Community OutreachFAQ

CDARS® for Socially Responsible Investors

Wouldn’t it be nice to secure your money and to help underserved communities at the same time? Whether you are an individual investor or whether you work for an organization with socially responsible investment goals, you can use CDARS to access multi-million-dollar FDIC insurance, earn CD-level interest, and help make entire communities economically stronger and healthier.1

Depositing funds through CDARS is safe and easy. When you deposit funds through CDARS, you can work directly with just one bank, sign one Deposit Placement Agreement, earn one rate for each CD maturity, and receive one easy-to-read statement summarizing all your CD holdings. It’s that simple.

Banking on Communities
Through the Community Development Bankers Association’s (CDBA) Banking on Communities Initiative,you can use the CDARS service to channel capital to a specific Community Development Financial Institution (CDFI). CFDIs are banks that lend and provide other services in economically distressed areas.2

When you deposit funds using the CDARS service, you make critical funds available for lending initiatives in local communities like producing affordable housing, financing small businesses, creating jobs, and expanding neighborhood facilities that provide much-needed services for low-income families.

Read about how socially responsible investing through CDARS can make a difference in an underserved local community

Find CDFI/CDBA institutions offering CDARS

Note: Funds can also be deposited in CDARS Network member banks with a CDFI designation that are not affiliated with the CDBA, but that support quality lending projects and provide hands-on support for those projects. For example, funds can be deposited in minority-owned banks that offer CDARS to support lending in underserved and disadvantaged communities.

Gulf Coast Rebuilding Challenge
Promontory is proud to have supported initiatives like the $1 Billion Gulf Coast Rebuilding Challenge, which encouraged participants to deposit money into community banks in the Gulf region in the wake of Hurricane Katrina. These community banks then used the deposits to address immediate lending needs, as well as longer-term projects in their local footprints.

Many corporations, such as General Motors, Home Depot, Bank of America, and Microsoft, as well as other participating depositors answered the challenge by placing funds through CDARS. CDARS enabled socially motivated investors to channel deposits to much needed communities while still earning CD returns and knowing their funds were eligible for FDIC insurance backed by the full faith and credit of the federal government. The project channeled capital into the Gulf Region and created a highly flexible source of liquidity for rebuilding the Gulf Coast. Who knew that simply depositing funds into fully FDIC-insured, interest-bearing CDs could make such a difference?!


When you place deposits through CDARS, you enjoy the benefits of One Bank, One Rate, One Statement®

One Bank. Access multi-million-dollar FDIC insurance coverage by working directly with just one bank – a bank you know and trust – and avoid the burden of tracking changing collateral values on an ongoing basis if you are accustomed to doing so.

One Rate. Earn one rate for each CD maturity and enjoy the option of reinvesting through a simple process. Historically, rates on CDs placed through CDARS have compared favorably to Treasuries.

One Statement. Receive one easy-to-read statement summarizing all of your CDARS holdings.

In addition, the full amount of your deposit placed through CDARS can support lending opportunities in a local community. You have the ability to make significant contributions to the banks serving communities in need and the satisfaction associated with making a difference.3

How Does CDARS Work?

When you deposit funds through 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 ($250,000) 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 lending in the local community.3

What Else Should I Know?

Your account information is protected; your banking relationship remains between you and your bank – the bank you know and trust.

[1] 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 funds through CDARS, or a particular CDARS transaction, satisfies those restrictions. Limits apply. Funds may be submitted for placement only after you enter into a CDARS Deposit Placement Agreement with a participating institution. The agreement contains important information and conditions regarding the placement of funds. CDARS and One Bank, One Rate, One Statement are registered service marks, and Reciprocal is a service mark, of Promontory Interfinancial Network, LLC.

[2] 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.

[3] When deposited funds are exchanged on a dollar-for-dollar basis with other banks in the Network, the relationship institution can use the full amount of a deposit placed through CDARS for local lending, satisfying some depositors’ local investment goals or mandates. Alternatively, with a depositor's consent, the relationship institution may choose to receive fee income instead of deposits from other participating institutions. Under these circumstances, deposited funds would not be available for local lending.