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Beyond Socially-Responsible Investing: Supporting Main Street via Community Banks and Credit Unions

by Darren L. Zagarola, CFP®, CPA, PFS

As published on, June 14, 2013

More than four years have passed since the market low of March 9, 2009, and the heart of the Great Recession. There was a time during the economic and market recoveries in which Main Street America was dissatisfied with Big Banks and Wall Street. The ground swell was astounding, and reminded us that everyone has a voice. During this same time, Sustainable and Responsible Impact (SRI) investments grew at a greater pace than the broader market, with more than $3 billion invested in SRI products by the end of 2012.

Most interesting about this growth is that investments were made in companies falling outside traditional SRI investment restrictions. SRI has grown from the days of exclusionary investing to include companies with good track records concerning corporate governance, executive compensation, shareholder advocacy and community development. People now have increased choices to invest in accordance with their values. SRI, however, is not just about the investment products chosen. When looking at the “Main Street versus Wall Street” issue, investors should understand there are more options to incorporate their values into their financial decisions beyond their investment portfolios.

If you believe you cannot impact decisions made by financial institutions, here are several ideas to change your mind. First, using local credit unions and community banks, as opposed to the mega banks, greatly increases the likelihood that monies will be invested in local community development. Remember, the money deposited into a bank (savings accounts, checking accounts, certificates of deposit) is used to lend to others. The bank does not hold that money in the safe until you need it. They charge one person interest to borrow the money and then pay interest to you for lending them the money. The question is what do they do with your money?

Your relationship with yo ur bank should be special. Think about George Bailey and his battle over the Bailey Building & Loan Association with the evil Mr. Potter in “It's a Wonderful Life.” During the run on the banks, George explains how the money deposited in the bank is used to help the other townspeople build their lives. Local banking is part of Americana. Do you want to lend your money to a bank which uses that money to support causes you do not believe in, or to pay for excessive executive bonuses? You have a choice in the matter. You can choose to invest in a local community bank which reinvests the money into your community.

The same holds true for your daily spending. The credit cards used to make everyday purchases are typically linked to the mega banks. The fees you pay – annual fees, late fees, interest – as well as the fees paid by merchants, go to the issuing bank. Therefore, while you may have moved your banking to a community bank, your credit card use is still supporting the mega banks.

Assuming that the majority of these banks are not necessarily interested in your personal values, consider using credit cards issued by community development banks or credit unions. They use their fees to help small businesses, individuals and homeowners in the local area manage existing debt. You can also select credit cards that turn everyday purchases into social and environmental change.

A Wall Street investment portfolio is not needed to be a responsible investor and to make responsible financial decisions. One source of information is Green America, a non-profit organization that promotes ethical consumerism. Green America has teamed with One Pacific Coast Bank to offer the Green America Visa Card. You can find out more about Green America at their website Look into community banks and credit unions to see the opportunities that exist to help out on Main Street USA.