Definitions & Methodology
Impact measurement is a constant work in progress, as we seek to understand and share not only our outputs, but our outcomes and long term impact. To ensure clarity of our work and the impacts described on this site, we’ve provided the definitions and our methodologies below.
Our affordable housing numbers describe dedicated affordable units developed, in development, or retained with the help of loan commitments made through 2019. Depending on the area, the U.S. Department of Housing (HUD) and the Federal Housing Finance Agency (FHFA) consider a unit affordable if it is affordable for households making 60% of the area median income (AMI), 80% of AMI, or 100% of AMI.
We determine affordability in compliance with HUD and FHFA income limits, and we define dedicated units as those that are deed restricted (including Section 8 or otherwise designated), managed by nonprofit affordable housing developers, or dedicated to affordability in the loan documentation.
We no longer refer to housing as ‘naturally occurring affordable housing’ as it inaccurately describes and misleads of there not being a need to address affordability since it occurs naturally. But in actuality, it is influenced by wealthy investors, public policies falling short, and a system that fails to protect those most vulnerable from market-driven displacements. “Referring to this housing as natural has the chilling implication that building owners who fail to maintain their properties, institutions, and systems bear no responsibility for its problematic status.” Learn more about the myth of naturally occuring housing here and here.
Certified B Corporations are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. In order to become a B Corp, a company must complete the B Impact Assessment and earn a reviewed minimum score of 80 out of 200 points, ensure social and environmental principles are protected through its corporate structure, and sign the B Corp Declaration of Interdependence and Term Sheet.
Beneficial State Bank has been honored as one of the Best for the World Overall every year since 2013. We are the third highest scoring B Corporation in the United States, and one of the top 5 highest scoring Certified B Corporations in the world. See a breakdown of our impact score, learn about the certification process, or view the assessment tool.
Community Development Financial Institutions (CDFIs)
CDFIs are financial institutions that are dedicated to delivering responsible, affordable lending to help low-income, low-wealth, and disadvantaged people and communities join the economic mainstream. Beneficial State Bank is a certified CDFI since 2009 and we have received numerous CDFI grants to support our work.
CDFI certification requires that 60% of all of our qualified loans by number and dollar must be in these Investment Areas. Per CDFI guidance, loans for Investment Area analysis exclude purchases and wholesale loans, resulting in an analysis of a slightly smaller number of loans than the full number of loans originated in a given year.
Totals and percentages of Beneficial State Bank’s CDFI qualified loans are also available broken out by commercial and consumer loans on the Impact Snapshot page.
Learn more about what it is required to become certified on the CDFI Fund website.
Our deposit calculator is intended to give you an estimated snapshot of how your deposit dollars translate to real community benefit in the form of mission-aligned, impactful loans. It is calculated using the distribution of Beneficial State Bank’s outstanding loan dollars across our 12 mission sectors as of the date noted in the footnote. Any mission-neutral loans are omitted. We then apply the ratio of our total loans relative to total deposits at the same point in time, to provide an accurate reflection of how your deposit dollars translate into meaningful loan investments. Because it is based on recent but past loan data, it is only an estimate of how YOUR deposits can be used by Beneficial State Bank.
Global Alliance for Banking on Values (GABV)
The Global Alliance for Banking on Values (GABV) is an independent network of banks using finance to deliver sustainable economic, social and environmental development. Beneficial State Bank is proud to be a member of the alliance, and to help develop and refine scorecards to help measure the social and environmental impact of banks, as well as analyze and report data to submit to the scorecard.
GABV has developed Principles of Sustainable Banking that guide the scorecard. The scorecard requires that each bank meets basic eligibility criteria then measures each bank on quantitative and qualitative factors as described below:
- Basic Requirements: Regulated Financial Institution, Mission Statement, Reporting Transparency
- Quantitative Factors: Resiliency through Earnings, Capital, Asset Quality, Client-based Liquidity; Commitment to the Real Economy; Commitment to the Triple Bottom Line
- Qualitative Factors: Leadership, Organizational Structure, Products and Services, Management Systems, Human Resources Tools, and Performance Reporting
Soon GABV will publish the scorecard methodology and member bank scores for public review. In the meantime, we provided two key mission-related elements of the scorecard, triple bottom line and real economy, on our impact snapshot.
The International Living Future Institute’s™ JUST™ program is a voluntary disclosure program and tool for all types and sizes of organizations, acting as “nutrition label” for socially just and equitable organizations. Beneficial State was one of the first companies to choose to disclose its information through this label. Organizations are labeled with up to three stars for each social and environmental indicator, depending on their demonstrated and documented level of commitment to each. See the JUST manual for detailed descriptions of each indicator and requirements for each level.
Our loan dollars are calculated using the amount we committed to lend in each year for term loans and lines of credit. Renewals are considered re-commitments and in the years following the original commitment are counted as new commitments. We recognize that our loan dollars are only a portion of what is needed for any of our borrowers to create an impact in the community. Our loans are often in conjunction with other loans and types of capital, and so much more than capital goes into each program, product or service. So we don’t claim to take full credit for the impacts, but are proud to support the good work of our borrowers by providing capital they need to get the job done.
