Banking on The Gender Multiplier Effect

Banking on The Gender Multiplier Effect

At this critical point in history—a tipping point for the GME—some financial institutions are giving it a boost. Our own actions can also put it in motion.

By Andrea Stevenson Conner

These days a fair number of women in the United States have become economically empowered enough to be able to spark the gender multiplier effect. That is, they have the means to help other women—and then watch as those women help other women, expanding the impact of the initial assistance.

Formally defined, the gender multiplier effect is the idea that when one woman is supported, the effect ripples out, benefitting not only the initial woman but also the people close to them. When you apply the GME to a company, government agency, or a developing country, you get more than a 1:1 return. In the biggest picture, the gender multiplier effect can have a positive impact on the global economy.

While having economically empowered women is certainly good news for the gender multiplier effect, for women and for the world, the bigger picture for women is still complicated. Both in the United States and in other nations, women’s rights to the traditional basics of “life, liberty, and pursuit of happiness” are threatened every day.

The gender multiplier effect, you might say, is at a tipping point. On the one hand, the GME is being supported in fields like financial services. For example, economically empowered women have started First Women's Bank, intending to promote women into top leadership positions and to serve female customers in the ways that work best for women. There are several other good financial services industry examples of the gender multiplier effect that we’ll discuss later in this article.

Even as some women have advanced economically, things like women’s health, their ability to get an education, and the access they have to capital are threatened every day. Notably, while having the capital to start a bank is impressive, it’s not even close to the venture capital needed to fund startups led by women. Just 2.3% of venture capital awards go to women today.

Today, as I write this, I am asking myself questions like these: Where are we going to go as a society? What’s going to prevail? Will the gender multiplier effect keep being put into action?

While you think about the answers to those questions, let’s explore the good things that are happening in financial services.

First Women’s Bank Boosts Gender Multiplier Effect?

It wasn’t that long ago that women couldn’t get a mortgage without a man signing the papers. For that matter, it wasn’t that long ago that a woman couldn’t get a credit card—just because she was a woman.

A group of economically empowered women who know about these challenges has decided to open a bank that makes women a priority.?

Chicago-based First Women's Bank had its grand opening in late September. It is a first-of-its-kind, purpose-driven bank with a mission to grow the economy and advance the role of women within it. The?bank is the only women-founded, women-owned, and women-led commercial bank in the country with a strategic focus on serving the women's economy.?

In a press release about the grand opening, First Women’s Bank CEO Marianne Markowitz’s comments underscore how the bank will spark the gender multiplier effect every day.

“Small-business owners support their families, their employees, and their communities—we’ve formed First Women’s Bank to support them,” she said.

In addition to providing personal banking services and innovative capital solutions for small businesses led by women, the bank has created the FWB Collective, which is both a community of resources, support, and inspiration for owners for small businesses and a platform through which individuals and organizations can provide tangible support for the women’s economy.?

“As entrepreneurs and investors, we know what it’s like to navigate the capital structures that can support or impede the growth of a business,” said First Women’s Bank Strategic Advisors investor/entrepreneur Nia Batts and actress/activist Sophia Bush in the press release about the grand opening. “It’s incredibly important to us to make sure that women—at every stage of their businesses—are supported with the community, resources, and opportunities that we know have not been historically made available to all.

“First Women’s Bank is not only committed to providing innovative capital solutions for women-owned business,” they continued, “but passionate about the opportunity to improve the economic prosperity of the women their services and products touch.”?

The Gender Multiplier Effect: We’re Not Waiting 257 Years

Also in September, PNC Bank announced the launch of?Project 257?: Accelerating Women's Financial Equality, an initiative designed to help close the 257-year economic gender gap. Project 257 was derived from the World Economic Forum's?2020 Global Gender Gap Report?that found at the current pace of progress, it will take another 257 years for women to catch up to men from an economic perspective.

PNC's Project 257 also will focus on expanding access to credit to eligible businesses owned and led by women. The project boasts internally certified?women’s business advocates, “bankers whose passion for supporting female clients and employees is both personal and professional.” The project promises to continually monitor the policies and practices it uses to evaluate creditworthiness with an eye for equity.

