Vermont Bank Fund With a Social Conscience

RESIDENTS of a mobile home park near Bellows Falls are breathing easier again, thanks, in part, to a $500 certificate of deposit taken out by Andrea Morgarte, of Hinesburg, and the savings of others who think like her. Shady Pines Park had become the tempting target of developers who could readily turn its several acres of prime real estate into a subdivision of luxury homes or condominiums. So to secure their future, residents formed a cooperative to buy the land. But where would they raise the money? Historically, mobile home owners have had the least clout of all property owners because banking institutions have traditionally viewed trailer homes with distaste.

But the cooperative's needs coincided with Vermont National's ability to respond to the social concerns of people like Ms. Morgarte through its recently established Socially Concerned Banking (SCB) Fund, designed to make loans in socially important areas. As a result, the loan was approved and the park's residents rest secure in the knowledge that the land cannot summarily be sold from under them.

About two years ago, says Vermont National's Robert Soucie, ``we began to notice a marked increase in the number of bank customers asking: `Is there a way I can have a say as to where my money is used, and how my money is used?' and we thought about it for a while.'' At the same time, Social Banking Programs Inc., an organization of investment consultants in Brattleboro, began looking into forming a bank of their own to channel money exclusively into socially important investments. When the two organizations realized they were thinking along parallel lines, they joined forces to create the SRB Fund.

James Valliere, president of Social Banking Programs, says the fund is unique. ``Where else,'' he asks, ``can ordinary people, small investors, insist that their money be used only to do good? They can't!'' But, he adds, ``the opportunity is almost certain to grow.'' He believes other US banks will follow suit and that the concept ``would be readily received in Europe.''

Vermont National customers can now invest as little as $500 in certificates of deposit or in a money-market account and specify that the amount be part of the SRB Fund. Fund money, except for the 10 to 15 percent that has to be retained as a liquid reserve, is used to make loans in five areas: affordable housing, environmental and conservation projects, family farming, education, and small business development, ``and I mean very small businesses,'' says Mr. Soucie.

In contrast, standard banking procedure invests some 60 percent of all deposits in large commercial ventures, often multinational corporations. Little thought has usually been given to how the manufacturing processes of these companies impact on the environment, or whether they are tied with repressive regimes.

Although the new fund puts a better world ahead of profits, Vermont National expects it will accomplish both goals. Certainly it has not changed its lending criteria. ``We're still going to ensure that the person borrowing the money will repay it,'' Soucie says.

Boston College sociology professor Ritchie Lowry, publisher of the magazine Good Money, which deals with investments of social worth, says there is another sound reason to make these loans: They are safe! ``The notion that moderate to low-income borrowers are high-risk, is false,'' he says. According to his research only one of every 200 borrowers in this group defaults on loans. To stress the point, he notes that ``the saving and loan industry wouldn't be in the mess it's now in if those [bankrupt] banks had followed socially responsible banking concepts.''

Meanwhile, Social Banking Programs, Inc. and Good Money Publications, based in Worcester, Vt., will regularly screen fund loans to see that they meet the required standards.

According to Mr. Lowrie, the screening process automatically excludes companies with poor labor-management relations, those tied to the nuclear industry, and those operating in countries with poor human rights records.

Depositors also receive quarterly reports showing where fund moneys have been loaned.

While the majority of depositors investing in the fund are from Vermont, word-of-mouth advertising has brought depositors from neighboring New England states and, ``to our considerable surprise,'' according to Soucie, from as far away as the West Coast.

Morgarte is one who avidly talks up the fund to others. ``That's how I heard of it,'' she says. ``Vermont National certainly hasn't done much advertising. But I like what they're doing for housing and small businesses,'' says the landscape designer, ``so I tell others when the opportunity arises.'' Have they responded? ``Yes, I have friends who have withdrawn from their savings account and invested [in the fund].''

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