Aug 19, 2021 |

Supporting Mission-Aligned Banks Creates Economic Opportunity

Gender equity is a complex and evolving topic. Until recently, most assumed it was about overt as well as subtle, systemic discrimination against cis women—and that a woman’s race impacts the degree to which she experiences inequity—usually perpetrated by men. But as we listen to the voices and the needs of the non-binary and gender-nonconforming communities, we must also evolve our thinking on the topic. We must learn from the lived experiences of those who hold non-binary and transgender identities. We must also acknowledge the role cis women have played in perpetuating their struggles with inequity and recognize that many men are proponents of gender equity. This topic is far too complex to do justice within the constraints of a blog post, but we are committed to participating in the ongoing conversation, amplifying the concerns of the most vulnerable in our communities, and lending a platform to those who can help us broaden our perspectives on this topic. Therefore, this post will focus on one dimension of the subject: cis women’s historical inequity regarding income and compensation, the financial services systems’ contribution to that inequity, as well as our need to conscientiously turn the tide and leverage our power of choice to catalyze progress.

No one has to look far to see the ongoing realities of gender inequity, whether it’s found on a paycheck, in C-suites, on the boards of marquee corporations, among lenders—even in the division of labor in the home. It’s a situation that has only been exacerbated by the global pandemic. Over the past year, nearly 3 million women dropped out of the labor force as their jobs cratered or were scaled back, schools closed, and childcare support crumbled.  

What happens when women are subtracted from bringing their fullest contributions to the larger social and economic environment, either for reasons of social history or due to a cataclysm like the pandemic? According to the Chicago Policy Review, it’s increasing poverty among women and children, particularly single mothers and women of color, and large-scale economic inefficiencies that affect the socio-economic development of society as a whole. The results, according to the International Monetary Fund,  are slower economic growth, lower labor force participation, and a drop in productivity. In other words, when women lose, we all lose. 

“When women are disempowered financially when they can’t get a loan to start or grow a business or to buy a house, it perpetuates an imbalance between the financial security of women and men, and in the process, holds our communities and our economy back,” said Janine Firpo, an Oakland-based, values-aligned investor, and entrepreneur. “When women have adequate financial means the first thing they spend their money on are the things that enhance the family and the community.”

Small business ownership is one of the most promising ways for women to gain more financial security.

But for far too long the financial sector has contributed to a gender imbalance in entrepreneurship. Banking has been an industry run by men and has long-favored male borrowers. Indeed, until 1988 women were required to have a male relative cosign on a business loan (in one incredible case a woman had her 17-year-old son co-sign a business loan because he was the only male relative she had). 

Women’s entrepreneurship has long been under-funded and under-supported—despite 40% of the nation’s businesses now being woman-owned. Numerous studies have shown that women face long-standing structural inequities when it comes to accessing capital for business formation, for no other reason than their gender identity. Women receive just 7% of venture funds for their startups and only 4% of all loan dollars lent to small businesses. And when women do manage to get funding, they receive 50% less than their male counterparts. 

Because they are founded to address such inequities, mission-aligned banks can be great resources for women entrepreneurs. They are focused on empowering people in their communities and getting capital into the hands of those who have been left out of the traditional banking system. This also means that when an individual chooses to put their deposit dollars in a mission-aligned bank, they are choosing to have their money work to help underserved members of their community (i.e. women).

“By banking with a mission-aligned bank, you’re supporting small businesses in your own community. And then those businesses can also give back to the community,” said Nona Lim, who owns a clean-label, Asian-inspired line of bone broths, noodles and soups in Oakland, and has been a longtime customer of Beneficial State Bank. “It creates a virtuous cycle where we can all flourish and thrive.”

A business or individual’s choice of bank is an important economic investment in one’s community.

Banking with values-based financial institutions can go a long way toward fighting gender inequality, both in our communities and around the world.

Instead of using depositors’ money to finance social or environmental injustices, which many big banks do, mission-aligned banks use their loan dollars to invest in women, in nonprofits, in local communities. Indeed, in 2020, nearly a quarter of all of Beneficial State’s loans went to women.

“The money you put in the bank is what gives the bank the resources to lend to businesses like mine,” agreed Lim. “It’s what allows the bank to continue to give back to the community.”

“Finding a financial institution that not only agreed to lend to us, but also that promotes and celebrates the work so many important, local nonprofits are doing to create change in our community was pretty amazing,” said Natasha von Kaenel, Director of Marketing at The Crucible, a woman-led nonprofit that teaches industrial and fine arts in Oakland and the East Bay, and works to open up the traditionally male-dominated fields of welding, blacksmithing and other industrial arts to people of all genders, backgrounds, and ages. 

By banking with values-based financial institutions, individuals can not only contribute to bettering their community, but they can also see the results of those investments in their everyday lives. They can know, simply through where they choose to bank, that their neighborhood nonprofit or new woman-owned small business exists in part because of them. 

“Why wouldn’t I want my money in a local bank that I know is empowering the women and people of my community?” Firpo said. “Putting your money where your values are is a transformative action we can take, even as small investors, to ensure that our values are being realized.”

Here are three steps individuals can take to learn more about banking with mission-aligned banks:

  1. Educate yourself on how banks use your money. If you already have a bank, you can check its website (remain wary of greenwashing) or ask where the bank invests your money and how it actively supports local communities. Good sources of information include Mighty DepositsGreen America, and Rainforest Action Network
  2. Select a bank that doesn’t just invest in doing good, but avoids doing harm. Values-based banks demonstrate that a bank can generate positive social and environmental impact while remaining financially sustainable. But if a bank is financing activities that harm communities or the environment, they could be negating any positive impact. 
  3. Encourage friends and family to align their money with their values. Let them know that where they bank matters—their money can be used to help, or harm. Beneficial State has resources here, and Stop the Money Pipeline has a useful checklist, as well. 

Originally posted March 2021: The Oaklandside "When Women Lose, We All Lose"