CDARS® for Socially Responsible Investors
With CDARS®, you can access multi-million-dollar FDIC insurance coverage and strengthen underserved communities at the same time.
CDARS offers a one-stop opportunity for socially responsible investors to meet their financial, administrative, and community objectives.
Through CDARS and the Banking on Communities Initiative of the Community Development Bankers Association (CDBA), you can channel capital to a specific Community Development Financial Institution (CDFI). CFDIs are banks that lend and provide other services in economically distressed areas.
Funds also can be deposited in CDARS Network member banks that are not affiliated with the CDBA and in minority-owned banks to support their missions to lend to underserved and disadvantaged communities.
You can also participate in the $1 Billion Gulf Coast Rebuilding Challenge. Challenge participants simply deposit money into community banks in the Gulf region that offer CDARS. These community banks then use the deposits to address immediate needs or reserve funds for future use. The goal is to create a highly flexible source of liquidity for rebuilding the Gulf Coast.
Why CDARS?
With reciprocal deposits through CDARS, your organization as an investor gets One Bank, One Rate, One StatementSM
One Bank. Investors can access multi-million-dollar FDIC insurance coverage by working directly with just one bank – the bank they know and trust.
One Rate. Investors earn one rate for each CD maturity and enjoy the option of reinvesting them through a simple process.
One Statement. Investors receive one easy-to-read statement summarizing all of their CD holdings.
In addition, the full value of your money can support lending opportunities in your local community.1 You also have the ability to make significant contributions to the banks serving communities in need and the satisfaction associated with making a difference.
How Does CDARS Work?
When you invest funds through CDARS at a local bank that is a CDARS Network member, those funds are divided into smaller amounts and placed with other CDARS Network members. Then, those banks issue CDs in amounts below the standard FDIC insurance maximum so that both principal and interest are eligible for FDIC insurance. Other Network members do the same thing with their customers’ funds, and a sophisticated matching system enables Network members to exchange funds with each other on a dollar-for-dollar basis. The resulting reciprocal transactions bring the full amount of the original deposit back to your bank, which can make the full amount of your invested funds available for community lending purposes.
What else should I know?
Your account information is protected; your banking relationship remains between you and your bank.
CDARS received very positive reviews in a March 8 Standard and Poor’s Credit FAQ piece entitled, "What Effect Will The Certificate Of Deposit Accounts Registry Service Program Have On Fund Ratings?” In the report, Standard and Poor’s stated that, from a credit perspective, it deems CDs issued through CDARS to be “AAA/A-1+” equivalent. Excerpts from the report are available at Crane Data
Find CDFI/CDBA institutions offering CDARS
[1] When funds are exchanged on a dollar-for-dollar basis with other banks in the Network, a CDARS Network member can use the full amount of a deposit placed through CDARS for local lending, satisfying some depositors’ local investment goals/mandates. Alternatively, with your consent, the member institution may choose to receive fee income instead of deposits from other Network members. Under these circumstances, deposited funds would not be available for local lending.
All CDBA members are CDFIs – a special designation by the U.S. Department of Treasury to recognize they primarily service economically distressed communities or populations.
If you are subject to restrictions with respect to the placement of funds in depository institutions, it is your responsibility to determine whether the placement of your funds through CDARS satisfies those restrictions.
Limits apply. Funds may be submitted for placement only after entering into a CDARS Deposit Placement Agreement with a CDARS Network member. This agreement contains important information and conditions regarding the placement of funds.
CDARS and Certificate of Deposit Account Registry Service are registered service marks of Promontory Interfinancial Network, LLC.
"As part of our socially responsible investing efforts, TIAA-CREF developed a Community Bank Deposit investment program to generate both competitive returns on short-term funds and positive social impact through deposits in community banks in underserved and low-income communities. TIAA-CREF found that the Certificate of Deposit Account Registry Service, CDARS, is the best vehicle for TIAA-CREF to access both safety and CD-level returns. Over the past three years, our program has ranged between approximately $20 million and $50 million in CDARS deposits with as many as eight leading community banks. Prior to CDARS, we couldn’t offer more than $250,000 in support to any bank and enjoy the safety of FDIC insurance coverage. CDARS changed all that. Now each bank is able to accept much larger deposits, which means more dollars to lend within their communities."
Scott J. Budde, CFA
Managing Director | Global Social & Community Investing
TIAA-CREF | Financial Services for the Greater Good