In today's complex financial landscape, many nonprofit organizations are discovering that their banking and investment practices may inadvertently support systems that contradict their social missions. For instance, food banks might find themselves linked to banks financing industrial agriculture, which exacerbates food insecurity, or housing nonprofits could be associated with institutions engaging in predatory lending. These challenges highlight the urgent need for nonprofits to rethink their financial strategies to better align with their core values. By consciously engaging with financial systems, nonprofits can not only enhance their impact but also drive systemic change. This article explores how nonprofits can leverage finance as a tool for equity and justice, drawing insights from recent research and case studies.

The Impact Experience, an Oakland-based nonprofit, recently published a report titled "Strategic Financial Engagement in Movement Building: A Case Study Analysis" in December 2024. The study delves into how organizations in various fields—such as climate justice, racial equity, sustainable agriculture, and human rights—are navigating financial systems to advance their goals. The findings categorize strategies into three broad approaches: systemic influence, incremental relationship building, and targeted grassroots action. Each approach aims to leverage finance as a tool for justice, addressing common challenges like institutional resistance and resource constraints.

To effectively align financial practices with mission, nonprofits must first understand their current financial landscape. Conducting audits of existing banking and investment relationships is crucial. Tools like Bank.Green and the Global Alliance for Banking on Values can assist in identifying banks that align with organizational values. Educating staff and board members about justice-aligned investing and financial literacy is equally important. Workshops and training programs can help build this knowledge base. Setting clear policies ensures everyone understands what alignment means within the organization. Creating cross-functional teams can facilitate this process, ensuring every financial decision advances the organization’s impact goals.

Once internal practices are aligned, nonprofits can expand their influence by cultivating strategic partnerships. Collaborations with community development financial institutions (CDFIs), Minority Depository Institutions (MDIs), and local credit unions can provide tailored financial services that support mission-driven initiatives. Direct engagement with financial institutions, using tools like As You Sow’s Invest Your Values platform, can help evaluate and improve ESG performance. Utilizing coalitions and networks focused on specific initiatives can further amplify efforts. For example, Native Women Lead partnered with Nusenda Credit Union in New Mexico to create a special loan fund, advancing business ownership among Indigenous women.

Nonprofits can also use their influence as stakeholders to drive meaningful change. Moving assets from harmful industries into community-led solutions demonstrates a commitment to justice. Even small actions, like switching bank accounts to institutions aligned with organizational values, can have a significant impact. Larger nonprofits with stock holdings can engage in shareholder advocacy to push for corporate accountability on issues like racial equity and environmental sustainability. By strategically leveraging financial resources, nonprofits can challenge entrenched inequities and promote equity-driven solutions.

Finance is more than just numbers; it represents power, priorities, and possibilities. Empowering nonprofits to align their financial practices with their social missions can lead to transformative change. Through strategic internal practices, strategic relationships, and direct engagement with financial systems, nonprofits can become leaders in justice-oriented finance, setting an example and building trust within the financial sector. This integrated approach ensures every financial decision advances the organization’s impact goals, fostering a more equitable and just society.