard or something is that your money is a) able to increase in value by earning interest and b) can also be used to provide value to other people -- like allowing someone to finance their new home via a mortgage or education via student loans.


The only downside is that you don’t have control over who your bank lends to or how it uses the revenue it makes from your loan interest payments or overdraft fees, unless you own a significant amount of stock in that bank. In some cases, banks have contributed in various ways to some things that may not align with your personal values like the Dakota Access Pipeline, redlining, predatory lending, and the subprime mortgage crisis that led to our recent economic recession, to name a few.


If you want to make sure your money is being used to fund causes that do align with your values, we recommend finding a community bank or credit union that has a commitment to funding mission-driven projects in their communities.
That’s why we have decided to work with Beneficial State Bank, a B Corp bank based out of Oakland, CA that offers banking for individuals, businesses, and nonprofits. It’s owned by a nonprofit Foundation that reinvests in their communities, including California, Oregon, and Washington, and funds social enterprises working toward positive social and environmental impact.


We believe in the power of using business as a force for good, and where and how our money is spent is not to be overlooked. If you are striving to be a more conscious consumer, don't let your dollars go to waste! Remember the power of intentional banking and consider working with a bank that uses your money in a way that you can feel good about.


Know of a mission-driven bank in your area? Share in the comments below!

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