5 December 2023

Tim Chen from NerdWallet: It’s Time to Prioritize an Efficient Corporate Social Responsibility Program

By Ronald Smith

It’s me, Tim Chen from NerdWallet, and I’ve got some exciting news to share. I believe that now is the perfect moment for us to truly concentrate on enhancing our corporate social responsibility initiative. Let me explain why.

You see, corporate social responsibility, or CSR, is all about businesses like ours going above and beyond to make a positive impact on society. It’s not just about making money; it’s about making a difference.

In today’s fast-paced world, where everything seems a little chaotic, I believe it’s crucial for us to bring more organization and structure to our CSR program. By doing so, we can ensure that our efforts are impactful, efficient, and beneficial to the causes we support.

Now, you might be wondering, why is this the right time to focus on our CSR program? Well, there are a few reasons I’d like to highlight.

Firstly, society as a whole is increasingly concerned about the actions of businesses. People want to support companies that genuinely care about making a positive impact. By strengthening our CSR program, we can demonstrate our commitment to social responsibility and improve our reputation among consumers.

Secondly, an organized CSR program can help us align our efforts with our business goals. By identifying causes and initiatives that resonate with our brand and values, we can create a stronger connection between our business and our CSR activities. This alignment can lead to increased employee engagement and customer loyalty.

Lastly, an efficient CSR program isn’t just a nice-to-have; it can also have financial benefits. When we invest in impactful CSR initiatives, we can attract socially conscious investors and partners who are eager to support businesses that prioritize making a positive difference.

So, my friends, let’s seize this opportunity to revamp our CSR program. Together, we can create a more organized and impactful approach to corporate social responsibility. By doing so, we’ll not only make a positive difference in the world but also strengthen our business and reputation. Together, we can make a change, one step at a time!

Tim Chen from NerdWallet: It's Time to Prioritize an Efficient Corporate Social Responsibility Program

Last week, I am thrilled to share some exciting news about my personal finance app and website, NerdWallet. We have made a significant decision to move $2 million of NerdWallet capital to Self Help Credit Union, a bank that serves people with low incomes in Oakland, California.

But that’s not all. We are also teaming up with Inclusiv, a nonprofit organization that represents community credit unions, to expand this initiative across the country.

Why are we doing this? Well, let me explain. As the CEO and founder of NerdWallet, I believe in the power of credit unions. These financial institutions are deeply rooted in local communities, particularly in areas that have been heavily impacted by the pandemic and face economic challenges.

By channeling funding and capital directly into the hands of those who need it most, we hope to make a real difference. Our goal is not only to support low-income populations but also to inspire other companies to follow suit and tap into the resources that credit unions offer.

Together, we can create a ripple effect of positive change. By leveraging the unique position and influence of credit unions, we have the opportunity to uplift communities and foster economic growth.

I am genuinely excited about this partnership and the potential impact it can have. It’s a small step towards a greater goal of improving financial opportunities for all. Together, let’s make a difference!

Last week, I had a chat with Tim on LinkedIn Live to dig deeper into why NerdWallet is making a move at this moment, how their team played a major role in this idea, why working with credit unions is a better fit than big banks, and how their efforts to help underserved communities also benefit them.

Check out the edited transcript below from a part of our conversation. And don’t forget to click on the embedded SoundCloud player to listen to our full discussion.

USamerica.US: How has the pandemic affected the people you usually assist?

Tim Chen: Yeah, it’s like a tale of two stories. We help a big chunk of America, based on extensive research and countless conversations I’ve had in living rooms all over the country. About half of our nation lives paycheck to paycheck. The other half has some breathing room and worries about different things. So, the pandemic has definitely had a significant impact on both groups. You might have heard of the term K-shaped recovery. For the first half, there has been plenty of stimulus efforts and federal aid to provide short-term financial relief, even though it hasn’t fully solved the long-term problems people face. As for the other half, a good number of them have actually done quite well financially. With lower interest rates, there’s been a rise in asset values. Many people have made a fortune in the stock market and other areas. Some businesses have thrived. It’s a mixed bag out there.

Okay, let me break it down for you. The problem we’re talking about here is that banks and credit unions make a whole bunch more money in rich neighborhoods compared to poor neighborhoods. Here’s how it works: they take the money you put into the bank and lend it out to local businesses and people. They give out loans for things like starting a business, buying a house, or just getting some extra cash. In fancy neighborhoods where people have a lot of money and good credit scores, it’s super easy for the banks to hand out loans because they know those people are reliable. But in poorer neighborhoods, there are still a lot of good people who could pay back a loan, like the baker down the street or your elementary school teacher. The thing is, the banks don’t always know these people, so it takes more effort for them to figure out if they can trust them and give them a loan.

So, there are a whole bunch of people out there who are really good at this stuff. They’re these credit unions that help out folks in low-income areas, and there are 351 of these awesome unions in a group called Inclusive. These credit unions know how to make the most of their money. Now, our board has this idea that we should keep a good amount of cash saved up for emergencies. Basically, we’re talking about putting in money first and taking it out last. But then I had a thought. I wondered if there was a better way to use this cash instead of just sticking it in our regular bank. So, we started looking at the interest rates you can get, and guess what? Sometimes, those local community credit unions actually offer the same or even slightly better rates than your typical bank.

So, here’s the deal: we got our team on board with this idea and thought, Hey, let’s bring some money into the communities that really need it. See, there are two ways companies can approach this. First, they can invest in their own local community. It’s a win-win situation because our employees love it and there’s so much excitement when we mention it. It’s pretty awesome. Plus, you can also find volunteer opportunities in the community to lend a hand.