Low and Moderate Income (LMI) Communities
Loans to businesses, nonprofits, and residential properties located in census tracts designated as Low or Moderate Income according to the 2010 Census American Community Survey. While “Loans to LMI Communities” is a common measure and generally anticipated to provide economic benefit to those communities through blight reduction, employment, and ownership, Beneficial State recognizes that this data point is a proxy for loans to LMI individuals and that not all loans to low income LMI communities benefit the residents of those communities.
As such, loans that Beneficial State provides to LMI communities are not automatically marked as mission loans; they may or may not be designated as mission loans depending on the borrowing entity’s ownership model, organizational structure and practices, and sector. Additionally, as part of our Contra Mission Principles we seek to avoid loans to LMI communities that may, in fact, have negative consequences on the residents of those communities through displacement, environmental harm, or other impacts.
Note that loans to LMI communities listed in the Business & Nonprofit Lending section of our Impact Snapshot page indicate the dollar amount of commercial loans outstanding to LMI communities at the end of year.
For CDFI Certification, we monitor the number of loans to LMI communities in qualified Investment Areas. Investment Areas are designated by CDFI and are designated based on poverty rate, unemployment, median family income, and other indicators of neighborhood disadvantage. See the CDFI definition of Investment Area and criteria on the CDFI website.
Mission, Conventional, and Contra Loans
We categorize each of our loans as Mission, Conventional, or Contra, with express commitment to have 75% or more of our portfolio considered Mission, and 0% Contra. Visit our Mission Principles and Policies page to learn details of how a loan is considered Mission or Contra based on whether the borrower or transaction helps supports our mission change-maker principles. A loan is considered Conventional if the borrower and transaction type are neither Mission or Contra.
Mission Intensity Score
Mission Intensity captures the comprehensive amount of lending that supports a bank’s social mission, regardless of the loans’ location. It is the percentage of a bank’s total annual lending that supports the bank’s mission by 1) being located in a qualified census tract or 2) by supporting a specific mission-relevant category. Banks designate a range of categories as being mission-relevant including loans to low-income borrowers or other targeted populations, loans to nonprofits or faith-based organizations, loans to minority- or women-owned businesses, environmentally-focused lending and more.
National Community Investment Fund (NCIF)
NCIF is an impact investor and a 501(c)(4) nonprofit investment fund. As members, we proudly participate in conversations that help us to track the social and environmental impact of community banks in the U.S. Learn more here.
Paris Pledge to Quit Coal
As a signatory on the Paris Pledge to Quit Coal, Beneficial State Bank joined banks across the world to commit to end financing for the coal industry. While Beneficial State has not previously financed coal companies, we believe it is important to spread the word and be a loud voice for change toward a clean, renewable future. See our letter here.
Portland Mayor’s Business Climate Challenge
In 2015, Mayor Charlie Hales of Portland, Oregon urged local businesses to take the Business Climate Challenge, highlighting six key actions making change in the key areas of Energy, Waste, and Transportation. Beneficial State Bank was proud to partake in this challenge, and ensure that we were taking as many of the actions as possible.
Mainstream financial actors describe individuals with low credit status as “sub-prime” but we prefer “pre-prime” because we think of this status as awaiting one’s full and fair opportunity to participate in the banking system.
Real economy describes the percentage of our annual loan portfolio that is lending either directly to a business or profit that is providing products or services to the real world, or is one step further away from that activity, for example, by purchasing a loan from another bank that originally supported it. These are considered one step or two steps away from the Real Economy, respectively. The Real Economy metric helps to measure the extent to which a bank is supporting activity in the real world (Real Economy), rather than moving money around, bundling and re-selling it in the Financial Economy. For the purposes of the GABV scorecard, any loan no more than two steps away from the Real Economy is counted as Real Economy loan.
Renewable Energy Lending
We work with each borrower to understand the kWh of energy they expect to produce each year. Our data is based on these estimates and updates from borrowers on their actual production. When we support existing facilities, production numbers are counted starting in the first full month after we make the loan. For loans that support new construction, production numbers are counted the first full month after a facility begins producing.
Carbon offset equivalents are determined via the calculators provided by the U. S. Environmental Protection Agency.
Small Dollar Consumer Lending
From 2011-2013, Beneficial State piloted its first small dollar loan product: the PAL loan. It was designed to be an alternative to predatory payday loans and therefore save community members the costly fees and stress associated with taking on these loans. The number of Potential Fees Avoided by PAL Borrowers is just that — a potential number, intended to give a sense of the stark difference between a loan designed to help people and one designed to extract fees from people.
The Potential Fees Avoided is calculated by taking the estimate each PAL borrower might have paid if they had used a payday loan instead and had experienced typical payday fees and debt cycles, and then subtracting the total of fees due by PAL borrowers, if paid as agreed throughout the term with no early repayments.
- Costs: The payday loan costs are computed based standard payday loan fee of $15 per $100.
- Number of payments: We estimated these fees first based on a bi-weekly payment (most common) and also as a monthly payment and took the average of these two estimates, to be more conservative.
Amount of principal borrowed: PAL loans were offered as $500, $750, and $1000 loans. The calculations used for payday loan fees were based on the actual number of the loans that were take out (32, 65, 1066, respectively).
While we can’t say for sure whether our PAL borrowers would have taken out a payday loan or whether they would have fallen into the repeat payday loan trap if they had, we feel it is important to illustrate the potential power and impact of providing alternatives to payday loans to the populations who need them.
Triple Bottom Line
A broad concept referring to businesses that consider people and planet on equal par with profit (the conventional “bottom line”).