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A Parallel World of

Credit Unions & Community Banks


The wake of the financial collapse of 2008 brought challenges to conventional ideas about finance.   Anger at Big-Bank behavior caused  a surge of money movement to local credit unions and community banks.  Local financial institutions provide many advantages to their customers.  Yet most Americans remain engaged with “too big to fail” institutions that have little if any commitment to their communities.  After that initial rush of funds into local credit unions and banks, the movement has faded.  If Americans put their money where they live, their capital will better serve the needs of the Main Street economy.  The financial health of communities and therefore the nation will depend on the further blossoming of community financial institutions.

A Short History of Credit Unions & Community Banks

Credit unions have been operated in American communities since 1908. They are typically not-for-profit cooperatives, owned and operated to benefit their members instead of for the profit of shareholders. Typically, membership is qualified by one’s employment status, geographic area of residence, or membership in an organization or profession.  Membership may consist of employees or students of school districts, community colleges, state universities.  Or, membership may include employees of state, county, or federal government agencies and their families.  Some large businesses support formation of credit unions for their employees.  Broad definitions of such qualifications allow a large number of local residents to join one credit union or another. Today, most members of a community qualify for membership in one or another credit union in their geographic area.

Community banks are depository institutions that are locally owned and operated.  Their banking services include savings and checking accounts, small business loans, consumer loans and mortgages for local businesses and families.  They once comprised over 90% of all banks in the United States. In recent decades, their proportion of the total national deposits has declined significantly. Since the 1980s it dropped from around 25% to 13% as the power of the big national banks has grown.

Mutual savings banks, originally were started by philanthropists to support the virtues of thrift among the working class.  They emphasized savings accounts and security of investments, and as a result remained secure during the Great Depression.  Though also member owned, most have been converted into stock ownership corporations.  In the 1970s deregulation resulted in big rewards for top executives and declining benefit to the communities they once served.

Advantages and Benefits of Credit Unions

Organized for the benefit of their members, credit unions can provide financial services at a lower cost than commercial banks.  No profit is needed to pay investor-shareholders.  There are none.  Credit unions are federally tax exempt.  Each is governed by a board of directors elected from the membership.  Officers are members, so naturally their interests align with other members’ interests.  When revenues exceed funds needed to operate programs in a given year, dividends may be returned to the membership.  Officers are paid normal salaries, unlike the exorbitant “compensation” packages of Big Bank executives.  In a  for-profit bank or S & L, “surplus” revenues would go to executives bonuses and shareholder dividends.  Instead in a credit union they go to the members or are held in reserve for operations.

Credit unions are in effect community financial cooperatives.  They are locally owned by their members, so their employees are aware of community needs and issues.  Because their members are community members, credit unions reflect community values in their policies.  Credit unions almost always offer lower rates and fees on services  than commercial banks or other finance corporations.  These include savings and checking accounts, ATMs, credit cards, consumer loans, and mortgages.  They are able to support community development, consistent with maintaining the stability of their assets.  Credit unions thrive when the communities they serve thrive.  They have an interest in educating their members in making the best financial decisions and choosing the right options.

Advantages and Benefits of Community Banks

Community banks are locally owned.  Like credit unions, they are more oriented to the needs of the people and businesses in the area they serve.   The dominant Big Banks serve the interests of their executives and shareholders who are mostly not local.  Lending decisions are made by community bank employees who live in the same community as their customers.   Lending practices align with policies formed by local bank officers.  Community banks make consumer loans, business loans, and provide mortgages in the community they serve.   That is why they have an inherent interest in supporting the health of those same communities.

Community banks, like credit unions, are part of local and regional economies.  Their investments, employees, and suppliers also contribute and benefit from the “main street economy” their customers depend on.  Community banks and credit unions are the financial backbone of the “real economy” of Americans where they live.  We would benefit from more community banks at municipal, county, and state levels.

Some Resources

Credit Union National Association.

