money

Reviewed by Charles Potters
Fact checked by Vikki Velasquez

Economic inequality is easy enough to find statistics on, but these are often difficult to parse. For example, politician Bernie Sanders, a vocal campaigner for equality, has provided various data points over the years to get his message across.

Sanders has claimed at rallies, on his campaign website, and elsewhere at various points in time (2014 to 2016) that: The top 1% of the population takes in 23.5% of all of the nation’s income; the top 0.1% of the population controls roughly as much wealth as the bottom 90%; the top 1% accounted for 58% of real income growth from 2009 to 2014, with 42% going to the bottom 99%; and that the United States has the highest child poverty rate among developed countries.

These numbers hop around among the 0.1%, the 1%, and the 90%, and among wealth, income, income growth, and poverty rates. Not all of these variables are necessarily correlated: An American lawyer with student debt might make several hundred times what a Kenyan herder does but have much lower net wealth.

For the purposes of campaigning, this style of presentation is fine; the picture of pervasive unfairness emerges clearly enough. For purposes of comparison across time and space, however, we need a nice, clean headline number.

Of course, any single data point will distort the picture, leaving this out, overemphasizing that, and giving the dangerous impression that life is simpler than it is. So we need to pick the best metric possible.

Key Takeaways

• Inequality in a country is often measured using the Gini coefficient, which shows the share of total wealth or income by population segment.
• A higher Gini coefficient indicates greater inequality, with high-income individuals receiving much larger percentages of the total income of the population.
• Critics of the Gini coefficient argue that it is an imperfect measure, as it ignores the informal economy and flattens distortions in the income distribution, leading to nonintuitive interpretations.
• The Palma ratio, another way to measure inequality, better weights observed income distributions using a simple and easy-to-understand ratio.

“Putting the Gini Back in the Bottle”

For years, the number used to measure inequality has been the Gini coefficient. It’s not hard to see why, given its alluring simplicity: 0 denotes perfect equality, in which everyone’s income—or occasionally, wealth—is the same; 1 denotes perfect inequality, in which a single individual makes all the income (figures above 1 could theoretically result if some people make negative incomes).

The Gini coefficient gives us a single sliding scale to measure income inequality, but what does it actually mean? The answer is off-puttingly complex.

If you plot population percentiles by income on the horizontal axis against cumulative income on the vertical axis, you get something called the Lorenz curve. Take one of these curves, calculate the area beneath it, divide the result by the area beneath the straight line denoting perfect equality, and you have your Gini coefficient—none of which is very intuitive.

Nor is that the only problem with the Gini coefficient. Take a hypothetical society in which the top 10% of the population earns 25% of the total income, and so does the bottom 40%. You get a Gini coefficient of 0.225.

Now, cut the income of the bottom 40% by two-thirds—to 8.3% of the nation’s total income—and give the difference to the top 10%, who now earn 41.7% (the amount earned by the 40% to 90% chunk stays steady).

The Gini coefficient nearly doubles to 0.475. But if the income of the bottom 40% falls by another 45%, to just 4.6% of the total, and all of that lost income once again goes to the top 10%, then the Gini coefficient doesn’t rise all that much—it’s now just 0.532.

Note

Countries with higher Palma ratios face greater economic inequality, impacting poverty, health, and education.

The Palma Ratio

To economists Alex Cobham (chief executive of the United Kingdom’s Tax Justice Network) and Andy Sumner (professor of international development at King’s College London and director of the Economic and Social Research Council’s [ESRC’s] Global Challenges Strategic Research Network on Global Poverty and Inequality Dynamics), the Gini coefficient just doesn’t make much sense.

When the bottom 40% of a population loses half their income, and the richest 10% get dibs, a sensible measure of income inequality should rise more than incrementally.

In 2013, Cobham and Sumner proposed an alternative to the Gini coefficient: the Palma ratio. They named it after José Gabriel Palma, a Chilean economist. Palma noticed that in most countries, the middle class—defined as those in the fifth to ninth income deciles, or the 40% to 90%—takes in around half of the total income.

“The (relative) stability of the income share of the middle is a strikingly consistent finding, for different data sets, countries, and time periods,” Cobham told Investopedia by email. Given that insight, there seems to be little sense in using the Gini ratio, which is sensitive to changes at the middle of the income spectrum but relatively blind to shifts at the extremes.

The Palma ratio divides the income share of the top 10% by that of the bottom 40%. The result is a metric that is, in Cobham and Sumner’s words, “‘over’-sensitive to changes in the distribution at the extremes, rather than in the relatively inert middle.” The table below, from which the hypothetical Gini coefficients above are taken, shows how this effect plays out:

The near-halving of the income of the bottom 40%—and the resulting boost to the income of the richest 10%—causes the Palma ratio to shoot up from 5 to 10, whereas the Gini coefficient ticks up only slightly.

The Palma ratio has another advantage: Its real-world meaning is easy to grasp. It is not the product of statistical wizardry, but simple division: The highest-earning 10% of the population make X times more than the lowest-earning 40%.

The Gini ratio, Cobham and Sumner write, “yields no intuitive statement for a non-technical audience.” The best we can do is something like this: On a scale of 0 to 1, this country is 0.X unequal.

How Is the Palma Ratio Calculated?

The Palma ratio is calculated by dividing the richest 10% of the population’s share of gross national income (GNI) by the share of the poorest 40%.

Why Is the Palma Ratio Considered Better Than the Gini Coefficient?

The richest getting richer and the poorest getting poorer is the main driver of inequality. The Gini coefficient, however, is more sensitive to changes in the middle group, which is where shifts in income less frequently occur. The Palma ratio was developed to remedy this issue by focusing on the differences between those in the top and bottom income brackets.

What Does a High Palma Ratio Mean?

A high Palma ratio indicates higher inequality in a society. It compares the share of income held by the top 10% versus the bottom 40% of earners. A higher ratio shows that the richest 10% disproportionately earn a large share of income, while the poorest 40% earn much less, revealing increased income disparity.

The Bottom Line

So, should we expect the Palma ratio to put “the Gini back in the bottle,” as Cobham and Sumner’s paper put it? Perhaps in time. As Cobham lamented to Investopedia, “Ah, the tyranny of the Gini remains strong!”

Still, it didn’t take long for the Palma ratio to attract some big endorsements. The Organisation for Economic Co-operation and Development (OECD) and the United Nations (U.N.) included it in their databases, and Nobel Prize-winning economist Joseph Stiglitz used it as the basis of a proposal for the Sustainable Development Goals.

Fact checked by Vikki Velasquez
Reviewed by Thomas Brock

A negative, or inverse correlation, between two variables, indicates that one variable increases while the other decreases, and vice versa. This relationship may or may not represent causation between the two variables, but it does describe an observable pattern.

A negative correlation can be contrasted with a positive correlation, which occurs when two variables tend to move in tandem.

Understanding negative correlation is important for investors since including assets in a portfolio that tend to move in opposite directions is key to achieving a well-diversified portfolio.

In fact, it is because some asset classes—for instance, stocks and bonds—tend to exhibit a negative correlation with each other that diversification can increase expected returns while at the same time reducing overall portfolio risk.

Here, we dig deeper into how correlation is calculated and why negatively correlated assets work together to produce a net positive, as opposed to simply canceling each other out, for investors.

