Banks may be known for taking in deposits and creating loans — after all, it's what they do — but some of them also give away money, at least indirectly, to not-for-profit organizations through foundations they establish and fund.
In June, a foundation established by Investors Bank presented a $125,000 check to County College of Morris, an educational institution that offers more than 45 associate degree programs and a wide range of certificate programs.
The gift, which supports communities served by Investors, will be used to expand and upgrade the CCM Center for Cyber Security. In 2017, the educational institution became the only community college in New Jersey to be named a National Center of Academic Excellence in Cyber Defense Education by the National Security Agency and the Department of Homeland Security.
Investors Bank, which has about $25.4 billion in total assets, created the Investors Foundation in 2005. “It lets employees make a positive impact on their community, while enhancing the bank’s employee recruitment and retention efforts because the employees know their thoughts matter,” said Chairman and CEO Kevin Cummings.
Executives meet with nonprofits, he said, and seek input from bank employees to decide which charities to fund. “The feedback from everyone is discussed and an executive committee then presents recommendations to the Investors Foundation board, which has the final say,” according to Cummings.
Since 2005, the Investors Foundation has made grants, primarily to local nonprofits, valued at more than $30 million. Legally, it’s a separate entity that’s not part of Investors Bank, but Cummings acknowledges the foundation is “integrated with our brand. The bank helped to save the Paper Mill Playhouse [in Millburn] around the Great Recession, and the bank and the foundation have given grants in excess of $100,000 a year to the playhouse for at least 10 years.”
Other institutions like Provident Bank, which has more than $9 billion in total assets, are also helping out. Since 2003, the Provident Bank Foundation has granted more than $23 million to not-for-profit organizations and institutions. In July, the foundation celebrated its 15th anniversary by awarding a dozen grants of $15,000 each to nonprofits nominated by about 1,100 bank employees and its full-service wealth management subsidiary Beacon Trust.
“It’s important to make grants in a transparent, structured way,” said Jane Kurek, executive director of the foundation, which made about $1.1 million in charitable gifts, grants and donations in 2017. “Every request — we’ve received about 200 so far this year — is judged on own merit in the context of three funding priority areas: community enrichment, education and health, youth and family. Each is scored on its scope, the needs it addresses, the reach and the business model of the not-for-profit and the measurable outcome of the individual request.”
Kurek has decision-making power over community grants of $1,000 to $5,000, while she and her staff make recommendations to the foundation’s board for “major grants” of $5,000-plus up to $25,000.
The foundation also makes six “signature grants” of $50,000 annually to two organizations involved in community enrichment, two in education and two in health, youth and family. Kurek is careful to keep the foundation’s activities distinct from those of the bank, noting “the IRS frowns on foundation activity that it considers to be self-dealing.”
As part of the organization’s community outreach efforts, Kurek said she usually brings a Provident Bank or Beacon Trust colleague along when she meets with charities or presents checks.
“These colleagues are leaders in the community,” she said. “They’re not coming along to develop business. We’re careful not to blur or cross the line.”
Institutions like Magyar Bank, which has about $616 million in total assets, have also established foundations. “Just about all of the grant requests the MagyarBank Charitable Foundation receives are very worthy, so making a selection is a difficult decision,” noted Magyar Bank President and CEO John Fitzgerald. “Ultimately, the projects that receive grants are ones that will have the most impact on the community; specifically, the impact on the foundation’s core focus of programs that fund education, health and human services, youth programs and affordable housing.”
He said Magyar grants total about $25,000 a year, and successful applicants have to align with the community-focused mission of the foundation. They also must demonstrate a strategy that leverages other resources and support from the region, while producing cost-effective results that can be measured and evaluated.
“All applications are reviewed by the foundation’s board of directors, which is comprised of members of Magyar Bank’s board of directors, senior level employees of the bank, and members of the community,” said Fitzgerald. “The foundation is an extension of the Magyar Bank brand. As a community bank, Magyar is an active leader and has built long-standing relationships with numerous nonprofits throughout the area.”
Many of these nonprofits have become customers of the bank as a result of the partnerships that have developed, he added. “The nonprofits further extend Magyar’s brand by encouraging their supporters to become customers of the bank as well. These relationships have played a key role in growing the bank’s brand.”
Setting up a separate foundation can also help a bank’s profit and loss statement, according to Donald Musso, president and CEO of FinPro, a full service management consulting firm that provides advisory services to the financial institutions industry.
“This way, a bank can take a one-time hit to fund the foundation, and then the finances are separated from the bank,” he said. “This can streamline the bank’s financial results, since they more accurately reflect banking operations. It also lets management focus on banking instead outside activities like charitable funding.”