Alternatively, you could reach out to Inclusive for some help in finding the most deserving communities in the country. Just talk to them and they’ll tell you about places like Northern New Mexico where there’s a lack of funding and a lot of people in need of loans. We’re still figuring out the details on that front, but we know it’s going to be a major focus for us moving forward.

So here’s the deal: NerdWallet is really good at connecting with a bunch of folks and showing them some savvy money moves they might not even know exist. It’s like uncovering hidden options, you know? Now, what’s interesting is that there are a whole bunch of big-shot money managers out there who might not realize they’re missing out on something great. I’m talking about a free ride, with government backing and all. Plus, it’s a win-win situation: it makes a difference and the employees will absolutely adore it. That’s the scoop we want to share with everyone. We’ve got something amazing here.

Me: Wow, let me tell you about Self-Help, a community development credit union that I find truly inspiring. They’re all about supporting the Oakland area, which is pretty awesome. I mean, imagine this: they actually funded the first grocery store in West Oakland in 50 years, called the Community Grocery. Can you believe that? It’s incredible what they’re doing. And you know what? I strongly believe that every credit union has stories like these to share. It just takes some effort to discover them. Funny enough, I had the chance to meet someone from Self-Help while serving on the Consumer Advisory Board at the Consumer Protection Financial Bureau. That’s when I made this great connection.

But when I started exploring further, I discovered two more institutions, one in Berkeley and one in San Francisco, that I believed we should also try to help. And the most effective way to make a difference is by getting other companies with a substantial amount of money to get involved too. I noticed that Netflix recently announced that they were moving some of their funds to a more specific bank. While they mentioned Black-owned banks as their focus, I believe there’s a significant overlap in terms of the potential to create a social impact through these deposits.

USamerica.US: Did the social unrest at the start of the pandemic, like the events surrounding George Floyd and Ahmaud Arbery, inspire you? There was so much frustration and unrest. And it wasn’t just about society. Many people were struggling financially, which only intensified the situation. It made this past year a time of heightened emotions and profound changes. Did that have any influence on your experiences?

Me: Honestly, yes. Within our company, there was a lot of discussion about what we could do and how we could make a difference. At every meeting, people were asking why we couldn’t take action more quickly and what steps we could take. It’s been a while since then, and I do wish we had started sooner. But as they say, it’s better late than never.

You: That’s right.

Small Businesses are Evolving: So, you’ve mentioned how your team was wondering why things weren’t moving faster. But what about the people who use NerdWallet, like your customers and the communities you serve? How has the connection between NerdWallet and not just your team, but the communities you reach, changed over time?

Me, Tim Chen: Let me tell you about a big trend happening in the world of investment management. People are really showing interest in ESG-oriented funds. That stands for Environmental, Social impact, and Governance. It’s amazing how much money is flowing into these types of investments. But it’s not the fund managers leading the way. It’s regular people like you and me who want to align their money with their values. As a company, we’re here to help you with all kinds of money questions, and we’ve noticed a significant increase this year in people who want to learn how to make socially responsible investments. It’s just one example of the ways we want to support you. On the other side of things, when it comes to saving money, we think it’s important to raise awareness. Typically, we only focus on interest rates when choosing a deposit account. But maybe there are other things that matter to you too, things that should be made transparent. Let’s explore those options together!

USamerica.US: So, you mentioned that you’d like to see more companies getting involved in this kind of activity. Have you actually seen that happening? Have other companies approached you, asking how they can also participate?

Tim Chen: Yes, we’ve started to notice a few others showing interest. It’s been about a week since we began, and we’re really hoping for this initial interest to turn into a major surge. I heard that the SP 500 companies have around a trillion dollars in cash reserves.

USamerica.US: That’s incredible!

USamerica.US: Can I discuss how credit unions work differently from big banks and how investing in them actually benefits communities more than what happens with these big banks? Because it seems like many smaller individuals don’t have the connections with big banks that are necessary to truly seize the best opportunities.

Tim Chen: Let me explain in simpler terms. Credit unions are different from banks. They are nonprofit organizations that work together with their members. When credit unions make extra money, they give it back to all the members. This means they are not solely focused on making as much profit as possible, like banks do. Banks are more concerned with growing their assets and finding cheap sources of money, even if it means ignoring certain communities. Credit unions, on the other hand, are all about community. They have branches that serve specific groups of people. The idea of credit unions started when groups of workers or community members came together to form their own financial institution.

And because of that, they have many more people out and about. They’re a part of the community. The people who work at these unions are often members of the community. Sometimes they do this as a part-time job, not full-time. So, in the last 10 or 20 years, many of them have had a hard time keeping up with the advancements in big tech, big data, and infrastructure software that have improved efficiency in large banks. They have struggled to keep pace. That’s why it’s important for us to give them the support they need to continue doing what they do.

USamerica.US: It feels like credit unions, unlike big banks, really care about the community. They have a stronger connection and understanding of the people in their area, rather than just being focused on making money. This not only affects the individuals who live in the community, but it has an impact on the community as a whole. Do you think this helps bring money into the community? And once the money is there, does it have a chance to circulate and benefit everyone?

Welcome to the One-on-One Interview series with thought leaders. This transcript has been edited for publication. If you have an audio or video interview, just click on the player above or subscribe to our podcast on iTunes or Stitcher.