This article originally appeared on FinTech Weekly.
For almost 40 years, a key piece of banks’ social responsibility strategies has been related to the Community Reinvestment Act (CRA), the 1977 enactment which ensures that banks are continually addressing the needs of low to moderate income neighborhoods and other underserved areas of the communities in which they are located. The CRA requires that financial institutions are periodically evaluated for these efforts, and this record is taken into account when an institution seeks to open a new location or participate in M&A activities.
Across industries, a number of culminating factors are changing the definition of what it means to be a socially responsible organization, all of which have specific and significant implications for financial institutions that are also responsible for complying with CRA guidelines. In order to remain compliant, as well as best serve their communities and engage employees, banks need to consider how to best track, manage, and report out on their CRA efforts and align those efforts with their overall giving and engagement strategy. And, at the same time, financial institutions need to take the transformation in the broader philanthropic sector into account and adjust their giving and engagement efforts, including their CRA-related volunteer opportunities, accordingly.
The technological environment in which banks exist has changed drastically since the inception of CRA. Maintaining records of community reinvestment and social impact in order to demonstrate compliance with CRA no longer necessarily entails hours—and extensive resources—devoted to manual spreadsheets and reporting in order to properly categorize employee volunteerism related to the CRA.
As financial institutions seek to do more with less, automated tracking, categorization and reporting saves time, resources and money, and better positions banks for M&A activity. Equally as important, more efficient reporting facilitates adaptation to other cultural and organizational factors that are having an impact on reinvestment and volunteerism activities.
Employee values are evolving, and the opportunity to give back in a meaningful way is critical to employee engagement across a multigenerational workforce. According to the 2016 Cone Communications Employee Engagement Study, 71% of employees want their company to provide opportunities for them to help make a positive impact on the company's social and environmental commitments.
In turn, financial institutions should view corporate responsibility and volunteerism efforts as serving a two-fold purpose. Providing transformational and meaningful opportunities to volunteer can bolster employee retention and attract new talent, while also meeting CRA requirements and the needs of their local communities.
As organizations shift away from traditional, transactional types of engagement to more transformative, inspiring, and impactful volunteer opportunities for their employees, there is a rise in both skills-based and pro bono volunteering activities.
Employees want to interact with the communities in which they work and use their own unique expertise to better those communities. For banking institutions, this can take the form of providing credit counseling or finance 101 sessions for people in the neighborhood to help residents better understand and manage their credit, for example. Or, branch marketing managers might participate in Q&As with current or aspiring small business owners in the community to help develop strategies that will encourage local economic growth.
By tapping into employees’ expertise and areas of interest, financial institutions can provide an outlet for their workforce to give back in long-lasting, meaningful ways. At the same time, skills-based volunteerism programs can be implemented in ways that allow banks to fulfill their CRA requirements by helping to meet the credit needs of the communities in which they operate.
With advancements in technology, the focus of CRA no longer has to revolve around manually tracking volunteer activities in spreadsheets, validating CRA-eligible activities or ensuring data accuracy. Instead, financial institutions can focus their attention on the ways in which strategic community reinvestment volunteer activities can lead to a more engaged, active and inspired workforce, and thriving local communities.