Key Takeaways

• A negative correlation occurs between two factors or variables when they consistently move in opposite directions to one another.
• Investors can utilize assets showing negative correlations to reduce the level of risk in their portfolios without harming returns.
• Even though two variables may have a strong negative correlation, this does not necessarily imply that the behavior of one has any causal influence on the other.
• The relationship between two variables can also change over time and may have periods of positive correlation as well.

Understanding Negative Correlation

When two variables are correlated, the relative changes in their values appear to be linked. This pattern may be the result of the same underlying cause or could be pure coincidence. It is thus important to recognize the adage “correlation does not imply causation.” Nevertheless, correlation is an important statistical tool used to measure the strength of a relationship between two or more variables.

This measure is expressed numerically by the correlation coefficient, sometimes denoted by “r” or the Greek letter rho (ρ). The values assigned to the correlation coefficients range from -1.0 and 1.0.

A “perfect” positive correlation of +1.0 would mean that two variables move exactly in lockstep with one another—so if variable A increases by two, so does variable B. A “perfect” negative correlation of -1.0, by contrast, would indicate that the two variables move in opposite directions with equal magnitude—if A increases by two, B decreases by two.

In reality, very few factors are perfectly correlated either way, and the correlation coefficient will fall somewhere within the negative-one-to-one range. Note that a correlation of zero suggests that there is no relationship between two variables and their movements are completely unrelated or random to one another.

Negative correlations occur naturally in many contexts. For instance, as the amount of snowfall increases, fewer drivers appear on the road. Or, as a cow gets older, her milk production drops. As you exercise more, you tend to lose weight. The more cats there are in a neighborhood is related to fewer mice. Negative correlations also appear in the world of economics and finance.

$begin{aligned}&r=frac{sum(X-overline{X})(Y-overline{Y})}{sqrt{sum(X-overline{X})^2}sqrt{(Y-overline{Y})^2}}\&textbf{where:}\&r=text{The correlation coefficient}\&overline{X}=text{The average of observations}\&qquadtext{ of variable }X\&overline{Y}=text{The average of observations}\&qquadtext{ of variable }Yend{aligned}$​r=∑(X−X)2​(Y−Y)2​∑(X−X)(Y−Y)​where:r=The correlation coefficientX=The average of observations of variable XY=The average of observations of variable Y​

How Investors Use Correlations

Investors can appreciate the concept of negative correlation simply by identifying two stocks that appear to be negatively correlated.

For instance, if stock A tends to fall when stock B rises, an investor who owns both shares would see the losses in one offset by gains in the other. The two stocks may be negatively correlated because they experience some negative feedback from one another directly, or because they react differently to the same external stimuli.

In the first case, imagine two competitors, such as Coca-Cola and PepsiCo. Because these two firms are locked in a perpetual battle for market share in the beverages sector, what is good for Coca-Cola may necessarily be bad news for Pepsi and vice versa.

A great new product by Pepsi may boost its share price while Coke falls. Therefore, close competitors in highly competitive markets may have a negative correlation.

In the second case, the two stocks may naturally react to the same external or indirect cause in an opposite fashion. For instance, financial stocks such as banks or insurance companies tend to get a boost when interest rates rise, while the real estate and utilities sectors get hit particularly hard given the same news.

Many investors study correlations between stocks, as well as between industries, geographies, and asset types. For example, an investor in oil might hedge a portfolio with stocks in airlines. The two industries have a negative correlation.

When oil prices slide, airline stocks rise. Adding more negatively correlated assets to a portfolio is the foundation of the concept of diversification. Modern portfolio theory (MPT), the formative theory behind portfolio diversification, points out that combining risky assets does not necessarily dictate that the overall portfolio risk will increase so long as there are negative correlations among them.

Important

A correlation may or may not be meaningful. Many complex factors could be in play, and the observed correlation could end up being spurious.

Negative Correlation Between Stocks and Bonds

One of the most widely recognized negative correlations among asset classes is that of stocks and bonds. Traditionally, financial experts have recommended owning both stocks and bonds with weights that vary with investment goals, time horizon, and risk tolerance. The reason behind holding both stocks and bonds is that when stocks fall, bonds tend to rise. This generates a risk reduction through diversification.

Why are stocks and bonds thought to be negatively correlated? The theory posits that inflation, which is a general rise in prices, benefits stock prices because increased costs will be passed on to consumers and translate into greater nominal profits.

Bonds, on the other hand, which often pay a fixed interest rate, will see the value of those coupon payments erode with inflation, making them less valuable.

Moreover, the amount initially invested in a long-term bond, known as the principal, will have less purchasing power when it is returned several years from now than it is today. As a result, inflation plays an important role in understanding the relationship between stock and bond prices.

Note

While computing correlation can be time-consuming, you can calculate it easily with software like Excel.

A second reason has to do with relative riskiness. Bonds are often seen as less volatile and more conservative, in general, than stocks. If investors feel that stocks are overbought or the economy is shaky and a selloff is likely, they may shift funds out of riskier assets like stocks and invest that money in bonds. This is known as “flight to safety,” where selling pressure in stocks accelerates downward prices while bonds get bid up.

Researchers looking at the price relationship between stocks and bonds, however, suggest the assumed negative correlation is not so straightforward and could be merely an illusion.

Empirical research looking at the historical movement of the two asset classes shows that there are periods of negative correlation, but mostly, they are positively correlated. Research looking as far back as 1926, in fact, shows that the stock/bond correlation has been positive for the vast majority of the time, with just three significant periods of negative correlation: 1929 to 1932, 1956 to 1965, and 1998 to 2003.

Negative Correlations and Forex Trading

The foreign exchange, or forex market, involves trading currencies that are priced in pairs. As such, no single pair trades completely independently of the others. Once you are aware of the correlations among and between different currencies and how they change, you can use them to your advantage.

The reason for the interdependence of currency pairs has a lot to do with the nature of international trade and global financial flows. Countries with large trade deficits have currencies that tend to be negatively correlated with countries showing a surplus. Likewise, the currencies of commodity-rich exporters will often be negatively correlated with countries that rely heavily on imports.

Negative Correlations and Business Management

In business, negative correlations can be identified by management as a way to naturally offset the risks of doing business. These are known as natural hedges. Executives may also look at existing relationships, such as between marketing expenditures and sales, as part of market analysis.

For example, if an expensive marketing campaign is met with declining sales, it could signal that the marketing is backfiring or alienating customers, and should be reconsidered. However, correlations should not be too quickly interpreted as evidence of one variable causing a change in another variable. Business environments often present highly complex causes and correlations that may or may not be meaningful.

What Does Negative Correlation Mean?

A negative correlation describes an inverse relationship between two factors or variables. For instance, X and Y would be negatively correlated if the price of X typically goes up when Y falls, and Y goes up when X falls.

What Is an Example of Negative Correlation?

In addition to the examples provided above, an often-cited example of a negative correlation is between the U.S. dollar and gold. As the U.S. dollar depreciates against major currencies or due to inflation, the dollar price of gold is generally observed to rise; and as the U.S. dollar appreciates, gold declines in price. This is why gold is considered a good hedge against inflation.

What Is Meant by Positive or Negative Correlation?

