NOTE: This is not a stock offering. The first common good bank does not yet exist and cannot yet offer stock publicly. Stock in the first common good bank will not be available to the public until the bank has a charter and the terms of that offering may differ from the terms currently proposed and described below.

Meanwhile: If you have assets of a million dollars or more, please fill out our Investor Qualification Survey to get involved.

Proposed Bank Stock Details for ANY Common Good Bank

Anyone will be able to invest in a common good bank. Member depositors will particularly be encouraged to invest. Depositors will be able to sell or buy stock easily once a month at the bank's suggested price, by transferring funds to or from their checking/savings account. An association of common good bank depositors will manage the price of these sales, in order to maintain an average annual return equal to the true rate of inflation.

One of our organizers commented that, on first glance, as a startup, a common good bank presents a high risk to investors, as compared to a more established business. Furthermore, with potential annual returns capped at the true rate of dollar inflation, the bank offers investors a low return, compared to conventional banks, which typically return 10 to 15%. High risk? Low return? Both are a matter of judgment. Here's why:

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What Return Means

With any investment, you are "vesting" something (time, money, hope) in an enterprise. The return on your investment consists of

1. the success of the enterprise and its mission and
2. any other incidental benefits you receive (such as money).

With purely financial investments, the only return you typically get is some unknown benefit to some unknown company (and its executives) and some money for yourself.

Gary Burtless, Senior Fellow, Economic Studies, The Brookings Institution: Task Force on Social Security Reform, House Budget Committee, May 11, 1999²

The potential return on a common good bank, on the other hand, is the realization of a better world for all of us:

1. in the short term, substantial support for local community organizations and
2. in the long term, one possible path to world peace, social and economic justice, consistent care for the environment, universal healthcare and enough food for everyone -- as well as a limited financial return for yourself (limited to the true rate of inflation¹, which has averaged about 6% per year over the past 30 years).

For comparison, the average long-term financial return on stock, with all its ups and downs, has been about 6.3% per year² - that is, nearly identical to the true rate of inflation.

Investment in a common good bank compares especially favorably to other social investment opportunities, because your investment counts more than double. First it helps to create the bank, which is a worthwhile investment in itself. Then the bank in turn is able to re-invest your money, plus the far greater funds held in savings and checking accounts, in worthwhile community projects and small business enterprises, as well as affordable mortgages, automobile loans, student loans and so forth.

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Risk

• The bank will create and manage a free brokerage service for stock sales between its hundreds of stockholders. If you want to sell your shares and another investor wants to buy them at the planned rate of appreciation, the bank will certainly buy your shares at that price and sell them to the other investor.
• The core of the common good bank™ business model has been well tested. The common good bank will be a community savings bank, accepting deposits, making loans, and providing other typical community savings bank services.
• Common good bank™ operations will be transparent whenever possible. For example, the complete common good bank™ business plan is online right here. This transparency invites additional scrutiny that will help keep the bank healthy.
• Banking is a highly regulated industry. Many eyes and many minds will be working regularly to keep the bank on track. Everyone involved has a financial and social interest in a common good bank's success: the community, customers, officers, staff, board of directors, external auditors, and state and federal regulators.
  
  The federal government monitors banks very closely. The OTS (Office of Thrift Supervision) and FDIC (Federal Deposit Insurance Corporation) demand that the bank prove and insure (via a fidelity bond, through an insurance company) the probity and competence of its directors and executive officers. They demand that the bank's business plan be realistic (They charge several thousand dollars to review the bank application). They demand that the bank stick to its business plan, unless they give formal permission to stray. They demand that a substantial amount of cash be reserved for contingencies. They examine the bank quarterly and require it to straighten up, if it is remiss in any way. Finished are the days when an unscrupulous bank manager could run off with the money.

Consequently, the one risk for investors is that the directors, despite their honesty and competence, will foul up so badly, and KEEP fouling up so badly (despite demands from the regulators), that the bank fails and is taken over by a bigger bank before getting in the black. How big you think this risk is depends on your assessment of the directors and executive officers, or of the regulators' competence in approving and overseeing the directors.

