Identification
The development of Triodos Bank is one that has notable implications for the development of both the banking and nonprofit or voluntary sector. With the ability to match investments with deposits in an environmentally friendly manner, the organization has created a positive situation in which both depositors and borrowers are able to more effectively control their finances. Unlike traditional banks, which seek only to maximize profit, Triodos Bank focuses on generating profit in a socially conscious environment that promotes community development in a positive manner. Although Triodos offers a wide range of services for customers, the reality is that there are specific services that are more attractive for financial managers of non-profit organizations. Utilizing this as a basis for inquiry into the services offered by the organization, this investigation considers what specific considerations would have to be made by a Chief Financial Officer working with a nonprofit organization with respect to borrowing and depositing monies in Triodos Bank.
Analysis and Evaluation
Critically examining the operations at Triodos Bank, researchers have noted that what makes this bank so successful is that it is able to effectively provide investors with a clear understanding of what activities are financing. In the context of traditional commercial banks, investors have no clear picture of how banks are investing their money.
[...] Although depositors placing funds in the bank can be assured that they are supporting socially just causes, it is evident that that nonprofit organizations making this choice need to take several issues into consideration when making the decision to deposit funds with Triodos bank. First the organization must consider how must profit it needs to make through investing its monies. While the returns on deposits placed in Triodos Bank are quite competitive, the reality is that if the nonprofit organization needs to acquire considerable amounts of capital through investment in order to fund its projects, Triodos Bank may not be the best solution for the organization. [...]
[...] Utilizing this as a basis for considering the actions that should be taken by the nonprofit to ensure the best financial outcomes for the organization, it seems reasonable to recommend that the nonprofit organization discuss this decision with the CFO and that the CFO work in close conjunction with Triodos Bank to ensure that return on investment is maximized and any potential penalties that may be incurred are minimized. In this context, the organization will have to consider a high degree of financial planning in order to accurately assess its needs. [...]
[...] Although conscience should serve as the impetus for nonprofit organization to deposit monies in Triodos Bank, the harsh reality is that from a purely financial standpoint, depositing monies in this organization may not make the most financial sense. However, for organizations that do qualify under the organization's loan programs, the ability to acquire capital at a favorable interest rate would have clear financial benefits for the organization. Here again, it is evident that the organization must engage in a high degree of financial planning such that it can effectively meet its needs over the long-term. [...]
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