A positive correlation would be the opposite type of relationship to a negative correlation. In other words, X and Y would be positively correlated if they both rise together or fall together. Note that correlations can and often do change over time, and the fact that X and Y are positively correlated now does not mean they will remain so. They may become negatively correlated in the future.

What Is Considered a Weak Negative Correlation?

The strength of a correlation relationship is quantified by its correlation coefficient, the strongest possible being “perfectly” correlated. A perfect negative correlation has a value of -1.0 and indicates that when X increases by z units, Y decreases by exactly z, and vice versa. In general, -1.0 to -0.70 suggests a strong negative correlation, -0.50 a moderate negative relationship, and -0.30 a weak correlation.

Remember that even though two variables may have a very strong negative correlation, this observation by itself does not demonstrate a cause-and-effect relationship between the two.

The Bottom Line

Negative correlations describe a relationship between factors that move in opposite directions. While negative correlations occur in several contexts, they are particularly of interest in the financial world since negatively correlated assets are fundamental to portfolio diversification and risk reduction strategies.

Even though inverse relationships may persist, correlation does not necessarily mean causation. Furthermore, correlations tend to shift and change in both strength and direction over time.

Fact checked by Kirsten Rohrs Schmitt
Reviewed by Andy Smith

In 1958, Cuba was an investment powerhouse. Their workers were paid the eighth highest wages in the world, and the country’s per-capita income exceeded that of Austria and Japan. It was such a hot expat destination that more Americans lived there than Cubans in America.

Cuba’s investment landscape remains a subject of intense debate, balancing untapped potential against systemic challenges. Let’s explore the current situation and what it means for investors through several key aspects.

Key Takeaways

• Cuba’s socialist economic model prioritizes state control but is cautiously opening up to foreign investment, especially in sectors like tourism, renewable energy, and agriculture.
• The embargo put in place back in the 1960’s is still in place.
• Cuba’s demographic challenges include a growing elderly population and emigration, meaning it could be tough for future businesses to find adequate labor.
• The 2020s brought economic difficulties, including inflation and a downturn in tourism.
• Cuba remains a subject of debate, with untapped potential and systemic challenges, making it a high-risk investment destination.

Understanding Cuba

Cuba’s socialist economic model, shaped by decades of U.S. sanctions, prioritizes state control over key industries while cautiously opening to foreign investment. For example, the 2014 Foreign Investment Act underscores this dual approach, aiming to attract capital while maintaining sovereignty. The law emphasizes sectors like renewable energy, agriculture, and tourism to drive export growth, import substitution, and technological advancement – all desirable traits in a country worth investing in.

Demographic challenges persist, however. As of a 2022 survey by CEDA, over 20% of the population is aged 60+, meaning there’s a potentially depleting workforce. Consider future implications for Cuba as well in light of broader significant emigration having impacts on labor markets as well.

The U.S. Embargo

The U.S. embargo on Cuba began in the 1960s after Fidel Castro’s communist government took power, with restrictions on trade, travel, and financial transactions. Over time, the embargo became a central aspect of U.S.-Cuba relations, impacting Cuba’s economy and limiting its access to international markets.

In the 1990s, laws like the Helms-Burton Act strengthened the embargo, codifying the restrictions and demanding Cuba move toward democracy and a market economy before sanctions could be lifted. Despite some periods of diplomatic thawing, especially under President Obama, the embargo has remained largely in place, with certain exceptions for food, medicine, and humanitarian aid.

While U.S. policy has fluctuated over the years, the embargo continues to hinder Cuba’s economic growth by restricting foreign investments, trade, and access to resources. These sanctions are a major obstacle to Cuba’s ability to integrate into the global economy and to raise capital for modernization or expansion.

Inflation and Tourism

Cuba’s economy has gone through a lot at the start of the 2020’s. For starters, it’s country was hit hard by the pandemic. Cuba’s economy contracted by 10.9% in 2020 due to COVID-19, U.S. sanctions, and structural imbalances. Note that immediately following the pandemic, some experts were optimistic, citing growth for 2021. The country’s growth did happen, with GDP in 2022 growing 2.0%.

However, there’s an incredibly unfortunate downside here. Much like how the United States faced inflation due to eased monetary and fiscal policy in response to the pandemic, Cuba’s inflation has fared much, much worse. Their inflation was more than four times worse than the United States in 2022, reaching a peak of over 39%. Note that this isn’t even the worst of it, as Cuba reported year-over-year inflation of over 77% in 2021.

Since the return from the pandemic, Cuba, like much of the rest of the world, has struggled to operationally get “back to normal”. For example, tourism, a critical revenue source, rebounded to 1.97 million visitors in 2023, below pre-pandemic levels. Things looked almost as bad in a more functioning society in 2024. Though Cuba’s tourism numbers increased to 2.7 million visitors, this was still below the 2022 numbers. It also experienced a decrease in international visitors from the year prior.

Potential Investment Sectors

There are some promising areas of Cuba to explore for investment. For example:

• Renewable Energy: Cuba’s 2030 Energy Transition Plan aims for 24% renewable electricity generation through solar, wind, and biomass projects. One of the main areas of this plan is through the External Investment Law, which is a regulatory framework meant to expedite the deployment of capital towards this goal.
• Agriculture: The elimination of the ration book system signals a shift toward private food markets. In addition, the rise of tropical storms has presented logistical challenges to Cuba’s farms. You could speculate that there are opportunities in organic farming and increased crop yield technologies.
• Biotechnology: State-owned BioCubaFarma received private funding from foreign partners such as Russia for vaccine production and medical exports. The idea behind this investment was to “bring market innovation medicines against the most complex types of diseases.”

Note

On January 21, 2025, President Donald Trump revoked former President Joe Biden’s removal of Cuba from the country’s list of state sponsors of terrorism. The move highlights potential future tension between the U.S. and Cuba.

Risks and Challenges

The investment landscape in Cuba is fraught with significant challenges, primary among them being the ongoing U.S. sanctions. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) maintains strict prohibitions on U.S. persons engaging in business with Cuba without specific authorization. According to OFAC’s Cuban Assets Control Regulations, most transactions between U.S. persons and Cuba remain prohibited, with violations carrying severe penalties.

Currency instability presents another major hurdle for potential investors. Earlier we discussed Cuba’s inflation issue. Though Cuba is undergoing monetary reform, the Central Bank of Cuba’s 2021 Monetary Reform eliminated the Cuban Convertible Peso. Ths means Cuba has just one sole currency, though that still left the country with a materially divergent exchange rate. It may be some until Cuba sees more reasonable economic stability on that front.

Infrastructure deficits also pose substantial operational challenges. In some major cities, only 18% of roads were maintained in 2023, and road maintenance was slated to drop to just 10% in 2024. These potential bottlenecks could impede efficient business operations in local companies. This is also important in the context that roughly half of Cuba’s roads are paved; though sufficient for today’s usage, it may be able to handle accelerated traffic due to economic expansion.

Is It Time to Invest in Cuba?

Investing in Cuba is risky due to its economic challenges, political instability, and the ongoing U.S. embargo. However, with Cuba’s gradual economic opening and potential in sectors like tourism and renewable energy, it may present opportunities for long-term investors willing to navigate its complex environment.

