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Socially responsible CDs

By Sheyna Steiner · Bankrate.com
Tuesday, August 3, 2010
Posted: 2 pm ET

I'm writing a story on socially responsible investing for Bankrate. It's an exciting topic and has received a lot of attention following the BP catastrophe and the meltdown in the financial sector.

The term socially responsible investing encompasses a broad range of investor activities, the most frequently discussed of which is screening investments for behavior that either does appeal to your conscience or does not.

Another tenet is shareholder advocacy and the third is community investing.

What's interesting is that there are many investment products that are geared towards these aims. Of course, mutual funds and ETFs are well known but I was surprised to find out that investors can buy CDs from banks that turn around and lend the deposits to green businesses specifically, or towards environmental conservation or community development.

For instance, ShoreBank, in Chicago, is a community development financial institution or CDFI.

According to the Web site for the CDFI coalition, a policy development and advocacy group, CDFIs are "mission-driven financial institutions that provide financial products and services to people and communities underserved by traditional financial institutions."

One line of ShoreBank's products, called Eco-deposits, include CDs which go towards helping businesses identify sustainable business practices and working towards community prosperity by lending money to businesses.

"If you love environmentalism, you can buy one of their environmentally-based CDs and they will lend it out. That’s the way CDs work you buy one and they lend it out to someone for a car or building or whatever. But with ShoreBanks's CDs they have religious institutions, faith based investing, environmental, community re-development," says Donald Cummings Jr. managing partner at Blue Haven Capital, in Geneva, Ill..

CDARS also participates in socially responsible investing with some CDFIs that are part of the CDARS network. You can deposit money with specific CDFIs to help low-income communities or they have a program with Gulf Coast banks that use deposits to help rebuild the area.

Those are just a couple of examples I've found of CDs available to socially conscious investors. Do you know of anything else out there in the CD world for SRI? Would you buy a CD that was targeted towards environmental or community causes?

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