Banks Invest Heavily In Community

June 11, 2004
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GRAND RAPIDS — The names of banks are frequently attached to community projects and organizations: Fifth Third Ballpark, the River Bank Run, the Grand Rapids Art Museum or Junior Achievement to name a few.

And generally speaking, banks are represented as sponsors within the local community more than firms in any other industry. But the community involvement isn’t just a matter of marketing or publicity.

“First and foremost it is to help the community,” National City Bank’s regional president Sean Welsh explained. “You look at some of the things we’re involved in. We’re not always the premiere sponsor so it tends not to be a marketing event, at least not for us. We do it because of the dedication of the organization we’re supporting.”

National City recently sponsored its largest fundraiser, the American Heart Association Gala, which raised $305,000. The bank’s $250,000 contribution to the Grand Rapids Art Museum was at that time the largest of any corporate donor.

“There are a number of reasons why we felt very passionate about the Grand Rapids Art Museum,” Welsh explained. “One is the downtown development that it is going to spur on. And if you look at the way we gave our money, it is going to establish an endowment for ongoing educational outreach programs.

“Hopefully our name will be lost very quickly amongst the other large corporate gifts,” Welsh continued. “But those dollars will be used to educate children and to educate the community, which will make us a more vibrant growing community.

“We gave larger than they expected to give and set the bar higher than they thought we would,” he said. “And the primary reason wasn’t because it was the greatest marketing event, but because we believed in the cause.”

Fifth Third Bank is not only the largest and most recognizable of the area’s banks, but also the most generous. It contributes more than $2 million annually to over 350 organizations in the West Michigan community.

“Our business is directly tied to the wealth, health and well-being of the community,” Fifth Third president and CEO Kevin T. Kabat explained. “You can always count Fifth Third at the table. We show up more often than not because we’re the largest organization in West Michigan, and in my mind it’s because of that, or maybe in addition to, that we should be a leader in participating in that fashion.”

In addition to the massive amounts Fifth Third gives to the community each year, its employees also donate more than 20,000 hours of volunteer work.

“We contribute to the economy not just by writing checks,” Kabat said, “but by the volunteerism we ask our employees to do. It really lifts the health and well-being of the community, and it’s good for business.”

With the bulk of its senior management being natives of the Grand Rapids area, Fifth Third’s relationship between the community and the bank is one and the same, according to Kabat.

He sets the tone for his employees, chairing United Way and serving on the boards of Davenport University, Clark Retirement Community, Grand Rapids Community Foundation, Spectrum Hospital, Grand Valley University Foundation, Junior Achievement Advisory Council and The Right Place Inc.

Some banks, such as Mercantile Bank, encourage volunteerism so much that they give employees additional vacation time when they volunteer.

“What we try to do every time we write a check to an organization is to say, ‘Here’s our money, but that’s not even half of what we want to do with you,’” said Stephen Ward, Huntington Bank’s vice president of community development. “The other part is how can our people get involved. How can we come in and teach the people you are helping how to better handle the money they do have.”

Huntington has spearheaded an effort shared by several local organizations to further the area’s financial literacy. Using curriculum provided by the FDIC and ABA, Huntington has conducted a series of courses ranging from budgeting to home ownership during business lunch hours at Grand Rapids Community College’s Learning Corner, and for both National Teach Children to Save Day and National Get Smart About Credit Day.

For the former, it targeted 10 colleges from Lake Superior State to Western Michigan University, teaching students about the very real danger of using credit cards during college.

“We went in and talked to rooms full of college kids,” Ward said.

“There again, it means that we’re helping people and building relationships with people who need to bank. All the way from the college student to the university itself, community development and business development are one in the same — you are building business the right way because you are establishing relationships with people. ”

YMCA Grant

Mercantile Bank last week announced donating $100,000 to the construction fund for the YMCA’s new building being erected adjacent to Grand Valley State University’s Pew Campus on Grand Rapids’ West Side.

The gift was announced by Jerry Johnson, a member of the YMCA board who is chairman of Mercantile. Johnson said the gift was the bank’s largest to this point.

LSI Credit Union runs a similar program. The three-year old LSI University offers an array of courses from checkbook maintenance for grade schoolers to retirement planning. It also has brought in John Edelman of the University of Phoenix as a director of educational programs and manager of its new branch.

Bank One-West Michigan has become involved in a financial literacy pilot with St. John’s Home in which students go through a four- to six week simulation of a small economy.

When the residents at St. John’s turn 18 — unless adopted or placed in a foster home —they are emancipated and put out into the world. To help prepare them for that world, the program turns the Home into an economy of its own, where the kids earn and spend. Along the way, Bank One is there to provide financial literacy components and input that it hopes will make those youngsters capable of financial independence.

“We take this perspective: That our giving has to have something to do with our company’s strategy,” said Ruth Vis, Bank One vice president of public affairs.

“Many giving programs done by corporations, banks or otherwise are primarily aimed at generating goodwill, positive publicity and, as a corollary, boosting employee morale: a strategic philanthropy.

“We have this sense that if we invest in the community in a value-added, meaningful way, it’s better for everybody. It’s better for the community and it’s better for us as a financial institution.”

She said financial literacy, for instance, teaches people to successfully handle money. “And that’s good for the community and it’s good for banks,” she said, “because it produces people who are financially literate and capable of being customers.”

The 1977 Community Reinvest Act (CRA) in effect forced many banks into community involvement by creating minimum standards to meet local credit needs. Yet most local banks go above and beyond CRA requirements.

Whereas most banks have a staff explicitly devoted to CRA compliance, that position has evolved into community development. Huntington’s Ward is an example, with his title changing only in the past year.

“Where the position used to be defined by legislation,” Ward said, “now we’re looking at the function and the people and what they do as far as community development.”

The universal philosophy amidst West Michigan’s banks is that the better the community, the better the banking.

“We absolutely have a responsibility to give back to the community,” Welsh said. “We derive a lot of business out of the community, the revenue opportunities we get come from our community, and we need to invest in them and make them successful.”

Not only are banks helping to develop the community through gifts, sponsorship, volunteerism and education, banks are developing through investment as well.

Besides having a long-standing commitment to low- and moderate-income housing, National City has invested in both the American Seating development and Dwelling Place’s Division Avenue Cool City project.

“We’ve either been involved or been the leader in most of the marquee projects you see,” Welsh said. “We do it quietly because it’s the right thing to do for the community. The promotion of our brand shouldn’t overshadow that.”

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