To find a local credit union:  [or]

— Dr. Robert M. Christie is an Emeritus Professor of Sociology, and the Founding Director of the Urban Community Research Center, at California State University, Dominguez Hills.  He taught quantitative and qualitative research methods, social psychology of organizations, and conducted community research for 35 years.  He consults with non-profit community groups on matters sociological.

Dr. Christie is an instrument rated pilot, a wood worker, and a freelance writer.  He blogs at on topics related to critical contemporary issues.  His passions are social change and the transformation to an ecological economy.

A Parallel World of

Socially Responsible Investment

The Challenge

The idea that a person should be “socially responsible” in making investment decisions is not new.  But it runs counter to the popular business ethic that says, “business ethics is a contradiction in terms.”  Yet the practice is gaining momentum.  Many compassionate people hope to ‘turn a profit’ on their investments while doing no harm.  They want to make a good return and do good, or at least not make things worse.  Well, it is possible.  That’s what Socially Responsible Investment is about.

The Challenge

For many years, choices for socially responsible investing were limited to a few mutual funds. The Calvert Funds and Domini Funds, two of the largest, have been around for decades.  These and many newer funds stipulate in their prospectus the types of stocks they will not invest in.  They also offer numerous sector funds to fit individual needs.  Fund performance is usually on a par with the industry.

Many potential socially responsible investors fear capital loss or weak dividend income or capital gains.  By limiting their investment options, they fear losing opportunities to both profit and contribute to society.

Most easily found socially responsible investment (SRI) opportunities have been focused on the larger investment world.  SRI has been about investing in national and international corporations that are not involved in environmentally or socially destructive businesses.  Because of the complexity of selecting individual stocks, most select a mutual fund or ETF.  Typically, businesses such as the fossil-fuel industry, other highly polluting industries, tobacco, weapons manufacture, etc. are excluded.   More and more funds are applying filters that account for environmental, social, and corporate governance (ESG) factors in choosing stocks.

But another important category of SRI investment should be considered by the individual investor.  Locally owned and managed sustainable businesses support their communities.  It seems more difficult to identify or assess risk and reward parameters for local businesses than it is for large corporations.  But if ecological sustainability is a priority, then local producers serving local consumers are likely to be good choices.

A short History of Socially Responsible Investment

An early socially responsible investment strategy was initiated by the Quakers.  At their yearly meeting in 1758 Quakers adopted a prohibition from investing in the slave trade.  In the 18th and 19th centuries, other religious restrictions were placed on certain businesses and investments.  Methodists applied principles of not harming your neighbor or not participating in manufacturing enterprises that harmed the health of workers.  Investors were admonished to avoid “sinful” businesses such as liquor or tobacco.  More recent and familiar are the efforts of Dr. Martin Luther King, who tied economic justice to ther civil rights struggle in the 1960s.  U.S  Protesters against indiscriminate napalm bombing in Viet Nam attempted to boycott Dow Chemical, the manufacturer and discourage investors from buying its stock.

One of the most effective efforts to align investments with morality was the divestment movement opposing Apartheid in South Africa.  Many institutional investors removed South Africa related stocks from their portfolios.  A similar effort today responds to the failure of the U.S. government and corporations to deal with climate disruption.  Bill McKibben of launched a fossil-fuel industry divestment campaign initially focusing on college and university endowment investment programs.  The movement has won some significant victories and is spreading to other institutional venues such as some city governments.

But for the individual investor, actions have been limited mostly to finding investment vehicles like mutual funds that exclude morally dubious investments from their portfolios.  Some funds also screen for positive factors such as Community Investment and employment equality practices.  With the acceleration of climate disruption, environmental impact and carbon emissions have become major filters for SRI funds.

Opportunities for Socially Responsible Investment

Today, many mutual funds and exchange traded funds with socially responsible investment policies are available.  It may seem daunting to search for the right ones.  But some services facilitate that task.  A potential investor should also be aware that each fund has its own investment criteria and may screen stocks differently.  As with all investments, some research is required of the prudent investor.

