Common Good Democracy™ - How Budget Options Are Chosen

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1. Disbursing Profits

   There are innumerable ways we could spend the bank's profits for the greater good. How do we decide which ones to put on the ballot?

   First of all, only nonprofit organizations are eligible to receive part of the bank's profits. Of course they in turn can distribute funds to a wider variety of initiatives.

   Second, to qualify for a place on the ballot, an organization must have significant support from the members of the bank, in the current year:

   1. The organization must be supported financially by at least ten members of the bank AND
   2. The organization must receive (in aggregate) at least $1,000^* in individual donations from members of the bank.

   This qualifying procedure encourages members to contribute to the nonprofits of their choice and to recruit additional contributions from other members. This increases financial support for local, national and international nonprofits even before the bank's profits are distributed.

2. Recommending Loans

   Member depositors in each community discuss and vote on the community's investment priorities.

   Each loan application in the community then goes to an elected group of three Division Advisors. The Division Advisors judge the application both as a business proposition and as a component of the community's investment priorities:

   • how credit-worthy are the borrowers?
   • how sound is the business plan?
   • how well does the proposal agree with the community's chosen investment priorities?
   • how well does the proposal serve the common good?

   The Division Advisors forward their recommendations to the bank's (national level) lending committee, which judges the proposal's adherence to the bank's overall lending policies related to (1) risk and (2) socially responsible lending for the common good. These policies will be the minimum necessary to assure sound business lending and steady progress toward sustainability and economic justice.

   The bank's loan committee, general manager and board of directors have the final say about which specific loans the bank approves, influenced by the broad lending priorities set by the member depositors, but constrained by what lending opportunities are actually available. Since the central purpose of common good banks is to give communities control over their own economic destiny, the recommendations of Division Advisors will generally be followed unless there are compelling reasons against them. In practice, we expect that the loan commitee will work with the Division Advisors and borrowers to resolve disagreements productively.

   Member depositors can greatly influence the bank's approval of specific loans to small businesses or for specific community initiatives by investing in them directly, contingent on the bank's participation. Members can choose to invest any amount in a given project, at any interest rate up to the planned rate of return on bank stock. This gives the bank's lending team a clear sense of how much community confidence and support there is for that project, which will result in safer investments, strongly aligned with the community's values.

^* $1,000: This minimum will vary from community to community.