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.
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 compares net charge off rates, which serve as an indicator of potential losses for financial institutions. The lower the net charge-off rate is, the better. What this statistic tells you is that the CDFIs CNote invests in are smart stewards of your capital.
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.
CNote accounts have no minimums, no fees, and no earning limits.
CNote currently pays 2.5% or more (users can earn increased rates of returns on their balance by referring new users) on all invested capital.
Because CNote is a unique product, any comparison to traditional financial products is imperfect. As a cash alternative, some users may compare CNote to CDs or savings products, however, that ignores the social impact of CNote.