Startup using idle funds to help community
A startup from Oakland, CA, want your money, but they want it for a good cause: to use your excess savings to help create job opportunities in low-income communities.
CNote was founded in 2016 by Catherine Berman and Yuliya Tarasava in an effort to take the money just sitting in idle bank accounts, and put it back into the community to help it grow. Recently, it was awarded Best Fintech Startup and Best Startup Pitch at SXSW
“Why do I have all this money just sitting in my savings account, and not doing good for anybody?” Berman said in an interview with Fast Company. For some clarity, Investopedia recommends keeping six months worth of savings in case of emergencies.
This is what inspired Catherine to start CNote. The startup gives the opportunity for users to invest directly into Community Development Financial Institutions, of which there are about one thousand across the US. These CDFIs make small loans to businesses that are not always offered by the larger financial institutions and in 2014 alone, they financed over four thousand small businesses, and nearly twenty-five thousand units of affordable housing.
Through just three easy steps users can get a 2.5% return on their investments, and CNote boasts that it will deliver 100% social impact. The 2.5% investment is predicted to give you an extra $500 per year, compared with just $12 that is gained from older savings accounts.
CNote also contains a security principal, that safeguards through a triple protection plan that includes a general recourse obligation with its CDFI partners, meaning they are obligated to pay back even if borrowers are unable to pay their loans. Secondly, a portion of loans are protected by the government and individual CDFIs carry a loss reserve and finally, CNote has established a loan loss reserve to give its customers better peace of mind, meaning that should anything go awry, CNote will step in to assist.
Despite the bad press many startups from Silicon Valley have with regards to community relations, the recent Bodega debacle is an example of this. There are also startups that are looking to help their local communities. CNote have followed in the footsteps of TechEquity Collaborative, a startup that wants to encourage entrepreneurs and their teams in the Bay Area to give back to the communities that have allowed them to grow out of their neighbourhoods.
But CNote is still different from TechEquity. By following the trend of philanthropists embracing impact investing it is striving to make the world a better place. On the company blog, the team note “We are working to make finance a more inclusive; where great returns are not reserved for the wealthy few. We are also crazy enough to think that you can get a great return while bringing prosperity to communities and individuals across the country.”
And that’s pretty darn commendable, if you ask me.