What Is the Current State of Cuba’s Economy?

Cuba’s economy has faced significant challenges due to long-standing trade restrictions, limited access to foreign markets, and a reliance on state-controlled industries. While there has been some gradual opening to private enterprise and tourism, the country’s economic growth remains constrained and it’s currency continues to devalue.

What Are the Key Sectors Driving Cuba’s Economy?

Tourism, healthcare, and biotechnology are key sectors driving Cuba’s economy. Tourism brings in much-needed foreign currency, while healthcare and biotech industries, despite limited resources, are highly regarded for their achievements in medical research and services. Agriculture also plays a role, though it faces productivity challenges primarily due to harsh, unpredictable natural disasters.

The Bottom Line

If you do choose to invest, it could be wise to limit exposure. Cuba’s significant risks, not to mention the politics that are involved, make Cuban investment speculative at best. This could mean impressive returns if you’re right, though consider the risk you’re taking on should you chose to invest in Cuba.

Procurement and access to financing are two barriers that minority owners face

Reviewed by JeFreda R. Brown

Small business contract discrimination refers to the notable disparity in the number of government contracts that go to minority- and women-owned businesses compared with other small businesses.

Government contracts represent a significant source of income for small businesses. The U.S. government has made it a priority to send federal contracts to small businesses since the second half of the 20th century. And the amount of money spent on government contracts is increasing.

Reports have suggested that differences in contracts received can be attributed to outright discrimination or structural access to capital that aids some firms over others in competing for these contracts. The government has attempted to decrease these disparities through affirmative action programs, but it is unclear how successful the programs have been, and court rulings have narrowed their scope.

Transparency has also been an issue. It wasn’t until 2021 that the U.S. government started disclosing racial and ethnic breakdowns of the business owners who win contract awards. And the large companies that win the big government contracts continue to not disclose the smaller firms they call upon to help them out.

Key Takeaways

• In the United States, federal, state, and local governments represent significant sources of procurement contracts for small businesses, especially since the second half of the 20th century.
• Some studies have suggested that minority-owned businesses have received a smaller proportion of those contracts than one would expect.
• Barriers that affect small business discrimination include the actual procurement of contracts and limited access to financing.

Federal Contracts

When the government purchases goods and services from private businesses, it is called procurement. In the United States, this type of contract spending is increasing.

In fiscal year 2023, the federal government spent about $759 billion on contracts, an increase of about $33 billion from fiscal year 2022 after adjusting for inflation and a big jump on the $586 billion spent in fiscal year 2019, according to figures from the U.S. Government Accountability Office (GAO). Of that sum, $171.5 billion went to small businesses.

It is an explicit goal of the government to move a portion of its expenditures into small businesses. The federal government, for example, automatically sets aside most contracts under $150,000 for small businesses. Moreover, since the end of the 20th century, much of government expenditure has been spent on contractors rather than on employees. Consequently, a significant chunk of governmental budgetary expenses goes to small businesses.

However, a disproportionately smaller percentage of this federal money finds its way to minority-owned businesses. According to the U.S. Small Business Administration and government, about 10% of all annual federal contracting dollars go to small disadvantaged businesses. Until recently, the government had a target of 5%. In other words, minority-owned businesses receive a smaller share of government contracts than the proportion of the population that they represent.

The government is trying to address this issue, with the Biden administration claiming to prioritize giving more contracts to small disadvantaged businesses. However, it still has a long way to go to meet its 2025 target.

50%

The share of contracts the government wants to go to small disadvantaged businesses by 2025.

Shortly after former President Joe Biden issued an executive order on advancing equity, the federal government revealed just over 1.6% of the budget allocated to federal contracts for small businesses was awarded to Black-owned small businesses and just under 1.8% to Latino- or Hispanic-owned small businesses.

State and Local Contracts

State and local governments also represent a significant source of contracting money for small businesses. In 1990, for instance, procurement at all government levels was at $450 billion, or 10% of the U.S. gross national product (GNP). State and local government made up about $250 billion of that total.

Localities are also subject to allegations of discrimination. In December 2020, for instance, the Civil Rights Division of the U.S. Department of Justice opened an investigation to determine whether procurement practices in Kansas City, Missouri, were discriminatory and violated the Civil Rights Act.

In Boston, Massachusetts, a 2021 study commissioned by Mayor Martin J. Walsh’s office showed that only 1.2% of the city’s $2.2 billion in procurements from 2014 to 2019 went to Black- or Latinx-owned businesses, triggering federal civil rights complaints. Note that in fiscal year 2023, Boston had awarded 14% of their contracts (in dollars) to these demographics – a 133% increase in the amount of awards from when the study has originally been procured. For certain demographics, Boston further increased contracting with minority demographics in fiscal year 2024.

D.C. government agencies have also been accused of discrimination. Research spanning several years showed they have been allocating funds to person of color- and woman-owned businesses. However, those funds weren’t distributed fairly and went to a relatively small number of firms.

Research shows that state and local discrimination in procurement is long-standing. A 1997 Urban Institute study found that members of minority groups received a disproportionately small share of government contracts.

The study, which looked at rates among local and state contracts, concluded that disparities existed for Black-, Latinx-, Asian-, Native American-, and women-owned firms across all industries that the study examined—construction, goods, professional services, and other services, with the exception of construction subcontracting, which showed a relatively small disparity.

The study revealed that minority-owned firms received just 57 cents out of every dollar in government contracts they would have expected to see.

1.2%

Since the very discouraging report about diversity contracting, Boston implemented a comprehensive strategy to boost minority- and women-owned business participation in city contracts. ,This included streamlining procurement processes, reserving specific contracts, and launching a business accelerator program..

Federal Regulations

Government contracting is subject to the anti-discriminatory laws that apply to private contracts, and federal contracting is also regulated heavily by Congress.

The U.S. Congress has made investing in small businesses a priority since the 20th century. Shortages during World War II and the Korean War led to the creation of the current regulatory framework.

In 1953, during the Dwight D. Eisenhower administration, Congress passed the Small Business Act, which led to the creation of the Small Business Administration (SBA). To promote free trade, Congress set out to give a “fair proportion” of federal contracts and subcontracts to small businesses in the United States. There is generally bipartisan support for this sort of program.

Congress also created the Small Disadvantaged Business and the Women-Owned Small Business programs to encourage fair contracting across race and gender. And the Small Business Reauthorization Act of 2000 created an Office of Advocacy in the SBA, which looked to strengthen minority- and women-owned businesses and guarantee limited small business loans.

According to the SBA, the federal government’s goal is to award at least 5% of all federal contracting dollars to women-owned small businesses (WOSB) each year. Small disadvantaged businesses (SDBs) can also get a better shot at winning contracts. To qualify:

• The business must be 51% or more owned and controlled by one or more disadvantaged persons.
• The disadvantaged person or people must be socially disadvantaged and economically disadvantaged.
• The firm must be small, according to the SBA’s size standards.

Businesses that sign up will be identified as SDBs or WOSBs, which, according to the SBA, increases their chance of winning contracts.

Important

Certain federal contracts are allocated specifically to small businesses owned by minorities or women in a bid to try and level the playing field.

Affirmative Action

Local, state, and federal governments have attempted to correct disparities through affirmative action programs.

