On Friday, the Federal Deposit Insurance Corporation (FDIC) seized control of Silicon Valley Bank (SVB), the 16th largest bank in the U.S. with $209 billion in assets. Luckily, at 6:15 p.m. ET on Sunday March 12, the Federal Reserve Board announced it would ensure that all SVB and Signature Bank customers will have access to their deposits by March 13th, alleviating the hysteria of businesses scrambling to access funds for payroll.
The bank, founded in 1983, created a niche space as a banking partner to tech startups and venture capital firms during the dot com and tech boom, largely between 1995 and 2022. SVB has also been a lender to nonprofits and a corporate leader in social responsibility.
“Ultimately, the greatest impact of a bank failure is on ordinary people, small businesses, nonprofits & more who banked & did nothing wrong,” said California State Senator Scott Wiener on Twitter.
In addition to the tens of thousands of customers and employees of SVB, Signature Bank, and Silvergate impacted by bank closure, here at Givepact, we want to emphasize how this may impact the nonprofit sector and local communities these banks serve.
#1 SVB committed $11.2 billion to “Community Benefits Plan”
In 2021, SVB announced a 5-year plan to provide investments to expand “financing of affordable housing, address the financial needs of low- and moderate-income people (LMI), and support small businesses, entrepreneurship and economic development” to communities in California and Massachusetts, specifically:
- $5.0 billion in small business loans of $1 million or less;
- $4.8 billion in Community Reinvestment Act (“CRA”) community development (“CD”) loans and investments;
- $1.3 billion in residential mortgages to LMI borrowers and in LMI census tracts; and
- $75 million in charitable contributions.
Their nonprofit partners in this plan include: California Reinvestment Coalition, The Greenlining Institute, Massachusetts Affordable Housing Alliance, and the Massachusetts Association of Community Development Corporations.
“The past 24 hours have reshaped the banking landscape,“ said California Reinvestment Coalition CEO Paulina Gonzalez-Britom, in a press release issued on March 10th.
“In the wake of what is now the biggest bank failure we’ve witnessed since the Great Recession, we cannot help but think of the communities that will be affected by another bank’s disappearance,” she continued.
If SVB does not fully recover, the loss of this Community Benefits Plan could be devastating to the nonprofits and communities the plan is intended to serve.
#2 Silicon Valley Bank Foundation donated $18M to nonprofits in 2022
The Silicon Valley Bank Foundation is associated with and funded by Silicon Valley Bank. The foundation is a separate legal entity from the bank, but it is closely tied to the SVB’s overall mission and values, and has supported a wide range of nonprofits from youth organizations in California to COVID relief in Wuhan, China. In 2022, they donated a total of $18M to nonprofits.
Organizations that have benefited from SVB grants, according to the SVB foundation’s 2021 990, include:
- 826 Valencia
- Australia Wildlife Donations
- Big Brothers Big Sisters of Bay Area
- Centro Community Partners
- Charlie Cart Project
- Hospice Society in the Main Area Germany
- Our Time
- Summer research
- Wuhan - COVID 19 Donation
#3 Silicon Valley Bank named by Newsweek among top responsible companies and Bloomberg for gender equality
In 2022, Newsweek included SVB among 500 of the largest corporations that “take their environmental and social responsibilities as citizens of the country and of the world more seriously than others.” Though it appears that Newsweek has removed them from the list, which is now only 499 companies, presumably due to the shut down by the FDIC, it’s worth sharing that SVB has been recognized for their leadership in corporate responsibility, gender equality by Bloomberg for five years in a row, and are a member of the Pledge 1%. Bloomberg’s gender equality index measures a company’s transparency around “female leadership & talent pipeline, equal pay & gender pay parity, inclusive culture, anti-sexual harassment policies, and external brand.”
#4 Silicon Valley Bank is not the only bank in trouble, signaling looming economic instability
Days before Silicon Valley Bank shuttered, crypto-friendly bank Silvergate went under and today Signature bank was closed by the FDIC. The current economic landscape, including the Federal Reserve’s steep increase of interest rates, is creating uncertainty for the future of many smaller banks and making it harder for small businesses and organizations to take out loans. This, in turn, may have lasting detrimental effects on the economy and hurt our country's most vulnerable populations. Nonprofits rely on the funding and strength of banks, individual donors, and the government. We must keep them in focus as this crisis unfolds.
#5 Take action to prevent protect from economic vulnerability.
Consider the following:
- Don’t have all your money in one location. If you have more than $250,000 your organization’s bank account, consider having bank relations at one or more well-capitalized banks. Take look at the top tier banks here.
- Open money market accounts, which provide a higher interest rate on savings and FDIC insurance beyond the normal limits. Take a look at Forbes’ list of the top companies from March 2023 list.
- Consider diversifying your operating runway beyond a few months directly into short-term U.S. treasuries through Treasury Direct. The T-bills are cash equivalents that pay interest, and most importantly, are directly owned by your entity and not cash loaned to a bank.
- Stay informed on the latest information on the latest economic news related to the bank crisis and the economy at large by following The Wall Street Journal, CNBC, and our recommendation for the best crypto news sources.
Sign up to donate crypto or cash to the nonprofits who that been impacted by the current banking crisis.