It may be more difficult to find good local businesses that serve local needs and are also looking for investors.  But the rewards, both financial and social, can be significant.  Often a small but growing local start-up needs a modest capital infusion to buy an important but expensive piece of equipment to keep the momentum going.  Personal knowledge is usually a key factor.  Interpersonal trust is essential in such a situation, whereas larger market processes are the issue in selecting mutual funds.  Providing a small but critical chunk of capital to a local business innovator, then seeing it grow, is a great experience.  However, such opportunities depend on your community involvement or your personal relationships.  But that is what community is about.

With corporations constrained by the fiduciary duty to maximize return on investment, implementation of SRI principles can be limited.  Mission driven businesses, impact investors and social entrepreneurs have difficulty operating as for-profit corporations.  Some are finding that the “Benefit Corporation,” or B-Corp, provides a vehicle for social purpose to drive the business.  This corporate form is only available in a few states, but a clear trend is developing.

Socially Responsible Investing can take many forms.  The responsible investor must seek out those with the best fit to her/his investment and social criteria.

Some Resources

Today, well over 300 SRI mutual funds and exchange traded funds are available.  It may at first seem daunting to search for the right ones.  But some services facilitate that task as well as inform about community investing and related matters.  Some provide stock and/or fund screens based on various criteria.

The Forum for Sustainable and Responsible Investment (US SIF) at

[Provides a range of SRI basics and other information, including reports and on-line courses.]

“Socially Responsible Investing” article in Wikipedia.  At

[Provides a spreadsheet listing 127 SRI funds cross-referenced by a range of categories by which each screens investments for social responsibility.]

Social Funds “The largest personal finance site defoted to socially responsible investing”  at   [Provides information on SRI mutual funds, community investments, corporate research, share owner actions, and daily social investment news, as well as investor guides.]

— Dr. Robert M. Christie is an Emeritus Professor of Sociology, and the Founding Director of the Urban Community Research Center, at California State University, Dominguez Hills.  He taught quantitative and qualitative research methods, social psychology of organizations, and conducted community research for 35 years.  He consults with non-profit community groups on matters sociological.

Dr. Christie is an instrument rated pilot, a wood worker, and a freelance writer.  He blogs at on topics related to critical contemporary issues.  His passions are social change and the transformation to an ecological economy.

A Parallel World of

Non-profit Financial Services

The Challenge

We are all aware, if not intimately familiar, with the financial chaos wrought by the Big Banks in recent years.  They have cost the nation hundreds of billions of dollars in both bailouts and in huge economic losses to citizens and to the government.  It is not hard to argue that we do not really need those giant institutions.  They have made major decisions contrary to the interests of the nation that has chartered them.  They have done little of benefit, except to themselves.  But wait!  We really don’t need them, but we do need something quite different to provide the financial services that sustain us and our communities.

Enter Not-for-Profit Lenders.  Most of us are familiar with local credit unions.  Many of us have belonged to one, either by virtue of our employment, student status, or other criteria.  That is because credit unions are financial cooperatives chartered for the benefit of their members.  They are able to lend at favorable rates to their members because they are not required to make a profit.  Some, when they have taken in more money from fees and interest than they need for current and projected projects, even return a dividend to members based on member’s borrowing activity that year.

The members of a credit union all belong to a particular category of persons: state employees, school or university employees or students, members of the military, etc.  But far less known are some other types of Community Development Financial Institutions (CDFIs), which provide socially beneficial financial services supporting the needs of entire communities or regions across the nation.  Such institutions are “mission driven” rather than profit driven and their missions are socially responsible in various ways.  Their focus is largely centered on community development, often by providing financial services to the otherwise underserved.

The earliest efforts of CDFIs include the Freedman’s Savings and Trust Company, established in 1865 to serve emancipated slaves in seventeen states.  In the early twentieth century, forerunners of what we now call community banks were established to serve other ethnic groups, including the Cherokee tribe in Oklahoma, the Chinese population in San Francisco, and women in Ohio.