Affirmative action dates back to the John F. Kennedy administration’s Executive Order 10925, which tried to free projects connected to federal funds from racial discrimination. That executive order established the President’s Committee on Equal Employment Opportunity. Since the 1964 Civil Rights Act, discrimination based on race and sex has been illegal.

A 1965 order from the Lyndon B. Johnson administration, Executive Order 11246, required federal contractors to document steps to encourage hiring equality. It was expanded in 1967 to include gender-based equality. Johnson’s order took the question out of committees and handed it to the secretary of labor, giving it to a Cabinet-level official with the authority to enforce equal opportunity, which led to the creation of the Office of Federal Contract Compliance.

President Barack Obama’s 2014 amendments to the order sought to make gender pay disparities easier to spot by increasing wage transparency and to include lesbian, gay, bisexual, and transgender employees under the order’s protections.

President Biden pledged to adopt a broad “racial equity agenda” and expand opportunities for minorities to win more government contracts. However, these efforts have been coming under attack.

For example, in 2024. a judge in Texas ordered a federal agency created to help minority-owned businesses to open its doors to all races. This ruling suggests Blacks, Latinos, and other minorities shouldn’t be presumed disadvantaged and marked another defeat for affirmative action, which has been coming under increasing pressure from conservative groups.

Important

Affirmative action has become an area of heated controversy, involving multiple high-profile court cases and executive actions.

Since Johnson’s time, the scope of affirmative action programs has been limited by court cases, including Regents of the University of California v. Bakke (1978) and the City of Richmond v. Croson (1989), which labeled affirmative action a “highly suspect tool” in combating disparity in state- and local-run programs.

The 1997 Urban Institute study mentioned above suggested that, where present, affirmative action has reduced but not eliminated disparities in contract awards.

Continuing Sources of Discrimination

Discrimination has historically fallen into two broad categories: that which affects the growth or formation of a firm, and that which affects the ability of those firms to participate in the government contracting process.

Businesses owned by women and minorities have less access to capital that can be used to finance or grow a firm. Minority-owned businesses, for instance, have had less access to loans.

In a 2010 congressional hearing, Chair for the Subcommittee on Government Management, Organization, and Procurement Diane E. Watson identified three main sources of discrimination in these processes.

Minority-owned businesses face “ongoing and persistent” discrimination in contract awards, she said. They also face structural barriers, such as access to financing, bonding, and resistance from trade unions. Finally, court decisions that restrict the scope and purpose of minority contracting harm the ability of these firms to compete for contracts.

What Is Discrimination?

Discrimination is treating a person or group of people unfairly because of their race, gender, age, sexual orientation, religion, social background, and so forth.

What Is the U.S. Government Agency That Assists the Small Business?

The Small Business Administration (SBA) was created in 1953 to help small businesses grow.

What Is Considered a Small Business by the U.S. Government?

The SBA defines small businesses by revenue (from $1 million to over $40 million) and the number of employees it has (from 100 to over 1,500). Thresholds vary depending on the industry.

The Bottom Line

Governments have been pledging for years to level the playing field of federal contracts, giving small businesses a bigger chance of winning them and particularly those small businesses owned by minorities and women. However, despite notable progress, many of these businesses are still being marginalized and struggling to compete, partly because of limited access to capital and structural discrimination.

Reviewed by Margaret James
Fact checked by Michael Logan

What Is a Non-Governmental Organization (NGO)?

A non-governmental organization (NGO) is a mission-driven organization that operates independently of the government. Also known as a civil society organization, an NGO may be established at the community, national, or international level to serve a cause, such as protecting the environment.

Most are non-profits, and some receive government funding.

Key Takeaways

• NGOs, or non-governmental organizations, play a major role in international development, aid, and philanthropy.
• NGOs are often non-profit and may run budgets of millions or billions of dollars each year.
• NGOs rely on a variety of funding sources, from private donations and membership dues to government grants.
• Advocacy NGOs work to influence public policy.
• Some well-known NGOs include the American Red Cross, the Salvation Army, and Amnesty International.

Types of Non-Governmental Organizations (NGOs)

The term NGO is generally accepted to refer to usually non-profit, private organizations that operate outside of government control. Some NGOs rely primarily on volunteers while others support a paid staff. The World Bank identifies two broad groups of NGOs.

• Operational NGOs, which focus on the design and implementation of development projects
• Advocacy NGOs, which defend or promote a specific cause and seek to influence public policy

Some NGOs may fall under both categories simultaneously.

Note

There are about 1.5 million NGOs operating in the U.S.

How NGOs Work

According to the U.S. State Department, U.S. regulations were created to assist in the formation of NGOs.

NGOs focus on a wide range of issues and areas. These might include women’s rights, the environment, healthcare, political advocacy, labor unions, religious faith, care of aging adults, and youth empowerment.

While the government is not involved in the activities of NGOs, U.S. law normally regulates them via their filing of information returns that show an NGO’s funding, management, and activities.

Forming an NGO

Any group of people may form an NGO without government approval or involvement. In addition, one need not be a U.S. citizen to form an NGO in the U.S. However, should an NGO wish to obtain legal benefits such as exemption from state and federal taxes, it should incorporate and register as an NGO under the relevant laws of the state in which it’s located.

An NGO doesn’t have to incorporate. For instance, to form a charitable NGO, all that’s required (as is for any charitable trust) is a legal contract and deed that conveys property.

While no federal government involvement comes into play, states in the U.S. may require NGOs with religious, educational, or charitable missions that ask for donations to register with a state charity.

Tax-Exempt Status

To obtain tax-exempt status, an NGO must apply to the U.S. Internal Revenue Service (IRS). Many types of NGOs are eligible.

Non-profit NGOs are welcome to apply for exemption from federal income tax. For state tax exemption, NGOs should apply to a state’s tax authority.

NGOs that engage in political activities may receive some tax benefits for the income they receive from the public, membership dues, and fundraising events.

Contributions to NGOs may be tax-deductible for donors.

NGOs may be subject to certain IRS restrictions and rules.

How Are NGOs Funded?

NGOs rely on a variety of sources for funding, including:

• Membership dues
• Private donations from individuals, businesses, and philanthropic organizations
• The sale of goods and services
• Grants
• Funding from foreign governments and organizations

Despite their independence from governments, some NGOs rely on government funding. 

Large NGOs may have budgets in the millions or billions of dollars.

Important

Federal and state governments may not make decisions about whether to grant or revoke an NGO’s tax-exempt status based on their opinions of the NGO’s value or mission.

Variations of NGOs

There are many variations of the NGO acronym.

• INGO: An INGO is an international NGO. For example, the Conference of INGOs of the Council of Europe is comprised of more than 300 participating INGOs.
• QUANGO: A QUANGO is a quasi-autonomous non-governmental organization that relies on public funding. Its senior officials are appointed by the government.
• ENGO: An ENGO is an environmental NGO. Examples include Greenpeace and the World Wildlife Fund.

What Is an Example of a Non-Governmental Organization?

The American Red Cross is a well-known NGO, as is Greenpeace.

How Does an NGO Work?

An NGO can be formed by any group of people that wants to carry out a mission in the public interest. They can have staff or volunteers, and operate with a range of budgets. They work independently of the government, but may receive government funding. They can be non-profit, and usually are.

