NeuGroup’s Diversity & Inclusion Working Group meets with leading MDIs/CDFIs to identify ideal collaborations.
Just over a year ago, the death of George Floyd led to a widespread cultural reckoning, with many companies pledging millions toward social justice initiatives. Some corporate treasurers are now viewing so-called impact investing as a part of regular, day-to-day activity.
- At a Q&A session with executives from five leading minority depository institutions (MDIs) and community development financial institution (CDFIs), NeuGroup’s Diversity and Inclusion Working Group shared and learned on the process of working with MDIs and CDFIs.
Here are some takeaways from the meeting compiled by NeuGroup’s Andy Podolsky, who moderated the meeting:
Long-term relationships. The key, the bankers said, is to not prioritize transactions, but to create long-term relationships and partnerships that help with a key need. Reliable funds from corporations can go beyond depositary relationships and provide much needed capital in the form of equity.
- “The first thing any bank needs for success is equity capital. Liquidity helps, but equity is number one,” one banker said. Though he understands that an equity investment could possibly be more difficult for corporate treasury, “it’s critical that we establish relationships with companies that are not episodic.”
- Another responded that “corporations’ motivation for working with us shouldn’t be just because it’s in vogue at the moment.” Corporations need to be willing to take a small amount of manageable risk for the opportunity for exponential positive impact.
- “If you make a simple financial commitment with our bank and then take it out in 24 months, it can be devastating to us if we built up the infrastructure to support you,” he said. “It’s more about a partnership for the long-term, the deposit is just a starting place.”
Lean in. “There has been an awakening in the past year,” one bank representative said. “It is becoming [clear] to me more and more that on some of the stuff in the D&I world, you’re going to have to lean in a little bit. There’s going to have to be some muscle, a little extra effort.”
- One treasurer at the meeting responded, “Some corporates want to ask, ‘How can I take all risk off the table?’ but the point about leaning in is a really great point, and that really resonates with me.”