One early successful not-for-profit lender is the Bremer Bank, founded in 1943 by Otto Bremer, a German immigrant in Minnesota.  Bremer viewed the proper purpose of a bank as serving the development needs of a community, not maximizing profits for shareholders.  Bremer Bank has grown considerably, but is clearly not “too big to fail.”  In fact, it barely noticed the financial crisis of 2008, because it is organized on an entirely different basis than the Big Banks of Wall Street.  First, it is 92% owned by the non-profit Bremer Foundation and 8% by its employees.  It is entirely uninterested in pyramid schemes like financial derivatives.  Its purpose is to provide the financial services needed by the communities it serves.  Its customers have been very loyal over the decades, since it operates in their interests, not those of some distant corporation.

A much younger CDFI with a specific focus on community housing needs is Homewise in Santa Fe, New Mexico.  Homewise is a full-service non-profit lender providing 30-year fixed-rate mortgages, energy conserving home improvement loans, and mortgage refinancing.  Its singular mission is to “promote financial security through successful homeownership.”  (We need not make the obvious comparison with the self-serving mission of the Big Banks and their undeserved self-aggrandizing executive pay and bonuses!)  In addition to providing free financial workshops and home purchasing advice, affordable fixed rate mortgages by Homewise are highly competitive.  It does not have to generate profits, thus allowing it to offer better rates, just like a credit union does for its members.  Its business model allows most of its funding to come from its own revenue stream.  Homewise generates part of its capital through its Community Investment Fund.   The Fund also allows investors to invest in its work and receive both a social and financial return on their investment.

Not-for-profit lenders with a community development oriented mission are capable of providing better financial services to their customers than traditional privately held profit-driven banks, and at a better price.  There are about 850 CDFIs in the USA.  These institutions fall roughly into four types:  loan funds, banks, credit unions, and venture capital funds.

Not-for-profit lenders such as those mentioned above typically support construction and remodeling projects that include designs that reduce energy consumption and utilize more renewable materials.  Their business loans are environmentally sensitive.  Again, their mission directs their attention to community enhancing values in their lending and investment decisions.  Their loan funds support projects and businesses that constitute value added to communities rather than to distant corporate board rooms.  They are genuinely conscious of environmental concerns and are interested in supporting implementation of green solutions to development and business needs.

The recent movement to “borrow and save locally” arose from the recognition that the big national banks caused the financial crash of 2008.  But many folks realize that the Big Banks routinely overcharge and rip off citizens in many other ways.  Sometimes it takes a seminal moment to spur people to action, such as when the Occupy Wall Street Movement burst onto the national scene.  Moving your money to a local credit union or locally owned bank tends to keep the money in the community or region.  It is not going to be used by these institutions to gamble in financial derivatives and be unavailable to finance projects needed in local communities.  That is even more true for CDFIs since it  would be directly contrary to their mission.

Because of the local community orientation of not-for-profit lenders, they are inherently ‘greener’ than local branches of the Big Banks.  They simply do not participate in the transnational promotion of excessive industrial, trade, and high-end consumer projects and associated massive resource waste.  They do not engage in high-stakes derivative gambling that inflates the financial system to the detriment of Main Street economies.  Local not-for-profit lenders are the best deal for you and for the environment.  APW is building a database of all such lenders so that you can easily find one in your area.

Cece Derringer, “Why not in Your Backyard? Exploring New Opportunities to Invest for Impact in Your Own Community.” (October 2014).

The Economic Development Partnership.

Gina-Marie Cheeseman, “Non-profit banking is Not an Oxymoron.”

(July 25, 2012)

— Dr. Robert M. Christie is an Emeritus Professor of Sociology, and the Founding Director of the Urban Community Research Center, at California State University, Dominguez Hills.  He taught quantitative and qualitative research methods, social psychology of organizations, and conducted community research for 35 years.  He consults with non-profit community groups on matters sociological.

Dr. Christie is an instrument rated pilot, a wood worker, and a freelance writer.  He blogs at on topics related to critical contemporary issues.  His passions are social change and the transformation to an ecological economy.



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