What Is the Difference Between an NGO and an NPO?

NGO stands for non-governmental organization. NPO stands for non-profit organization. A non-profit organization returns any profits it makes to the organization to pay expenses and salaries and further its goals. It doesn’t pay out profits to shareholders or owners. It isn’t a business that exists to make a profit. Some NGOs may be NPOs. Not all NPOs are NGOs.

The Bottom Line

Non-governmental organizations (NGOs) work towards a mission on local, national, and international levels. They work outside the frame of the government, are usually not-for-profit, and can obtain tax-exempt status if they meet certain criteria.

Companies are becoming more diverse, slowly

Reviewed by Samantha Silberstein

Many of America’s leading companies are increasingly focusing on racial equity. However, there’s a noticeable scarcity of executives from underrepresented groups at the helm of these prominent organizations. Experts frequently point out that these companies struggle to identify and nurture young talent, or to effectively assist their team members in progressing through the ranks of management.

Key Takeaways

• Eight Black chief executive officers (CEOs) led companies on Fortune 500 ranking, only accounting for less than 2% of companies in the S&P 500.
• While boardrooms are only slightly more diverse than top management, the number of Black directors increased after the death of George Floyd.
• Research indicates that diversity in the workplace offers numerous benefits to organizations, including increased profitability, enhanced creativity, stronger governance, and improved problem-solving abilities.

Diversity Efforts

Consumer brands are often accused of sidestepping controversy. But several assumed an advocacy role in the wake of George Floyd’s killing in 2020. Nike ran a video on social media in which the apparel giant asked the audience not to “pretend there’s not a problem in America.”

Meanwhile, Amazon pledged $10 million to nonprofits focusing on “justice and equity.” Employee donations—and the company’s 100% match—raised an additional $17 million. In total, the Amazon community gave $27 million to 12 organizations that the Black Employee Network (BEN) helped choose.

Internally, many organizations are making a concerted effort to diversify their ranks. For example, a 2024 report from executive recruiting firm Crist|Kolder Associates, which examined 671 S&P 500 and Fortune 500 companies, found that:

• In the past decade, the representation of women and racially or ethnically diverse individuals in CEO and CFO positions at large companies has seen significant growth. The number of women and racially or ethnically diverse CEOs has more than doubled, and the number of racially or ethnically diverse CFOs has more than tripled.
• In 2023, women represented 9.7% of sitting CEOs and 17.6% of CFOs, while 13.5% of CEOs and 14.9% of CFOs are racially or ethnically diverse.
• As of 2024, there are 66 female CEOs in all Fortune 500 and S&P 500 companies, up from 32 in 2014; there are 92 ethnically diverse CEOs, a significant increase from 41 in 2014.
• In the study of 674 companies, an all-time high of 99 CFO positions, or 15% of the total, are held by people of color. This includes 9.9% by Asian-Americans, 2.4% by Hispanic individuals, and 2.6% by African Americans.

Race and Power in the Fortune 500

CEOs

Despite Latinx and Hispanic individuals being the largest racial or ethnic minority group in the United States, making up 19.1% of the population according to the latest U.S. Census Bureau data, the Crist|Kolder Associates report shows 26 Latinx/Hispanic CEOs in 2024, down one from 27 in 2023, but up four from 22 in 2022.

And while Black people make up about 13.6% of the country, only 11 were CEOs in 2024, down from 12 in 2023 but up from 8 in 2022. Of the racial and ethnic minority groups, Asian Americans, who comprise 6.3% of the U.S. population, had the most representation at the CEO level: 55 during 2024, up from 50 in 2023, and 42 in 2022.

While the latest report highlights ongoing underrepresentation, it also underscores a positive trend in diversity among corporate leadership. From 2014 to 2024, the representation of Latinx/Hispanic CEOs in the studied companies has significantly increased, doubling from 12 to 26. Similarly, the number of Asian American CEOs has risen from 23 to 55 in that timeframe. The number of Black CEOs has also almost doubled from 6 in 2014 to 11 in 2024, albeit at much smaller numbers.

This chart shows the number of companies with ethnically and racially diverse CEOs from 2014 to 2024:

Boardrooms

And what about the boardrooms that help steer these enormously influential companies? Racial and ethnic minority populations are somewhat better represented, although in most cases, they still bear little resemblance to the customers served by these companies. Of course, the addition of new directors from underrepresented groups is hampered by persistently low boardroom turnover.

The 2024 S&P 500 New Director and Diversity Snapshot from Spencer Stuart, a leadership consulting firm based in Chicago, looked at the latest proxy statements from 489 companies filed between May 1, 2023, and April 30, 2024. According to the report:

• 58% of the new directors appointed are diverse, defined as individuals who self-identify as female and/or underrepresented minorities (including Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more races or ethnicities), and/or LGBTQ+. This decreased from 67% in 2023 to 72% in 2022.
• 42% of new directors were women, a slight decrease from 46% in 2023 but a 40% increase over the past decade.
• While diversity overall has increased, the number of new directors who self-identify as underrepresented minorities has dropped to 26% in 2024 from 36% in 2023.

Also note that there has been an increase in the transparency of diversity reporting. Nearly all S&P 500 boards (99%) disclose their gender balance, and 99% disclose their composition relating to underrepresented minorities. And 58% of boards disclosed a Rooney Rule-type commitment to include diverse candidates in their searches, indicating a strong focus on enhancing diversity in board recruitment processes.

Smaller Companies

At smaller companies, members of racial and ethnic minority groups are more likely to be in key leadership positions. Still, the data here again suggests a long way to go before America reaches something resembling racial equity.

In 2024, the U.S. Bureau of Labor Statistics reported that Latinx/Hispanic individuals held 6.1% of chief executive positions across the economy. Black executives also accounted for 6.1% of these roles. Asian American executives, representing 6.4% of top leadership positions, now slightly exceed their proportion of the U.S. population, marking a shift from previous years where their representation was closer to their demographic share.

The Elusive Quest for Diversity

For diversity advocates, there are some recent signs of progress at the boardroom level, in no small part due to the national discussion of racial disparities in the wake of Floyd’s murder in 2020 and the rise of the Black Lives Matter movement. 

For example, a group of Silicon Valley leaders launched The Board Challenge, which calls for companies to appoint a Black director within the next year. And Institutional Shareholder Services, an influential advisory firm, announced that its research reports would start calling out large companies “that lack racial and ethnic diversity.”

Efforts like these seem to be bearing fruit. The recruiting platform BoardProspects reported that companies in the Russell 3000 index named 130 Black directors in the five months following Floyd’s death. In the five months prior, they only hired 38.

The question is whether such progress will be sustained over time. While changing the look of boardrooms is important and challenging, tackling the lack of minority leadership in the C-suite is an even bigger hurdle. Experts say most companies simply lack a strong pipeline that delivers Black, Latinx/Hispanic, and Asian American executives to top leadership positions.

Or perhaps companies just don’t look hard enough. “There is no shortage of minority candidates who can compete for these jobs,” Dick Parsons, former CEO of Time Warner and chairman of Citigroup, told USA Today. “It’s not that they get overlooked. They don’t get looked period.”

