Citigroup Inc. and Bank of America Corp. are implementing software that tracks employees' volunteer and community activities, making it easier, for one thing, to verify compliance with the Community Reinvestment Act.
AngelPoints Inc., the 3-year-old company that sells the software, says Bank of America is already using it to track employees' CRA-related service tasks and other volunteer efforts, while Citi is setting up its system, initially, at least, to track volunteer efforts in general.
The Mill Valley, Calif., vendor says its system helps streamline what for many banks is currently a muddled and inefficient process. The current version of the CRA exam includes a service commitment that counts for 25% of the compliance test.
"The collection of CRA [service] records can be a data nightmare," said Reade A. Frank, the vice president at AngelPoints in charge of sales and marketing. Because most banks track their community outreach activities essentially by hand - transferring the data piecemeal rather than entering it into a coherent program - much information is simply lost, Mr. Frank said.
The Web-based AngelPoints system records, quantifies, and uploads all of an institution's community programs into a CRA file, he said. Through a central site, employees can enter their volunteer hours and employers can manage and report the institution's cumulative activities.
Employees use the program to find and sign up for volunteer activities and log their hours. At their employers' discretion, they may be able to redeem volunteer hours for rewards such as days off, donations to a favorite charity, or free merchandise.
Meanwhile, an administrator appointed by the employer, such as a human resources manager, can oversee the institution's cumulative efforts. An optional CRA module presents a questionnaire that determines, among other things, whether a particular service qualifies for CRA credit.
Qualifying questions to be filled out by the administrator include: "Did the service target affordable housing, small business, community services, or revitalization for the benefit of low to moderate income individuals?" and "Are the majority (51%) of the beneficiaries of the service considered low- to moderate-income individuals?"
AngelPoints' clients include Deloitte & Touche LLP and McKesson Corp.
Mr. Reade said that only around 5% of U.S. employees do volunteer work, less because of apathy than because of "the logistical challenge for companies to influence broad participation" in community programs.
Apart from altruism, there is a business case for increasing an institution's volunteer rates, he said. "For banks especially, respect in the community is fundamental to getting clients. As a retail entity, a bank needs to be viewed as having a positive effect" in the neighborhood where it runs branches.
Kenneth H. Thomas, the author of "The CRA Handbook" and a lecturer at the University of Pennsylvania's Wharton School, said software such as the AngelPoints system could help large institutions with the confusing task of discerning which community services qualify for CRA credit. The criteria is also available at several Web sites, including that of the Federal Financial Institutions Examination Council.
"Many banks feel that any type of service that they do, like sponsoring the upcoming celebration of the Cherry Festival, counts [for CRA credit] because it's helping the community," he said. "But CRA has to be financial, for example, related to retail services, economic development, or credit education."
Any investment "that helps banks learn more about CRA is good, but I would really rather see the money go toward bringing loans to the community," he said.
