Banking with a New Perspective

Beneficial State Bank

7. Affordable and Clean Energy 8. Decent Work and Economic Growth 10. Reduced Inequalities 11. Sustainable Cities and Communities 16. Peace, Justice and Strong Institutions

Overview

Beneficial State Bank operates like any other bank but without profit as the bottom line. They seek to provide financial services to individuals and businesses that fit within their mission metrics. This reinforces many SDG's as they service companies that are seeking improvements on all fronts.

Author

Matthew White

Matthew White

School

University of Tennessee

University of Tennessee

Professor

Emily Landry

Emily Landry

Innovation

Beneficial State Bank was founded in 2007 by Tom Steyer and Kat Taylor who had a vision for a triple bottom line community bank with a commitment to a non-profit of the same name. Although created by wealthy individuals, it started from the bottom to see if it could garner the support to sustain. In 2012, it became a Certified B Corporation which solidified it as a company that was committed to social responsibility.

The services that Beneficial State Bank offers are just like any other bank, but they act with a "No Harm Banking Model." Their bylaws require that what they are doing, whether it be grants, loans or other financial services, falls within their mission metrics. Zero dollars of their lending dollars go into things such as fossil fuels, private prisons or predatory lending to name a few. What they do with their services and the money is purposeful and intended to make a positive societal impact.

What makes Beneficial State Bank unique is the structure it operates under. You have the company itself and then a parent company, Beneficial State Foundation, which is a non-profit organization. The profits from Beneficial State Bank are used by the Beneficial State Foundation to carry out the company's mission goals. Beneficial State Bank has also partnered with Global Alliance for Banking on Values since 2012, which, according to their website, is a world-wide network of financial institutions that are committed to "advancing positive change in the financial sector through sustainable economic, social and environmental development."

Banking with a New Perspective

Inspiration

In 2007, when the founders of Beneficial State Bank, Tom Steyer and Kat Taylor, started the company, they wanted it to be a mission driven business. According to Manny Barragan who is a client & treasury associate with the company, "They ensured from the get go that the bank was going to be driven by purpose." Tom and Kat sought a world where the financial community was a catalyst of economic, social and environmental change. Although it was started by extremely wealthy individuals, the company did not start at the top of the mountain. According to Mr. Barragan, "The bank started from the bottom to see if it could garner the support from the customers they already had." If you jump ahead to the future, it is evident that there was considerable buy-in from customers who saw the benefits of a triple bottom line community bank. Through their commitment to the customer and society's best interest, they have attracted a large number of clients who were former customers of larger, commercial banks. The financial industry is an extremely fossilized industry with a near non-existent history of innovation and Tom and Kat ventured to change this. Mr. Barragan put it like this, "It's a very disruptive business and is giving the lightbulb moment to other financial institutions." In 2007, Tom Steyer and Kat Taylor set out on a journey to introduce a foreign way of doing business to an extremely fossilized industry. In that time, their innovation has sparked a conversation about the benefits of triple bottom line, community based financial institutions.

Overall impact

There are few industries that are more fossilized than the financial services industry. There is seemingly very little room for change and innovation. Beneficial State Bank knows this yet still found a way to alter how business can be done and the impact it can have. Although their procedures are nothing new, the mission driven mindset is changing the impact and benefits that a company can create.

Beneficial State Bank is showing companies everywhere, in every industry that there is a place for companies looking to make a positive impact. They have shown since their inception that success and activism can co-exist. Although it is not their motivating factor, the company has been very successful financially. The B Corp movement is often swept under the rug due to the lack of relative success and competitiveness with existing players in their respective industries. Beneficial State Bank and its innovative tactics are proving that the two can co-exist. They are on the forefront of success for socially responsible companies. They are achieving it through fundamental success, quality employee recruitment and a mission driven business model that is constantly challenging the status quo. The innovation of Beneficial State Bank is making an impact by running a successful business while remaining disciplined in their commitment to economic, social and environmental change.

Business benefit

It is often hard for companies that are not profit driven to compete with institutions that are. Beneficial State Bank is not one of the Big 6 in America but it is definitely thriving with its mission driven model. According to Mr. Barragan, the company's assets total well over $1 billion which is a huge milestone for financial institutions. The way that they conduct their business is not only socially responsible but it clearly makes financial sense as well. A large hindrance to the social responsibility and B Corp movement is customer buy-in. When the company is producing results it is much easier for the customers to jump on board and for the movement to grow.

A large part of what makes companies successful is the employees. The innovation of Beneficial State Bank is a great recruiter of employee talent. It allows socially responsible individuals to pursue their career ambitions and make the positive impact that they desire. The gentleman I interviewed is living proof of this. During the Dakota Pipeline controversy, Manny Barragan was moved to reflect and seek out a company that is doing its best to improve the livelihood of everyone and everything in society and prevent events like this. He was drawn to Beneficial State Bank because they shared his values and morals. The company is creating a culture where the employees are able to improve their lives and the lives of those around them on a daily basis. They are constantly self evaluating their business and procedures and creating policies that ensure more benefits, higher wages and more diversity within the organization.

Social and environmental benefit

Typically, a company is bound to the desires of their shareholders and oftentimes have to make choices that are at the expense of stakeholders, such as employees and the environment, to ensure maximum profit for shareholders. Beneficial State Bank answers to nobody except shareholders. Their whole business model is to improve the condition of the customers, environment and society as a whole.

The mission and goals of the Beneficial State Foundation, which is the non-profit parent company of Beneficial State Bank, are focused on advocacy for a plethora of things. Mr. Barragan noted that the company is a huge advocate for LGBTQ+ and environmental rights. The foundation is the avenue that the company uses to make advances in these areas. From an environmental standpoint, they are constantly working toward a more sustainable future. They have actually received a revolving grant from the state of California for families to afford a hybrid or electric vehicle. As was previously mentioned, Beneficial State Bank itself refrains from lending to companies or projects that are focused on fossil fuels or other environmentally harmful activities.

From a societal standpoint, the products they offer are meant to build up businesses and nonprofits that are committed to the progression of society. According to their website, they support diverse and distributed ownership. They strive to empower and build wealth for those that come from under-served and historically oppressed groups. It all comes back to the company's roots as a mission driven business that is focused more on the long term success of communities than the short term view of profits.


Interviews

Manny Barragan, AVP, Client and Treasury Associate

Manny Barragan, AVP, Client and Treasury Associate

Manny Barragan, AVP, Client and Treasury Associate

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Beneficial State Bank

Beneficial State Bank

Oakland, CA, US

Business Website: https://beneficialstatebank.com/

Year Founded: 2007

Number of Employees: 201 to 500

Beneficial State Bank is a mission-driven and community based bank focused on their customers and fulfilling their financial aspirations. They act very similar to a traditional bank as they offer loans to retail and business customers and offer savings and checking accounts. What separates Beneficial State Bank is their commitment to social and economic change that benefits a larger pool of society.