Minority group members who find employment at top firms report pervasive biases hindering their advancement. For example, a recent survey by McKinsey & Co. found that minority employees were more likely to report being excluded from social activities with co-workers or having to correct false assumptions that colleagues made about their personal lives.

Business Benefits of Diverse Leadership

Greater equity does more than keep stakeholders happy—it can also improve the bottom line, according to a body of research on the subject. For example, a separate analysis by McKinsey found that companies in the top quartile for gender diversity on executive teams were 25% more likely to achieve above-average profitability, and those in the top quartile for ethnic and cultural diversity outperformed their peers by 36% in profitability.

Additionally, a study by Boston Consulting Group concluded that greater minority representation at the top also leads to more innovation. Companies with above-average diversity in their management teams generated significantly more income from products launched within the past three years than less diversified companies. “People with different backgrounds and experiences often see the same problem in different ways and come up with different solutions, increasing the odds that one of those solutions will be a hit,” the authors noted.

How Many Women Are Fortune 500 CEOs?

The number of women running businesses on the Fortune 500 list hit 52 in 2024. Some view the 69-year-old Fortune 500 list as a barometer for leadership diversity in the country’s largest companies. While 52 is a record, it still means that just over 10% of Fortune 500 companies have women at the helm.

Does Diversity Help Companies?

Yes, the benefits of a diverse workforce are increasingly recognized and supported by recent findings. Companies with diverse executive teams are more likely to outperform their less diverse peers in terms of profitability and demonstrate higher levels of innovation and employee satisfaction. Workplaces that are committed to diversity and inclusion also experience lower turnover rates and are better positioned to attract top talent.

What Is Diversity, Equity, and Inclusion?

Diversity, equity, and inclusion (abbreviated as DE&I or DEI) refers to programs and policies that encourage participation and representation from diverse groups. DEI aims to hire a diverse workforce, give workers a voice, and include workers in business happenings.

Specifically, diversity refers to the numerous ways that people differ, such as race, ethnicity, nationality, age, gender identity, physical ability, mental ability, socioeconomic status, experience, and education (among others). Equity means creating a level playing field through fair access and opportunities. Inclusion is the extent to which team members feel a sense of belonging and value within an organization.

The Bottom Line

Corporate leadership in America is gradually evolving towards greater diversity and inclusion, though challenges remain. In recent years, there has been a notable increase in the representation of women and racially or ethnically diverse individuals in top executive positions. This shift is seen in the growing number of women CEOs leading Fortune 500 companies, tying an all-time high of 52 in 2024 (reached in 2023), or just over 10% of all companies.

The representation of underrepresented minorities in boardrooms has seen some progress, albeit at a slower pace. The 2024 S&P 500 New Director and Diversity Snapshot from Spencer Stuart highlights that 56% of new directors appointed are diverse, a decrease from previous years but still indicative of a broader trend towards inclusivity.

Companies have become increasingly aware of the business benefits of diversity, as it has been shown to improve retention and reduce the costs associated with employee turnover. Businesses are focused not just on hiring but also on creating inclusive environments where all employees feel valued.

Reviewed by Andrew Schmidt

LinkedIn wants to help you get a new job – it really, really does. But you’ve got to help it help you. It is a Microsoft subsidiary, and a very effective one. Even though LinkedIn has over 1 billion users, only a tiny fraction of those people are relevant for your job-hunting purposes, so you need to find—and get found by—the right ones. Here are four ways to make that happen.

What You Need to Know

• LinkedIn has over 1 billion members in 200 countries worldwide.
• Your LinkedIn profile should include a professional photo, relevant work and education history, and keywords from job listings in your profile description.
• Staying active on the platform and doing sufficient research into the job you want can help you land a new position in your desired field.

1. Make Your Profile Work Harder

Your first step to increasing your visibility is fairly easy: Add or change your photo to a better quality, more professional one. Research shows that adding a photo will increase your profile’s traffic by a factor of 11. Find or create an in-focus headshot of yourself dressed appropriately for what you do, smiling and making eye contact with the camera.

As far as what your profile should actually say, think of it as a reverse “Help Wanted” ad. As you scan job listings, note keywords you see repeatedly, things like “customer-centric” and “relationship building.” Headhunters search candidates’ LinkedIn profiles the same way, so you want to make sure your language reflects theirs.

Your Headline

Your first opportunity to work in important keywords is with the 120-character job title that appears under your name, aka, the headline. Don’t feel obligated to use your literal title, especially if your title doesn’t adequately describe what you do (e.g., not “community manager,” but “commercial real-estate management professional”). Most especially, don’t use “former” or any other word that indicates you aren’t currently employed.

Your Summary

The next opportunity to grab a potential employer’s attention is the “Summary” section—this is the make-or-break spot to sell yourself. Highlight your skills and be specific about accomplishments, awards and other recognition. Use employers’ hot-button terms (e.g., “fast-paced environment”), but don’t just stuff the summary full of keywords. Write in the first person—here’s one spot where you can let your personality shine through and add to your memorability (in a professional way, of course). Be strict about length: If you use the entire space allowed, you run the risk of appearing both boring and old, neither of which is going to win you a job.

Tip: It’s important to remember that LinkedIn will notify your contacts when you make changes to your profile, so while you are under construction, make sure you turn off the “Notify my network” function (found in the right-hand column on your Profile page). Otherwise, you run the risk of annoying your contacts with a continuous stream of insignificant updates. When you are happy with your new profile, though, turn it back on and let everyone know!

2. Stay Active (But Not Too Active)

To stay top of mind with your contacts, you want to maintain a visible presence on LinkedIn. It’s important, however, to be judicious about how active you are, especially if you are unemployed. You know that Facebook friend who seemingly posts every 15 minutes? Well, you don’t want to be that person on LinkedIn, especially if you haven’t used it at all in a while.

Start Slow

First, download the LinkedIn app to your phone; this will encourage you to check out the site whenever you have downtime. (Think: less Facebook, more LinkedIn, until you have a new job.) Then, visit LinkedIn’s home page at least once a day and see what others are posting. Like and comment on those posts. After you have a feel for what’s appropriate, begin adding items yourself every day or so. The easiest way to do this is to find interesting, provocative stories, photos and videos that involve your profession and make intelligent comments as you share them, rather than trying to blog with high frequency yourself. If you are a blogger, however, be sure to include LinkedIn in your social media outreach.

Use Visuals

LinkedIn has made sharing photos directly from your phone easier, so if you find yourself at a professional seminar, conference or networking event, remember to post a photo and positive comment. Or post your work itself, especially if you are a visual or performing artist, culinary pro, or contractor. (Be mindful of client confidentiality and copyrights, of course.) Won an award or doing some volunteer work? Snap a photo and share that.

Don’t Add New Contacts in Big Batches

It makes you look indiscriminate and possibly desperate. But keep an eye on LinkedIn’s suggestions for additions to your network and invite people you know to link every few days or so. If the person accepts the link, send a friendly note updating them on what you’re up to. (You can also customize the copy that goes out with the invitation.)

Don’t be reluctant to ask for help in your job search if you think they can be of assistance—that’s what LinkedIn is for. Stay on top of your contacts’ new positions, birthdays, job anniversaries and other accomplishments via the Keep in Touch section in the Connections channel, and send congratulations. It’s important to reinforce your connections with LinkedIn contacts; a network of people you barely know is unlikely to do you much good.

