Beneficial State Bank's Lending Policy: We Make 75%+ Mission-Aligned Loans and 0% Contra-Mission Loans
Feb 07, 2022
Do you ever wonder what happens to your money when you deposit it into a bank?
It doesn't just sit in a vault. It gets leveraged and loaned out to businesses and individuals alongside others' cash. When you choose a bank, you choose a company that will invest your money.
Not all loans are equal. Some banks loan your money to small businesses or help people buy a car or a house. But other companies, like oil and gas producers, weapons manufacturers, and builders of private prisons, all take out loans, too. According to the Rainforest Action Network, "In the five years since the Paris Agreement, the world's 60 biggest banks have financed fossil fuels to the tune of $3.8 trillion." If you put your money in some banks, your money might be working to fund these projects without your consent.
If you bank with Beneficial State Bank, you can rest knowing that your money is going to local businesses, nonprofits, and individuals in need, and never to harmful actors. At least 75% of our lending goes toward our mission categories, and the rest never go toward projects or organizations that cause harm. You can break down the impact of your money with our deposit calculator.
What does it mean that we make 75% mission-aligned loans?
We evaluate every company that we lend money to, and over 75% of the money that we loan out goes to mission-aligned organizations. To be counted as mission-aligned, a company must fit into at least one of these categories (although many companies fall into multiple or even all of the categories):
- Mission-driven core products & services: They do work to heal the planet and our communities, including the arts, education, environmental sustainability, affordable housing, healthy food, and social justice.
- Mission-driven corporate practices: They are committed to practices aligned with our mission, such as intentionally and proactively hiring marginalized people or sourcing ethical, fair-trade materials.
- Mission-driven ownership structures: They have a business structure that empowers workers and keeps the company accountable to the community, such as nonprofit organizations, worker-owned cooperatives, Social Purpose Corporations, and tribal government entities.
- Ownership by underserved communities: They are changing the focal points of power and ownership by centering people who have been excluded from building wealth, including organizations that are majority-owned by people of color, women, LGBTQ and/or gender non-conforming individuals, immigrants or refugees, or veterans.
What does it mean that we make 0% contra-mission loans?
Just as important as the projects we support are the projects we will not support. It's not enough to do good with our money; we must also avoid contributing to the bad. Our contra-mission categories include:
- Illegal products and activities: This includes products or activities that are illegal in any of our jurisdictions.
- Discrimination: We do not lend to companies that exhibit inequitable treatment of individuals or groups.
- Weapons: Encompassing semi-automatic weapons, automatic weapons, accessories that enable rapid-fire capability, and entities that sell firearms to individuals under 21 or who have not passed a universal background check.
- Predatory lending: We use the FDIC's definition of predatory financial services and research from Harvard and NeighborWorks to ensure that our loan dollars do not fund products and services that hurt low-income communities.
- Energy sources: We do not support coal, gas, oil, uranium, large-scale hydroelectric, and other energy sources that significantly contribute to climate change or pollution.
- Resource extraction: Extractive projects and industries and the direct supply chains that serve them, including hard rock mining and fracking.
- Incarceration or punishment: This includes prisons, juvenile justice boot camps, and any other forms of incarceration.
- Contra-mission transactions: We review and evaluate loans to see if they include transactions that create an oligopoly or monopoly in an industry or create significant job loss.
Evaluating loans is complex and takes time, but it is core to who we are. We are committed to evaluating how our loans will impact the social and environmental issues that affect us all.
What about the other 25%? What are those?
We also make some loans (less than 25% of our loan portfolio) that don't fall into any of our mission categories and do not cause harm to the environment or communities. We consider these "neutral" loans. Here are some examples of loans that fall into this category:
- Attorney or accountant firms without an explicit mission service
- Small businesses like hair salons, landscaping companies, HVAC companies, truck repair shops
These organizations may still be doing good in their communities even if they don't fit squarely into one of our mission categories. For example, small businesses strengthen local economies by providing good jobs and keeping money local.
Still have questions? Learn more about how Beneficial State Foundation evaluates our loans.
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