print pageFounding Member/Owner FAQS
(Click on a question, or scroll down to see the answers.)
ANSWERS
Why should I trust you?
That's really up to you to discern. But take a look at who is behind the Common Good Bank plan. Most of our partner organizations are well-established nonprofits and their website links are on our Who Are We page. Likewise many of our advisory board members are well-known and respected. They would be happy to confirm their involvement. Many of them could also serve as character references for the Project Director.
We are not currently accepting deposits or investments. If you are worried about a multi-level marketing scam, rest assured that donations and loans are made to Common Good Finance, a 501c3 nonprofit (originally called "Society to Benefit Everyone", founded in 2006) regulated by both federal and state government.
top What are the risks to Founding Member/Owners?
We have taken several steps in the Common Good Bank plan, to minimize the risk to Founding Members. However, as in most startups, all but the donation part will be at risk. The risks are different in each of four stages in the Common Good Bank startup plan:
- Before we apply for a charter, there is zero risk. Donations are straight donations. Money that Founding Members lend will not be spent until we have enough Founding Members to make the project succeed and are ready to apply for a charter. And Common Good Bank will not sell stock until it has a charter.
- Post-charter: After the state regulators and the FDIC have formally approved the Common Good Bank business plan (affirming that in their judgment the plan will succeed), we will move forward with the business plan. The Loan money will be spent on preparing to open according to the approved plan, and Common Good Finance will collect the $10 million in stock purchases that Founding Members have pledged. The stock purchase funds will be held in escrow until the bank opens. In the unlikely event that the bank does not acually open, those funds will be returned.
Unlike most bank startups, we will not apply for a charter until we know where ALL the money is coming from. Also unlike most bank startups, we are lining up our depositors and borrowers in advance, so that we can operate profitably from Day One.
- In the first years after opening, in the unlikely event that the bank makes a large number of bad decisions right away and fails, then all of the Member/Owners could lose their entire investment (just like any business that consistently makes bad decisions).
- Once there are many Common Good Communities, loss will become even less likely. Still, just like any business, all Member/Owners could lose all of their money, if the overall Common Good Bank system fails.
- The risk of NOT investing is that we could ALL be much worse off without Common Good Bank. We are quickly killing our planet and ourselves. If we want there to be more than 2 or 3 more generations, this would be a good time to take a risk on a better way.
top What are the benefits to Founding Member/Owners?
Founding Member/Owners will have the joy of shepherding the Common Good Bank plan through to fruition.
We can make no promises about financial results. But see our business plan for projected results. Also see the Sound Investment page for projected social returns. Social benefits are by far the largest incentive to Founding Member/Owners.
In the Common Good Bank design there is a planned return for stock purchases. The planned resale price of Common Good Bank stock is designed to give each Member/Owner an inflation rate return upon reselling. Inflation will be estimated at prime minus 1.5% through the bank's first year of operation (about the same rate as a high interest CD). The true rate of dollar inflation has averaged about 6% over the past three decades -- about the same as prime minus 1.5% and also about the same as the overall average return on stock market investments.
top Shouldn't I get a higher return, since I'm taking the biggest risk?
Our Founding Member/Owners need to understand that this is not a "for profit" investment. It is an investment in a better world, a thriving community, and the well being of all people. Common Good Bank is designed to level the playing field, giving everyone the same deal. We are doing everything we can to make the risk very close to zero for Member/Owners in every stage of the plan, so there will be no great difference in risk from one stage to the next. And regardless of what you deserve, it would look really bad if the founders took a big chunk of the profits right from the start. So everyone gets the same deal: a Planned Return equal to the true rate of inflation.
top How about Exit Strategy? When can I get my money back?
An easy exit is crucial to our plan. In particular, low income Member/Owners MUST be able to treat their stock like a deposit. Here's how we plan to keep stock sales fluid:
- Our Planned Appreciation (matching the inflation rate) is an easy target. It's just maintaining purchase power.
- The bank will sell stock continuously at the Planned Price (again matching inflation).
- Ten percent of the deposit funds in every Common Good Account will be held as stock. That is, if a depositor adds $100 to his or her account, then $10 worth of stock is automatically bought on behalf of that depositor. Since some deposits will be made every day, there will be a constant demand for stock. Shares will not necessarily be sold immediately when the depositor withdraws funds, so overall 90% of the bank's deposits will serve as a buffer to protect the fluidity of stock sales.
- In order to participate and have profits to give away, a community must maintain the same stock to deposits ratio as regulators require overall. So if Common Good Bank is attractive at all (and we expect that it will be extremely actractive) then membership will grow and new communities will want to join, so there will be a growing demand for stock at the Planned Price.
- The bank will retain enough earnings to maintain a static net worth, resulting also in a static book value for its stock, equal to the planned resale price.
All of these factors tend to make your loan and stock purchase predictable and secure. In short, we expect that you, as a Founding Member, will be able to reclaim your funds within a year or two after the bank opens, thanks to ongoing automatic stock purchases by thousands of other depositors.
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