STEP BY STEP: "We need to find ways to create employment, and it is not only the government's responsibility but private industry needs to as well," says Lucienne Gigante, the marketing chief at Doral.

One Small Bank's Business Case for Social Responsibility

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Sometimes if the growth isn't there, you have to go out and create it.

That's part of Doral Financial's (DRL) motivation for developing several programs that help women entrepreneurs start or expand businesses. Programs such as these provide a way for community banks to promote their brand, differentiate themselves from competitors and bring in new business, industry experts say.

"We are getting our name out there through helping someone else who needs it," says Lucienne Gigante, senior vice president of public relations and marketing at the San Juan, Puerto Rico, company. "It's a way to not only say you are a community bank but actually show you are one through your actions."

The Puerto Rican economy has experienced a sluggish recovery with unemployment still hovering above 13%, almost twice as high as the U.S. figure. This has made it more difficult for Doral and other banks in the territory to deal with legacy problem loans and increase revenue. Doral, which has $8.5 billion of assets, reported a second-quarter loss of $12.8 million on declines in revenue and valuations of certain assets.

These economic factors spurred Doral into action with directives from top management to think outside the box, says Gigante, who leads the bank's social responsibility efforts. The company decided to divert funds away from traditional advertising to support corporate social responsibility efforts.

Whenever Doral Chief Executive Glen Wakeman was approached with ideas, "he always responded with 'Make it bigger,' " Gigante says. "We need to find ways to create employment, and it is not only the government's responsibility but private industry needs to as well."

This type of support for a philanthropic initiative from top executives is crucial, experts say. If the program isn't a priority for management then "the culture of the rest of the bank picks up on that," says Kathleen Burns Kingsbury, a wealth psychology expert and founder of KBK Wealth Connection.

Doral started in 2007 by making a donation to research of breast cancer one of the leading causes of death among Puerto Rican women for each opening of a special checking account. The bank then expanded its efforts by offering free mammograms to women out of a mobile unit stationed at its branches. Executives knew it had tapped into an unmet need when 150 women had lined up for the service by 7 a.m., Gigante says.

The company now works with women entrepreneurs through several programs. It gives capital to nonprofits, which then provide microloans and mentoring to women to start their own companies. Over the last two years it has also selected more than two dozen women to receive $50,000 each in loans and grants along with ongoing mentoring to expand their existing businesses.

Doral also hosts educational events at its branches where successful businesswomen lead seminars on everything from obtaining permits to marketing. More than 230 women attended the last event, Gigante says.

Hosting events in a branch can be more effective than other forms of traditional advertising, says Tom Truedson, president of the Core Organization, a marketing firm. Those that attend are already interested in the bank whereas "99% of the people mass advertisements hit" don't care, he adds.

Programs like Doral's that help businesses create jobs can have "a ripple effect," says Linda Gornitsky, president of LBG Associates, a corporate philanthropy consulting firm. Those businesses and their employees will require additional products and services from other sectors.

When launching outreach programs, banks need to ensure that they align their business goals with meeting a community need and addressing employee interests, Gornitsky says. A third of Puerto Rican households are led by women and more than half of the territory's population is female, executives say.

"It is in our interest from a business point of view and from a social responsibility stance that our community is healthy," says Jesus Mendez, executive vice president of Puerto Rico operations at Doral Bank. "It makes all the sense in the world. Rather than spending tons in advertising, our real investment is spending time assisting the community."

Doral executives are hoping that as these women expand their businesses, they will continue to come back to the bank for additional products. All of this is a long-term strategy that won't necessarily produce big results now but is an investment in the future, experts say. Every bit helps as the company continues to look for new retail deposits and loans. It had some success in the second quarter, reporting that loan production rose about 20% from a year earlier to $630.7 million.

"If someone gives you a grant or a small loan when a lot of other people don't believe in you, that is a powerful connection," Kingsbury says.

However, banks need to be careful when they develop programs geared toward women, experts warn. Executives "often assume we are one big homogenous group" but that isn't true, Kingsbury says. Banks need to decide on their target audience and then run focus groups to get feedback, she adds.

With many bank executives focused on controlling costs, there are inexpensive ways to engage in philanthropic efforts, Gornitsky says. Having employees provide consulting or other pro bono services to nonprofits is a great way to ensure widespread involvement. Engaged employees are usually happier, which increases retention and decreases recruitment costs.

"A lot of companies today have limited funds so they have to think about getting more bang for their buck," she says. "You shouldn't think about it as being cash poor but as being resource rich."

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Comments (2)
Women's initiatives can work on a smaller scale too. North Jersey Community Bank has had success with creating a business women's networking group:


North Jersey Community Bank's Own Breakfast Club
Posted by bmcgeer | Friday, August 16 2013 at 5:45PM ET
Kudos to Doral Financial and its insured bank to sub, Doral Bank, for their innovative efforts in working with local non-profits to assist women entrepreneurs in Puerto Rico tp "start and expand businesses- with the tangential benefit objective "to differentiate themselves from competitors" and "bring in new business".

That said, some aspects of Doral's program as described in this article (e.g., funding by contributions to the non-profits to enable them to provide loans just to women entrepreneurs and, presumably referring such entrepreneurs to that source of funding, and, more generally, enabling women entrepreneurs to develop more permanent direct lending relationships with Doral) may have potential adverse ECOA/Reg B implications. This could energize the regulators, including the disparate impact police, asa well as the ever lingering class action bar.

Perhaps Doral has received appropriate regulatory comfort. If so, great, keep up the good work! If not, they might consider expanding their very excellent program for women entrepreneurs to cover, in all material aspects involving lending efforts, all promising entrepreneurs regardless of gender.
Neal L. Petersen, Attorney at Law, former General Counsel, Federal Reserve Board
Posted by petersenesq | Tuesday, August 20 2013 at 1:56PM ET
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