Houses of worship and their parishioners can invest in justice housing, no matter the size of their bank accounts.
Following biblical stewardship principles can help us invest through the lens of justice.
Financing is a substantial barrier to justice housing development. However, faith communities can help by supporting financial institutions specifically set up to support affordable housing development. In doing so, we help produce more affordable housing.
Community banking: make your bank account match your values.
Choosing a bank is a simple decision that impacts our communities in more ways than we may realize. When we and our peers deposit money into our bank accounts, each deposit contributes to a wide pool of capital the bank uses for loans. Individuals, organizations, and businesses take out those loans -- businesses that include housing developers.
The amount of loans a bank can give is directly related to its level of capital. Put simply, more deposits = more loans. So, where we place our deposits directly relates to loan access.
All banks have lending standards, but certain banks have extra standards: mission-based standards. In addition to risk calculation, some banks take into account the vision of the loan applicant and the goal or location of the business for which the loan is being used. These banks direct loans to local organizations that seek to make a social impact. For example, they prioritize affordable housing or community spaces in low-income neighborhoods.
Most often, these are community banks, which seek to directly serve their geographic community. They are present in the city or neighborhood, and have the pulse of the local population and its needs. They understand local context and ensure deposits go back to work in the immediate community.
When we as customers open accounts with local community banks, our deposits directly support the work of local affordable housing development. We make banking decisions for a variety of reasons: convenience, amenities, rewards programs, or tradition, among others. Can you identify why you use the bank you do? Was mission part of your search criteria? We believe it should be.
Banking is like voting with your dollars. By utilizing a certain bank, you are supporting their mission. Placing deposits in community banks allows you to financially support your immediate community without spending extra money. Regardless of the size of your account balance, your deposit can support loans made to develop justice housing.
Your money is sitting in a bank anyway, so why not let it go back to work in a way that serves the community?
How do I choose a just bank?
Classification as a community bank doesn’t automatically mean a bank is good for the community (or for you!). Small banks can be just as guilty of perpetuating racial, social, and economic inequities as large and corporate banks. And small banks are not exempt from the discrimination that continues to plague our banking system.
So, it is critical that we do our research to make banking decisions through the lens of justice. When considering a bank, do your research.
Who owns the bank?
What is the bank’s mission?
How are your deposits being invested?
Which investment products are specially designated for local housing development?
What products does the bank offer to low-income residents of the community?
What programs or supports do they offer to increase financial literacy?
Do they have a history of perpetuating redlining or other racially discriminatory practices? Is there evidence of continued discrimination?
Making decisions based upon these criteria — in addition to convenience, suitability to your needs, etc — allows you to be a more socially conscious banker. Picking a bank that prioritizes affordable housing lending allows you to directly support affordable housing development while carrying out your regular banking activities.
Examples of local community banks that support affordable housing development in Washington, DC:
Find more options at International Community Banking Association
Try looking for Community Development Financial Institutions (CDFIs), which specialize in community development and are legally required to extend a certain percentage of their loans to low-income communities.
Search the B Corporation database, a list of companies that have been evaluated and vetted for their impact on their local communities by a neutral third party certifier.
In choosing a bank, we invite you to ask yourself: “How can I be putting my money where my heart is?”
Social Impact Investing: investment for good
Community banking isn’t the only tool for investing in affordable housing development. Impact investing is an investment strategy that works like traditional investing: investors place their money into a company, the company uses that money to do its business and make more money, and investors get a financial return on their original investment.
The difference with impact investing is that along with a financial return, there is some kind of measurable community impact, such as stronger school performance, reduced recidivism, or increased units of affordable housing. This is different from traditional philanthropy, because investors expect to gain a financial return on their investment, instead of just donating to a cause.
Opportunities to support affordable housing development in DC through impact investing:
In summer 2019, the Greater Washington Community Foundation launched an Impact Note that raises funds for affordable housing development and production of Permanent Supportive Housing units. Those who invest in the fund earn a financial return while their investments support creation of new homes for low-income households in DC.
Manna Inc Capstone Fund is a revolving loan fund operated by Manna, a nonprofit housing developer and housing counselor started by Church of the Savior in DC. Manna has built over 1,200 units of affordable housing since they started in 1982. The Capstone Fund provides funding for Manna’s affordable housing development projects. Investors contribute in $1,000 increments and receive up to 3% rate of return. Rather than placing funds in a bank savings account, investors can receive a similar (or better) interest rate while increasing Manna’s ability to build more affordable housing.
Churches hoping to build affordable housing are always looking for investors to support their work. Interested in one of these opportunities? Let’s talk about it.
Impact investing isn’t exclusively for people with high disposable incomes. There are more opportunities than ever for people with lower incomes to both invest in and speak into the use of investments for social impact funds.
Just like with the bank deposits, you can set sums of money in these funds and they will go to work in the community while you earn interest. Again, you’ll be putting your money where your heart is.
How does this apply to churches?
The DC Metro Area is home to the five wealthiest counties in the nation, yet one in four children in the District live in poverty. Money discussions are sensitive, particularly when we live in a city with such drastic economic inequality, and when those engaged in faith communities come from very different wealth backgrounds. But the biblical call to stewardship is indisputable. Nothing is ours. Everything is God’s, and the deathly tight grip we have on our possessions is misguided. God is calling us to live with looser hands.
Each of us has a responsibility to prayerfully discern, in partnership with the Holy Spirit, what loosening our grip on our earthly possessions means for us.
These strategies to invest in justice housing work on both individual and institutional levels. Think about your church’s assets:
Do you house your deposits in an institution that perpetuates economic disparities or one that seeks to promote equity and inclusion?
Do you have an endowment that can be invested in a low-risk impact fund?
Do you have a building fund that can be safely stored in a community bank?
When you hold events, do you make an effort to support local, independently-owned businesses?
How can your church put its money where its heart is?
There are over 600 churches in DC. Imagine if all those churches and all members of those churches began investing locally. Imagine the collective financial power we could generate: power that directly translates to expanded financial access for affordable housing development.
