New bank AbleBanking plans to be the bank for people who care about philanthropy.
Big banks might say that they give back, but while the dollar amounts are high, their donations amount to a rounding error on their books. New bank AbleBanking plans to be the bank for people who care about philanthropy.
Although major banks, like Bank of America, are big donors to charitable causes, their generosity is relative. Compared to their assets, even a few hundred million dollars is comparative small potatoes, and it’s really customers who are paying that in the end, in the shape of fees and other charges.
Moreover, argues Heather Campion, chief administrator of a new charity-focused bank, customers have to swallow enormous marketing and advertising spending, and pay for services they don’t necessarily need–like physical branches.
By having no branches, and spending nothing on offline promotion, Boston-based AbleBanking aims to offer both higher rates of interest and higher rates of charitable giving. When it launches this quarter, its customers will get a free $25 to give to a nonprofit, plus a further $2.50 annually on every $1,000 they keep on-account.
Campion says that works out as $2.5 million in donations for every $1 billion in deposits, or 10 to 12 times what traditional banks give away. Last year, Bank of America donated about $200 million, or 0.02% of deposits. AbleBanking plans to give away about 0.25% of deposits.
“If customers knew how much money banks were spending on marketing versus their charitable giving, they’d be pretty surprised,” Campion says. Also, AbleBanking will allow its customers to give to any registered 503(c)3 non-profit, rather than going along with whatever choices banks have made on their behalf.
“We are taking the majority of our marketing dollars and giving them back into the community by letting our customers choose which non-profits they want to support,” Campion says.
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