Better Banking Blog

How the Banking Industry Can Change the State of Affordable Housing

Aug 13, 2021

Man and daughter sitting at a table drawing rainbows together

It’s no secret that the Bay Area has a housing problem

For years, San Francisco has held the astonishing top spot for highest median rent in the country—with Oakland not far behind at No. 4. The plight of our unhoused residents is so bad that a few years ago the UN published a report calling it “cruel and inhuman.”

The problem often feels overwhelming and unsolvable. But each of us can take steps to bring us closer to a solution. By choosing a bank that reflects our values, we support inclusion and community development. The current moment has demonstrated why it is critical that each of us embrace our power and make informed choices.

The COVID-19 pandemic has exacerbated housing insecurity in Oakland. As with so many other social inequities, people of color have been hardest hit. Experts suggest we keep our housing expense burden below 30% of our gross income. Yet, even before the pandemic, the percentage of non-white renters exceeding that was significantly higher than that of white renters (59% versus 42%, respectively). Our friends and neighbors are struggling, and it’s up to all of us who value a just and equitable society to change the state of affordable housing in our community. Banks should be part of the solution, and many are.

Our money doesn’t just sit in a vault

Most people lack a strong understanding of how banks utilize the cash they deposit into their accounts. Banks loan these deposits to people and organizations or invest them in stocks and other financial instruments. Many large banks use their depositors’ money to fund environmental and social injustices, including mass incarceration, payday lenders, fossil fuels, and other sectors that cause harm to our communities. If we fail to examine the lending practices of our banks, our hard-earned paychecks can finance highly damaging and extractive industries.

On the other hand, with a little effort, we can ensure our money is invested in the transformation and healing of our community here in Oakland. Banking with values-based financial institutions, of which there are many, can go a long way toward helping alleviate problems such as homelessness and unaffordable housing, both in our communities and around the world. That’s because values-based banks focus on putting money toward industries that create a thriving community for all.

Beneficial State Bank is helping address the housing crisis by working with organizations like East Bay Permanent Real Estate Cooperative.

A group of people sits together on brick steps together, with a sign that says "Land without Landlords"

Since 2018, EB PREC has organized Black, Indigenous, people of color (BIPOC), and allied communities to cooperatively purchase and steward properties for long-term housing. By facilitating collective ownership of affordable housing, EB PREC empowers communities to generate a return and take back control from speculative real estate developers. If a neighborhood property goes on the market, EB PREC can mobilize residents to step in and purchase it rather than waiting for a new landlord to raise rents to unaffordable levels.

We’re really changing the understanding of what ‘ownership’ means. The idea of ownership can be very entitled and domination-centered. But there’s no place in the country where a minimum wage job secures housing. This idea of ownership as we currently embrace and practice isn’t realistic and attainable for everyone. We want to create a movement to give people collective ownership.

Lauren Jones, Communications and Marketing Coordinator at EB PREC

EB PREC’s model is so promising that activists around the world, from Germany to Australia, have reached out for details on how to replicate it. Communities worldwide are looking for a model that isn’t reliant on government subsidies, but on mobilizing (and increasing) the collective wealth of local residents.

This is one example of how values-based banking focuses on solutions to intractable problems in our communities. Not only can our deposit dollars support our community, but we can influence how financing resolves, or amplifies, social, economic, and environmental challenges everywhere.

Here are three easy steps to take:

If you’re tired of your money funding a broken system, you can do something about it.

  1. Educate yourself on how banks use your money. If you already have a bank, you can check its website or ask where the bank invests your money and how it actively supports local communities. Good sources of information include Mighty Deposits, Green America, and Rainforest Action Network.
  2. Select a bank that invests in doing good. Values-based banks demonstrate that a bank can generate positive social and environmental impact while remaining financially sustainable.
  3. Encourage friends and family to put their money to good use. Let them know that where they bank matters—their money can be used to help, or harm. Beneficial State Bank offers helpful resources and Stop the Money Pipeline has a useful checklist, as well.

Making a conscious, informed choice about your financial institution is a simple way to give back to your community. Just like EB PREC’s housing model, real change is possible when we collectively change how we do business.

Originally posted Jan 2021: The Oaklandside "Smart, values-based banking: a tool to help alleviate Oakland’s housing crisis"

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People, Planet, Prosperity for All

We are proud to lend $337 million to affordable housing, and $0 to private prisons. When you bank beneficially, you choose to support people and planet.