How Giving Can Grow Your Bank
Steven K. Gold
March 4, 2020
“When our community thrives, our bank thrives,” states Tara Brewster, vice president of business development at Greenfield Savings Bank (Greenfield, MA). Indeed, strong communities equate with community bank success.
Thriving communities are created in several ways, including effective local government, good schools, quality employers, and nonprofit organizations that support a community’s needs – especially those needs that are not being met by government or the for-profit sector. Local nonprofits play a crucial role in the health and economic wellbeing of a community.
Community banks are some of the biggest benefactors of local nonprofits. Even outside of CRA requirements, community banks are generous. Many give hundreds of thousands of dollars a year, to more than a million dollars a year, to support nonprofits in communities they serve. This makes perfect business sense since, as Brewster points out, thriving communities create conditions of wealth and stability that reinforce bank success.
What if banks could do even more to support local nonprofits that help our communities to thrive? How could banks be motivated to do this? Is there some underutilized asset held by local nonprofits that can be ‘unlocked’ to transform nonprofits into valued partners rather than just recipients?
It turns out that there is.
Nonprofits have something that all organizations need in order to succeed in the long run: deep emotional connections with their supporters. Similar to their favorite sports teams, people are passionate about the causes they care about. Unfortunately, despite the best intentions of bank leadership teams, the vast majority of banks and other businesses do not inspire the same emotional connections as the local animal shelter or the Boston Red Sox. Better interest rates and friendly service simply cannot compete.
According to Jim Briand, founder of NexTier Partners and past president of the New England Financial Marketing Association, "One of the key ways that community banks can compete and differentiate themselves is by making their community support dollars work harder. If a community bank competes on technology or rates alone, they are competing on the terms of big banks.”
Banks compete along dimensions such as service, convenience, technology and rates. Nonprofits are different. They are borne out of a deep human need. They touch our hearts and minds in ways that banks and other businesses cannot. If you or a loved one has experienced the effects of cancer, then you will be drawn to those organizations that help cancer patients, families and survivors. If you love animals, then you will probably support the local animal shelter. If you or a loved one has a need or particular interest, then you will be passionate about the organizations that support your need or interest.
Many community banks support local nonprofits and think they are building emotional connections with members of the community, except that current bank-nonprofit collaborations are generally ineffective. This is evident by the prevalence of the “Giant Cardboard Check” ceremony and photograph. The problem with giant cardboard checks is that they are low value, such as when they appear on page 14 of the local newspaper. They are not widely noticed and are generally ineffective even when they are noticed.
This led a group of us to look for ways to do better. We posed a few simple questions to ourselves: what if we could unlock the potential for a nonprofit to be a highly effective advocate (marketing partner) for a community bank? Would nonprofits acting as effective local marketing partners enable banks to keep more dollars in the community, instead of sending dollars to out-of-town advertising agencies or a newspaper owned by an out-of-state media conglomerate? If local nonprofits can help a community bank to be more successful, then the community gets stronger. Everyone wins.
We determined that there are five major goals for such an initiative, and any bank can use these as guidelines to work with nonprofit advocates:
Although there are ways for community banks to make giving activities more apparent – beyond giant cardboard checks – it’s challenging because a bank is still driving the communication. In order to be most effective, the nonprofit needs to play an active role in the communication. This is why we created A World For Good, to give banks and nonprofits a simple, effective marketing tool – one that builds the virtuous cycle mentioned above.
According to one study, when a non-profit advocates for a brand it is 3.5 times more effective than the brand’s own advertising (source: The Authenticity Report, Changing Our World Inc., 2018). Other research says that customer lifetime value for a financial brand is increased by 5.8 times when a customer is emotionally engaged with the brand (source: Motista/The Financial Brand, 2017). There is clearly an opportunity to grow customer loyalty and value.
“Community banks are some of the most charitable businesses around. Yet most banks miss out on a massive opportunity to transform their charitable giving into actions that will help them emotionally connect with customers. It’s a missed opportunity for banks and also for the communities they serve. We address this by providing a simple, turnkey solution that transforms our members’ charitable giving into effective, measurable marketing” says Charlie DiPietro, president of A World For Good. “Banks can now leverage the hidden power that nonprofits have to be powerful advocates for their brand.”
One key to working with a nonprofit advocate is to make it easy for them, as well as for the bank’s marketing team. Most nonprofits are operating with small teams, stretched to their limits, and so any solution needs to be simple. It is also important to offer value to each and every nonprofit advocate, to be a good long-term partner. This means rewarding the nonprofit with greater awareness, and possibly increased giving over time. As a nonprofit does the work of an effective marketing partner, it deserves increased support. This creates the virtuous cycle that benefits the entire community.
When your community thrives, your bank thrives.
Steven K. Gold Is founder and CEO of A World of Good. More Information Is available on its website: home.aworldforgood.com.
A Yale University psychiatry professor calls on banks to make their services accessible to people with mental health issues