Nonprofit organizations and small businesses often struggle to find new revenue sources, but the current COVID-19 pandemic makes operating an organization even more challenging. Banking institutions can serve as a resource for information on how the Community Reinvestment Act can be a benefit to them.
What is the Community Reinvestment Act?
The Community Reinvestment Act (CRA) was enacted in 1977. The Act requires that the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) “encourage financial institutions to help meet the credit needs of the communities,” particularly those in low- and moderate-income neighborhoods. Under the CRA, Banking institutions earn ratings based on their compliance with the Act, much like a report card, during their regular audits by the FDIC. The ratings are “Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance.”
“1st Security Bank is a community-oriented bank, which actively supports our communities and the bank’s CRA initiatives. It’s one of our core values.” says 1st Security Bank Chief Risk and CRA Officer Erin Burr. This kind of support can help small businesses, and nonprofits such as North Kitsap Fishline, which has provided food and emergency services to those in need for more than 50 years.
“North Kitsap Fishline has worked with 1st Security Bank for more than a dozen years. The organization just moved into a brand new building, a 7600-square foot facility,” says Marge Johnson, interim director and business manager at Fishline. The building houses Fishline’s Food Bank, serving those who are in need of the basic food necessities. It is the receiving center for Grocery Rescue, which “provides foods from grocery stores that would normally be disposed of,” explains Johnson. “Not rotten, but not perfect.”
The Fishline building also houses 11 other nonprofits that serve the community — from Veterans Affairs to YWCA to Peninsula Community Health Services.
How can a nonprofit or small business benefit from the CRA?
Money: Sometimes, it’s as simple as cutting a check. Banks can choose to give donations (no strings attached) or provide loans to various nonprofits and small businesses that meet the needs of those in the communities they serve. “Food banks are struggling right now,” says Burr. “There are a lot of people on unemployment. We’ve sent messages out to our branches and our home lending offices and asked them to ‘Please pick a food bank or nonprofit that is in need in your area, and let’s provide them a check to provide more funds to buy the basic necessities they are lacking.’”
During the COVID-19 pandemic, the bank’s branch managers were encouraged to order food for their teams from local eateries. “Some of these small mom-and-pop places — how are they going to survive?” Burr says. “We are constantly trying to think of more creative ways that we can help nonprofits and the communities we serve.”
Volunteers: Even without a check, a little people power can go a long way.
“Sometimes we may not be able to make the largest donation, but if you’re preparing a fundraiser like an auction, a breakfast, a luncheon, we can provide volunteers,” says Burr. “If you need greeters, or people to count the donations as they are coming in,” a CRA-affiliated bank can help rally the troops.
Financial Literacy: The CRA offers nonprofits and businesses an opportunity to tap a financial institution’s expertise, whether it’s something as simple as balancing the books, or more complex, like an education program. “1st Security Bank also provides financial education to local schools and non-profits. We may not always be able to provide the donations a nonprofit may need, but we can provide volunteers, we can provide services for you,’ ” Burr says. For instance, 1st Security Bank partnered with the IF Project, and provides financial education at the Women’s Correction Center in Purdy. “These women are all about to re-enter society in the next year,” Burr says. “In order to be successful, they need to know how banking has changed over time since they’ve been incarcerated. We go over basic banking concepts, budgeting tips, and even review their credit report.”
Marketing and IT: Getting the word out about business offerings, programs and needs can be a challenge for many nonprofits and small businesses. A CRA-affiliated bank can connect the organization with team members who have the expertise needed to create brochures, website text, and other messaging. This sharing of skills can also be helpful in the area of technical support.
The CRA may be little-known, but it’s a powerful tool for the small businesses and nonprofits that help give communities their local flavor. “It just gives us a lot of different avenues to try and help these communities,” says Burr.
At 1st Security Bank of Washington, we take a personal approach to our work. We live in the communities we serve, so our branches are tailored to their communities. We believe that relationships make the difference, and that sets 1st Security Bank apart.