Safety & Performance

For over a decade, CNote CDFI partners have lost ZERO investor dollars.

At CNote our mission is to make financial products that are easy to understand, accessible to all, and have a positive social impact. We will not tell you what to do with your money, or misrepresent the risks associated with an investment in CNote. We want you to fully understand the risk-reward tradeoff you are making when investing in CNote.


Risk

No investment is risk free, including an investment with CNote. However, CNote’s investment model has a historical pedigree of strong performance. Certified Community Development Institutions (CDFIs), the vehicles we invest your money in, out-performed FDIC institutions during the Great Recession. The chart below looks at net charge off rates, which represent the percent of debt deemed uncollectible (higher percentages are bad).

Net Charge Off Rates: On Par with FDIC institutions

Note: CDFI rate reflects weighted average of OFN Members CDFIs; FDIC rate reflects the weighted average of all FDIC institutions.

Source: "OFN 20 Years Opportunity Finance Report", Board of Governors of the Federal Reserve System - Quarterly Data

Even when the United States economy was in its most vulnerable state, CDFIs had lower charge off rates than FDIC insured banks.


Banks have one incentive: to maximize their profits. As we saw in the Great Recession, this can lead to excessive risk taking to the detriment of customers. CDFIs, on the other hand, are proven, non-profit financial institutions that have one incentive: making good investments in underserved communities. CDFIs know that their existence is contingent on being responsible with invested capital, which is supported by their strong track record. Banks have a lot to gain by maintaining close to 0% savings account rates and constantly collecting hidden fees, whereas the interests of CDFIs are more aligned with their investors.

Losses are possible with an investment in CNote but we have taken affirmative steps to mitigate the risk. A CNote customer can lose money in their investment if a partner CDFI has net charge off rates in excess of their loss reserves. In other words, if a partner CDFI makes a lot of bad loans, or the bulk of their investments fail to perform, then they will be faced with financial losses which they may be forced to pass on to customers.

CNote has an extensive due diligence process for evaluating potential partner CDFIs to prevent that exact scenario. Only industry leading CDFIs with a strong financial track record are selected for partnership. CNote evaluates CDFIs along multiple key performance indicators to maximize return and minimize the risk of loss.

Additionally, we diversify by investing money across multiple CDFIs, not just a single entity. That way, if there are significant charge offs at one CDFI, the whole investment portfolio will not be substantially impaired. CNote offers additional protections, such as our Triple Protection Plan (details in FAQ) that provides additional redundancy to prevent capital losses.

Return

Along with outperforming FDIC banks on net charge off rates, CNote’s current return of 2.5% far exceeds the rates offered by FDIC savings accounts at nearly all banks.

Many FDIC-insured banks currently offer 0.06% returns or less, and “high-yield” accounts typically come with limitations where the higher interest rate only applies to the first $5,000 or $10,000 invested. Some accounts carry high minimums of $25,000 or more to be eligible for just a 1% return.



CNote accounts have no minimums, no fees, and no earning limits.

Over time, the competitive rates offered by CNote can have a significant impact on the total value of your savings

CNote (2.5%) vs. Traditional Savings (0.06%) return compounded over 10 years*

This graph is for illustration purposes only, and is not a representation, warranty, or guarantee of future investment performance. Expected return via traditional banks are calculated based on a national average rate listed by FDIC (Source). Expected returns for CNote are calculated using projected 2.5% yield. Future rates may be different. You should not rely on this graph in and of itself to make any investment decisions.


Still have questions? Please email us at support@mycnote.com or call at (424) 262-6683.

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