The project also is committed to the professional growth of women within its ranks. “We recognize that being a great place for women to bank means we must also be a great place for women to grow professionally,” the project’s website states.

Coinciding with the launch of Project 257, PNC has partnered with?SheEO, a global nonprofit whose mission addresses one of the major factors driving the 257-year gap: women's lack of access to capital. SheEO provides interest-free loans to businesses that are owned and led by individuals who identify as women or nonbinary. The organization crowdfunds capital. To date, SheEO has crowdfunded?$7 million?to support more than 100 ventures in?the United States,?Canada,?Australia,?New Zealand, and the UK.

Importantly, SheEO’s vision is that the organization’s work has a positive ripple effect. It’s an excellent example of the gender multiplier effect in action.?

“You are not alone,” the organization’s homepage says. “At SheEO you're surrounded by?radically generous people?committed to making the world better for all.”

Credit Unions Also Sparking the Gender Multiplier Effect

Part of PNC’s Project 257 is a commitment to invest in community development financial institutions that primarily support women and minority entrepreneurs. Self-Help Credit Union, Durham, North Carolina, is not only a member-owned cooperative with a volunteer board of directors but also a CDFI that, while it serves the whole community, has specifically committed to helping to elevate the financial standing of women and children.

For example, Self-Help CU supports women who are building assets by opening their first savings accounts, starting their own businesses, or buying homes.?

“Our approach to community development also includes youth and education,” the CU’s website states. “We lend to child care providers who might have difficulty getting loans from other sources, and we finance facilities for public charter schools that serve students poorly served by existing options.”

The credit union reports having made more than 1,200 loans to women-owned businesses; child care loans that have created or maintained more than 23,000 spaces, mostly for low-income children; and public charter school loans that have helped create facilities for more than 42,000 students, with a focus on communities that lack quality educational choices.

Interestingly, the credit union industry has a history of “feminist federal credit unions” that promoted their vision of serving women and female entrepreneurs.

This article quotes Susan Osborne, who co-founded Connecticut Feminist Federal Credit Union in 1974, as saying: “It’s not just enough to have the will or the need, you actually need the resources.”

Connecticut Feminist FCU and Detroit Feminist Federal Credit Union, founded in 1973, both focused on the immediate needs of women. “Members lent to women who needed help making large household purchases, like cars or washing machines,” the article explains. “They also tried to teach financial literacy to women who had never been allowed to manage money before.”

This was less about idealism and more about meeting needs that women had at the time. “What we were financing was not luxury items,” Osborne says in the article. “It was basic needs that women had and really couldn’t get at the time with the kinds of livelihoods they had.”

The Equal Credit Opportunity Act of 1974 helped level the playing field for women and lessened the need for credit unions to serve such basic financial needs. And perhaps that act helped lead to today’s economically empowered women who can support other women with business loans.

Still, the clear need for First Women’s Bank, PNC Project 257, and other initiatives suggests that we’re not yet done closing the economic gap for women. It points to the fact that we must keep working on this issue since we know that through the gender multiplier effect, helping one woman means helping many people.

In the end, what comes with being economically empowered is voice. It’s so good for society that women are becoming more financially enabled. Establishing banks that serve women as customers and promote their leadership helps push the balance toward activating the gender multiplier effect and its powerful positive ripple.

You and I might not have the capital to start a bank or a venture capital fund. But we can still act in ways that will help ensure that the tipping point we’re now facing goes in favor of sparking the gender multiplier effect—and ripples out to make the world better.

We can manage our finances using banks led by women. We can buy from women-owned businesses. We can take an up-and-coming woman out to lunch and introduce her to key people in our networks. What is the thing within your sphere of influence that you can do to better the lives of women this week? Do it.

Andrea Stevenson Conner is president of Stevenson Conner Global Strategies and a fierce advocate for the gender multiplier effect. Reach her at [email protected].