Through months of discussion and revision, we have created a flexible, conservative model business plan for common good banks, that maximizes benefits and minimizes investor risk. You can view the business plans online - both the model plan and plans for individual common good banks - and judge the risks for yourself. (NOTE: This is not a stock offering. The first common good bank does not yet exist and cannot yet offer stock publicly.)

Of course, there will also be the option of investing simply by opening an account, insured by the FDIC, in which case the risk is VERY close to zero, with a planned annual interest rate competitive with other banks.

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Financial Return

To figure the probable return on your investment, you need to sum the potential benefits and losses, each multiplied by its assessed risk. The magnitude of these products depends on your personal assessment of how much you care about what there is to gain, how much you care about what there is to lose, and the risk in each case.

For example, if you care a lot about the future of the world, and not so much about a few thousand dollars, investment in a common good bank might be a very sensible investment. If you also have a high degree of confidence in the business plan and/or the directors and executive officers, then it may be the best investment possible. According to our model business plan, investors can expect with a high degree of confidence enormous benefits to the community, plus the full amount of planned average personal financial return.

NOTE: This is not a stock offering. The first common good bank does not yet exist and cannot yet offer stock publicly. Meanwhile, you can help with a no-obligation 10-second signup.

If you have assets of a million dollars or more, please fill out our Investor Qualification Survey to get involved.

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Potential Social Return on $1

The common good bank's design as a distributed network of Community Divisions could result in a phenomenally large social impact. To give you a sense of the mind-boggling range of possibility, here is a calculation of potential social return on a single dollar invested today in a theoretical private offering to start the first common good bank. ("M" means million.)
 

Loan Fund Multiplier

$1.5M

$5M lending capital

x4.3

Angel investment will enable the bank to get a charter, so that it can accept $5M to $8M in investments from ordinary investors.

$1 capital

$9 deposits

x10

Capital adequacy regulations allow the bank to accept up to 9 times as much in deposits as the amount of capital raised.

$1

$9 MORE deposits

x10

Under our United States fractional reserve banking system, regulations effectively allow banks to lend out up to ten times as much as they originally receive as deposits.

$1

90¢ in local currency

x1.9

For every dollar of deposits, communities can choose to create up to at least ninety cents worth of local currency, for local grants or additional lending.

1 bank

4 MORE banks per year

x5 per year

Within the past year, even before the first common good bank exists, communities in four other states (besides Massachusetts) have begun working to create common good banks. We speculate that every year, for the next several years, each common good bank will inspire at least four more communities to start one.

$20M

$200,000 to give away

1% per year

A one percent return on average assets (ROA) is common for mature community banks. Our business plans show that with $20M in assets, common good banks can return more than $200,000 in profits and merchant contributions to the Community Fund, even in the first year.

5-year TOTAL impact:

$2.3M to lend + $5,776 to give
if local currency is lent.
$1.2M to lend + $1.1M to give
if local currency is granted.

Wow! A million to lend and a million to spend for the common good FOR EACH DOLLAR INVESTED. That potential social return could make common good banks a very attractive investment opportunity for community-minded investors.

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1. "true rate of inflation". See, for example, George J. Paulos: "An Alternative Inflation Index", September 08, 2004.

2. "6.3% per year". Gary Burtless, Senior Fellow, Economic Studies, The Brookings Institution, Task Force on Social Security Reform, House Budget Committee: "Risk and Returns of Stock Market Investments Held in Individual Retirement Accounts", May 11, 1999.

"Chart 1 shows the pattern of real stock market returns over the period back through 1871. I have calculated the 15-year trailing real rate of return for periods ending in 1885, 1886, and all other years through 1998. The return is calculated by assuming that $1,000 is invested in the composite stock index defined by Standard and Poor's and quarterly dividends are promptly reinvested in the composite stock. The 15-year trailing return has ranged between -2% and 13% since 1885. The historical real stock market return averaged about 6.3%."