Economic Democracy

In economic democracy, power lies with people - their hearts, minds and hands - rather than with financial wealth. Every Common Good Bank stockholder/depositor will have an equal say, regardless of the amount of their deposits or the number of shares they own.

Common Good Bank depositors in each Community Division will manage a large Community Fund and will set investment priorities for their community. The Common Good Bank Penny Vote system will be used in both cases.

The Community Fund

Money in the Community Fund comes from three sources:

• Bank Profits. The bank will generate profits, just as conventional banks do, by charging interest on loans. Much of these gross profits will be used to cover the bank's costs, including outsourced services, salaries of bank employees, building and equipment maintenance, and so forth. Another chunk of the profits will be retained to offset inflation, backing the value of the bank's stock.

  All of the remaining profit will go to the Community Fund. Typically, banks generate an annual net profit of about one percent of their average assets. That is, on average, about $60 per depositor. So, for example, in a Community Division with 100 depositors, the Community Fund would get about $6,000 a year in bank profits, once the bank has been operating for a few years.

• Merchant Contributions. Many local businesses will offer a percentage rebate to Common Good Bank depositors. Half the rebate goes to the customer, half to the Community Fund. Initial surveys suggest that these contributions may easily exceed the bank's profits.
• Local Currency Grants. Depositors in any Community Division can collectively create local currency grant funds simply by crediting the Community Fund. The total amount created is limited to 90% of their total deposits. In a Community Division with 100 depositors, this amount would be about $540,000. These created funds are restricted to the local community.

What Gets Funded

Common Good Bank depositors will make grants from their Community Fund to advance the common good in any way they see fit, subject to these conditions:

• All of the local currency grant funds must go to benefit the local community.
• Half of the remaining funds must likewise go to benefit the local community.
• The remainder must benefit communities in need elsewhere, with half of that remainder going to benefit communities outside the country.
• The funds must be used for empowerment, rather than charity. That is, they must be used to support communities in becoming self-sustaining.
• The funds must be granted only to public nonprofit organizations. Funds may be used for any community-spirited project, if the project has a nonprofit fiscal sponsor.
• The funds cannot be granted to any municipality unless that municipality meets the size limitations of a Community Division and uses the Common Good Bank democracy™ to make decisions.

Setting Investment Priorities

Common Good Bank communities will invest exclusively in socially and environmentally responsible borrowers for sustainable, socially productive purposes. The bank will have detailed, specific lending policies that further define this restriction.

Within that broad mandate, Common Good Bank depositors in each Community Division can decide what kind of investments will most benefit their community. For example, they could decide to dedicate 50% of available loan funds to rebuilding local agricultural infrastructure, 25% to participate in a regional cooperative healthcare initiative, 20% for small business loans, and 5% for mortgages and other loans.