Banks are forces for change, helping individuals achieve their financial dreams and communities thrive economically. But they have limited bandwidth and resources to invest in every nonprofit cause and program in their communities.
As a result of increased economic uncertainty and political shifts, corporate philanthropy is evolving. Banks are receiving more funding and partnership requests from nonprofits than ever.
Below are five tips for creating strategic and impactful partnerships with nonprofits:
1. Host community conversations to understand the most pressing challenges and economic solutions. Community conversations serve two purposes: They allow banks to deepen partnerships with stakeholders and foster new cross-sector strategies to move people along the path to economic mobility and prosperity. Last year, the ABA Foundation launched its Community Conversations Guide. The guide aims to inspire and equip bank leaders to listen to community members in new ways and build awareness of their financial needs and challenges in this economic climate. By hosting these conversations, banks can surface the most prominent economic barriers in the community, existing nonprofit programs and services and the gaps and opportunities to add value and scale impact.
2. Educate your nonprofit partners on how banks operate and are regulated. When banks and communities understand each other, they create a foundation of trust and collaboration that drives economic growth. That starts with banks actively listening to community partners. It also requires nonprofit partners to understand how banks are regulated, assessed and rated. The most effective partnerships between nonprofit organizations and banks mutually benefit both organizations. They are a two-way street where both parties gain a return on their investment.
3. Be clear about how you evaluate nonprofit partnerships and your metrics of success. Banks that are leaders in the community and economic development realm identify and prioritize segments of the community with unmet needs and market opportunities; they do not attempt to be all things to all people. Be upfront and transparent with nonprofit partners on the factors you evaluate when determining the bank’s engagement and investment. It’s important for potential partners to understand the needs the bank is working to address as well as its business strategy and performance needs. In addition, you will want to communicate the need for robust data collection on program impacts on low-to-moderate income communities and financial health indicators, in adherence with the Community Reinvestment Act.
4. Evaluate the effectiveness of the partnership. It is critical to have open and effective lines of communication on a regular basis to determine what both parties need to do to improve or whether there is no longer mutual interest in continuing the partnership. Consider setting annual expectations for both parties — whether in a formal document or an email exchange — so that there is mutual agreement as to the time, talent, resources and capital each party will invest. Specifying the expected returns that both parties hope to achieve from the relationship is also important. Some banks and nonprofits conduct this type of review on an annual basis.
5. Remember that partnerships evolve. Regardless of how successful a partnership might be, they are not static. They could ebb and flow. At one point, a nonprofit might partner with your bank at one level. And, at another point in your life cycle, the nonprofit could partner with you at another level.
The ABA Foundation is working to bridge gaps between banks and nonprofit organizations in communities across the country. We believe that when banks and nonprofits can build positive and productive relationships, we can build a thriving economy for all.
