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Bank on Change: Diversifying Deposits for Financial Stability and Social Impact


In an ever-changing financial landscape, managing assets effectively is a priority for treasury professionals. Balancing risk and reward is crucial, and diversification has become an essential tool for risk mitigation. At the same time, treasurers are increasingly recognized as change agents driving corporate social responsibility. With cutting-edge technology at their fingertips, treasurers can now easily diversify deposits while also increasing their impact on local communities and improving financial performance.

Team members from DREAM, a network of public charter schools and community youth development programs in Harlem, that works closely with MDI Carver Federal Savings Bank.

Make a Difference with Minority Depository Institutions

Diversifying deposits across community banks and credit unions not only offers financial advantages, but also strengthens local economies. These institutions are vital for small business loans and community development initiatives. By investing in minority depository institutions (MDIs), treasurers can support under-resourced communities and contribute to economic growth. According to the FDIC, MDIs have historically served communities in which a higher share of the population lives in low- to moderate-income (LMI) census tracts and in which higher shares of residents are minorities compared to non-MDI banks, demonstrating their crucial role in fostering inclusive economic development and providing access to credit for underserved populations.

Boost Your Financial Returns with Sweep Accounts

Community banks and credit unions can provide higher interest rates on deposits compared to larger banks. Sweep accounts automatically transfer surplus funds into these institutions, allowing treasurers to capitalize on favorable interest rates while reducing risk. According to a study by the FDIC, community banks’ net interest margins were 14 basis points higher than those of larger banks in 2020. This difference in interest rates can lead to substantial savings and increased returns for organizations that choose to diversify their deposits. By adopting this strategy, treasurers can improve their organization’s financial performance, promote social impact, and ensure a stable cash flow.

Leverage State and Private Insurance Programs

To further enhance deposit diversification, treasurers can explore reciprocal coverage programs and extended insurance options provided by state and private programs. These additional layers of protection can offer added security and peace of mind for organizations seeking to optimize their risk management strategies. Programs such as the Certificate of Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) enable organizations to access multimillion-dollar FDIC insurance coverage by spreading deposits across a network of participating banks.

The team at New Covenant Dominion Credit Union, a certified CDFI and MDI.

Experience the Power of Impact Cash®

Impact Cash is a groundbreaking technology solution that simplifies deposit diversification, allowing treasurers to open numerous FDIC and NCUA-insured accounts with ease. By spreading funds across multiple institutions, this approach minimizes risk and maximizes insurance coverage for deposits. Impact Cash offers the added benefit of investing in a socially responsible and impact-first manner, empowering treasury professionals to align their investment strategies with their organization’s values and commitment to social responsibility.

As treasurers navigate the complexities of risk management and impact investing, diversifying deposits through sweep accounts and innovative solutions like Impact Cash becomes an invaluable strategy. By supporting community banks, credit unions, and minority depository institutions, treasurers can drive positive change while securing financial stability. Embrace the future of treasury management and harness the power of deposit diversification for a brighter, more impactful tomorrow.

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