Banking on Change

This is the first in a series of social banking articles.

I became familiar with Wainwright Bank four years ago when I was invited to attend a meeting by Oakes Plimpton of the Arlington Farmers Market and the Boston Area Gleaners. Plimpton circulated a newspaper article highlighting Wainwright Bank and its online donation program, Following this meeting, I started to research the bank, focusing on its online fundraising program. I contacted a lawyer with whom I was working while representing the Nutrition Education Outreach Project for her opinion. “Wainwright Bank has an excellent and well respected track record working for new emerging nonprofits,” said the lawyer, who works with Foley and Hoag.

President Obama and U.S. Treasury Secretary Geithner implemented the Troubled Assets Program (TARP) that was previous created by the Bush administration to help stabilize, provide economic cushioning, and create market liquidity during the 2008 financial crisis. The TARP program was designed to buy back commercial mortgages securities from banks nationwide. The TARP program gave the U.S. Treasurer the purchasing power of 700 billion dollars. In a controversial plan hammered by the Republican party, a second economic stimulus was created taking 30 billion from the remaining TARP dollars to provide funding for local community development. This money was given to community banks nationwide to bolster small business lending under the Capital Purchase Program (CPP).

One of the local community banks to participate in the CPP was the Boston-based Wainwright Bank. Wainwright is a community bank that operates with dual bottom lines. It offers commercial banking through its twelve branches as well as a social justice platform that works with non-profits. As the first decade of the millennium comes to a close, Wainwright Bank has provided 3/4 of a billion dollars in funding for socially responsible community development in metropolitan Boston.

What sets Wainwright apart from other larger commercial banks is that they work with over 700 nonprofit organizations. Since 1988, Wainwright Bank has committed funding for housing to help low-income and homeless citizens find a place that they can call home. This financial lending includes single room occupancy, transitional—meaning short or long term special needs housing—and permanent affordable housing, like owner-occupied or long term rentals.

Wainwright works with some of the area’s most respected nonprofits, providing traditional services along with funding specifically for community development. The largest nonprofit with whom the bank works is Pine Street Inn. Wainwright has provided 20 million dollars in funding to Pine Street Inn since the bank’s inception in 1988, mainly for various construction projects, including a women’s shelter, men’s housing, transitional housing for homeless families, and permanent housing in Boston.

Wainwright Bank has also worked with three prominent Cambridge-based nonprofit organizations: the YWCA, YMCA, and Ruah House. Wainwright provided funding for construction of the SRO women’s complex at the YWCA near Massachusetts Avenue. They also funded the renovation of the Central Square YMCA. Furthermore, the bank provided capital for the purchasing and renovation of the Ruah House. This is a women’s HIV housing program now affiliated with Cambridge Cares About AIDS, located in Central Square next to St Paul ‘s Church.

While 2008 was marked by the national financial crisis, Wainwright continued to work locally in Boston with the Federal Home Loan Bank community development advance (CDA’s) to fund local projects. CDA’s are discounted loans that have a lower debt structure and are a good financial instrument. Wainwright Bank has worked with several charter schools like Boston Colligate and Roxbury Preparatory in new and renovation construction of schools in the inner city.

The week before this past Christmas, I interviewed Steve F. Young, Senior Vice President for Consumer Banking by phone at his downtown Boston office. I was interesting in learning how the 2008 financial crisis impacted Wainwright Bank and how they were able to continue to fund community development projects in Eastern Massachusetts.

How has Wainwright Bank (WB) been impacted by the 2008 financial crisis?

Wainwright Bank was encouraged by the New England Federal Reserve Bank to participate in the TARP program for banks with good financial standing. This was referred to as the Capital Purchase Program (CPP). WB was one of the five Massachusetts community banks invited to join this program. The CPP provided WB with a secondary, reserve level of funding that enabled us to continue community development financing during the 2008 crisis.

Robert: What types of housing projects have you developed to meet the needs of low-income people?

WB provided the funding for the Cambridge YWCA 43 room SRO complex addition one block from Massachusetts Avenue in Central Square. We also provided funding for Ruah House, the Cambridge HIV women’s complex. These two projects serve the needs of different women’s groups: low-income and HIV positive / special needs.

Robert: What led WB to develop and create online web hosting for local nonprofits?

Steven: We work with over 700 non-profits daily as their commercial banker and community development funder. We were looking at how we could better serve this growing group. We wanted to create an online platform that would assist them to raise funds legally thorough a link to our bank’s web page.

Robert: How has the program worked so far?

Steven: The CR.NET has raised over 10 million dollars since its inception 12 years ago. The site now has over 120 non-profit organizations listed online. We are the only bank nationally to have an online fundraising program.

Robert: What types of housing projects has WB developed with nonprofit organizations in 2008?

Steven: WB received $23 million in New Market Tax Credits (NMTC) from the U.S. Treasurer. This program awards tax incentives to the private sector for investment capital in underserved neighborhoods, including housing financing. The first NMTC project was Hope House of Lower Roxbury. HH was building a new residential treatment facility that provided an 80-bed recovery home and 22 units of affordable housing for program graduates. We were one of the project funders that provided a $10 million tax credit and a $7 million loan to facilitate completion.

Following the New Year’s celebrations in 2010, I interviewed Oakes Plimpton, of Boston Area Gleaners and Lauren Corduck, Executive Director of Solutions at Work.

Oakes Plimton: WB is a well respected bank for nonprofits. We are located on the CR.Net for fundraising. We have done far better fundraising with an individual mailing campaign rather than online. That may be due in part because of the tight economy. CR.Net is still a good program which we will continue to use. I like how the bank sets up a bank account for you to receive your on-line donations.

Lauren Corduck: WB provides nonprofits with a variety of excellent services. My predecessor used CR.NET for fundraising. We will continue with the program further after we review and edit our information.

Local community banks could potentially facilitate community development in the area’s underserved neighborhoods, such as those in Boston’s Dudley Square and Uphams Corner, as well as in more middle-class neighborhoods, such as Central Square in Cambridge. Wainwright Bank serves as a model financial institution by working in community development and collaborating with many groups, including local and federal government, nonprofit organizations, and private businesses. Wainwright has developed a series of financial instruments like New Market Tax Credits and community development advances that help nonprofits bridge the development gap and provide housing for people of limited means.

Does Wainwright Bank have the potential to create moderate priced housing, for example in the undeveloped Central Square building that the police headquarters vacated, since having relocated to Kendall Square, or on Prospect Street where there is an abandoned apartment complex? Such projects could be completed in conjunction with professional development, creating housing for people with limited means along with improving neighborhoods. As someone who has studied planning, I wanted to raise these questions for Spare Change readers and Boston and Cambridge residents, in order to make them aware of development issues.

Robert Sondak is a vendor and a writer for Spare Change News.