College desposits funds in community bank

By Tom Lisi

Macalester began a partnership with University Bank, a local community development bank, this summer when it deposited $500,000 of its operating budget into an account. The bank will, in return, offer internships to Macalester students.The operating budget, which is composed of revenue from grants, tuition, room fees and the college’s endowment, totaled more than $77 million for the 2007-08 school year.

The operating budget, unlike the endowment, is not expected to make money from investments. By investing in University Bank, Macalester does not run the risk of sacrificing large returns by choosing a socially responsible option.

Community banks have developed over the last few decades in urban areas across the country. They are for-profit banks, but operate to lend and invest in neighborhood-based programs in low-income communities and areas that are otherwise not serviced by larger banks.

Karin Trail-Johnson of the Civic Engagement Center and Danny Schwartzman ’04 have led Macalester’s effort to get more out of an investment in a community development bank. Opportunities have been offered to Macalester students to intern and work at University Bank in order to gain exposure to the workings of a community bank.

“I’ve always thought it would be a good idea for interested Macalester students to do work for a bank like this-to see how for-profit institutions can do good community work that most people think are reserved for non-profits,” said David Wheaton, Macalester’s vice president for administration and finance.

If the investment proves to be helpful for students and the community, the amount of money invested could go up in the coming years, Wheaton said.

The administration has yet to evaluate the extent to which the relationship with University Bank has been successful.