3. Research, Research, Research

Even if there’s no job that matches the exact criteria you’ve entered in the Jobs channel, LinkedIn is good at suggesting companies that might have a suitable opening. Spend some time looking through the Discover Jobs in Your Network area. (This is another reason to build a large network of contacts.) And look at the site’s list of “People Also Viewed” jobs on job listing pages. It can lead you to some interesting postings you might not otherwise find.

Beyond the extensive job listings, LinkedIn has enormous amounts of background information available on companies. While this may not directly help you find a job, being well informed once you have the interview will help you get the job.

4. Consider Joining LinkedIn Premium

Starting at $29.99 a month, LinkedIn’s paid service is a little pricey, but a short-term subscription may be worth it. One of the Premium services takes a page from Google’s paid search: It moves your correspondence to the top of the mailbox of whoever posted the job you’re applying for. Sure, the potential employer knows that the reason you’re the “featured applicant” is because you paid to be, but that doesn’t necessarily negate your advantage of being first.

Via Premium, you can also see complete information about who viewed your profile. It can be a bit of a red herring to know that someone has looked at your profile since you still don’t know why they looked—it could simply be that you share a name with the person they were really seeking.

Probably the most valuable element of the paid service is InMail, which allows you to contact anyone on LinkedIn directly, even if they are not a current contact. However, you are only allowed three InMails a year (pricier plans allow more), so you have to be extremely prudent about how you use them—they are not a cold-calling tool. Reserve the privilege of making contact with a key decision-maker for your dream job or other critical communication.

What Is the 4-1-1 Rule on LinkedIn?

The 4-1-1 rule argues that for every piece of content you share to LinkedIn about yourself, you should share one update from another source and four pieces of content from others. The idea behind this rule is to keep your feed focused on other’s needs and to start conversations and engage with other users.

What Are LinkedIn Professional Groups?

LinkedIn groups provide a place for professionals in a specific industry to meet together to discuss insights, ask for guidance, and build relationships. Joining a local group in your current or target industry can help you build connections and earn a job or grow in your current position.

What Is LinkedIn Advanced Search?

Premium users get access to LinkedIn’s Advanced Search feature. This feature offers additional search filters that can help users find company information, business leads, and job opportunities in a target industry or field.

The Bottom Line

LinkedIn is a valuable job search tool if you do it right. Fill out your complete profile, with a good professional photo, a headline and a compelling summary. Remember that LinkedIn is a search engine: Pay attention to the keywords that will get your profile noticed by the right people.

To stay visible, share links to interesting, provocative stories, photos and videos relevant to your profession, adding an intelligent comment. But don’t post so often you become annoying. And don’t forget that LinkedIn is a great place to research companies so that when you do get that callback, you’ll be ready to rock the interview.

Where they are, what they provide, and how they help

Reviewed by Margaret James
Fact checked by Betsy Petrick

Ever since the founding of the Bank of North America in 1781, banking has played a critical role in facilitating the American Dream. These institutions provide indispensable monetary services, ranging from accepting deposits to offering loans. Credit is king in the United States, and without high-quality financial institutions, countless Americans would struggle to acquire vehicles, housing, and other essential items.

However, like pretty much all of the nation’s older institutions, banks have also played a significant part in America’s racist past. Racial discrimination in the banking industry and financial system has targeted African Americans, and challenges to ending discrimination persist today. Black-owned banks arose as an alternative to larger institutions, to provide greater access to banking services as well as an opportunity to support local communities.

According to the Federal Deposit Insurance Corp. (FDIC), a minority depository institution (MDI) is “…a federal insured depository institution for which (1) 51 percent or more of the voting stock is owned by minority individuals; or (2) a majority of the board of directors is minority and the community that the institution serves is predominantly minority. Ownership must be by U.S. citizens or permanent legal U.S. residents to be counted in determining minority ownership.” Most of the Black-owned banks featured in this article fall into the former category.

For the purposes of this article, Black-owned and Black-managed credit unions that serve the Black community have been included to provide the most complete picture of America’s Black financial institutions. The article uses the term “Black-owned” in this broad sense, recognizing that stockholders own for-profit banks and members own credit unions.

Key Takeaways

• Today there are 148 minority-owned financial institutions in the United States. Taken together, they have approximately $349 billion in assets in total.
• Of these, 23 are Black-owned banks.
• Black-owned banks provide customers not only access to the financial resources they need but also the chance to invest in the financial health and well-being of their community.
• Black-owned banks also play a critical role in fighting modern-day systemic racism in the financial sector.
• Critics of Black-owned for-profit banks have posited that true financial justice requires institutions, such as not-for-profit credit unions, that are separate from a financial system rooted in racism and exploitation.

Background and History of Black-Owned Banks

Black-owned banks didn’t exist until more than a century after the Bank of North America first opened its doors. Prior to the chartering of the first Black-owned bank in 1888, the U.S. Congress and then-President Abraham Lincoln established Freedman’s Savings Bank in 1865. As part of the Freedman’s Bureau, this institution was designed to help newly freed African Americans navigate the U.S. financial system.

Despite Congress voting to close the Freedman’s Bureau in 1872, the bank continued to operate. In 1874, Frederick Douglass took over as the bank’s Washington, D.C., branch director, and he found the place to be rife with corruption and risky investments. Despite Douglass investing $10,000 of his own money in the bank in an attempt to save it, Freedman’s Savings went bankrupt later that same year. Although Freedman’s Savings Bank doesn’t fit the modern criteria of a Black-owned bank, it represents a critical first step.

The first officially chartered Black-owned bank, True Reformers Bank, was founded on March 2, 1888, by the Rev. William Washington Browne. A former slave and Union Army officer, Browne was founder of the Grand Fountain United Order of True Reformers fraternal organization. True Reformers Bank came about when Browne and his organization faced financial hardships while trying to establish a new branch in Virginia. Unable to manage the order’s money without arousing suspicion from paranoid and prejudiced locals, Browne founded True Reformers Bank so that the organization’s finances would be free of scrutiny from White people.

The bank opened its doors in 1889 and went from a small operation in Browne’s house to an institution strong enough to survive the financial panic of 1893. Although True Reformers Bank continued to operate after Browne’s death in 1897, problems were beginning to develop by 1900. Under its new president, the Rev. William Lee Taylor, branches were poorly regulated, unsecured loans were made, and an embezzlement scandal cost most accountholders their savings. By 1910, the State Corporation Commission had ordered the bank to be closed.

As the story of True Reformers Bank was playing out, other Black-owned banks were also getting their start in the U.S. Capital (spelled Capitol by some accounts) Savings Bank of Washington, D.C., opened its doors in Oct. 1888, roughly six months before True Reformers Bank. Capital Savings also managed to survive the financial panic of 1893, though it later closed in 1902.

From 1888 to 1934, more than 134 Black-owned financial institutions were founded, predominantly located in Southern states. Their numbers dwindled during the Great Depression, leaving nine by 1930. It wasn’t until the civil rights movement that a resurgence took place, raising their numbers to 50 by 1976.

By 1988, the savings and loan crisis had wiped out 35 Black-owned banks. The start of the most recent decline came in 2001, during the early 2000s recession, which rapidly accelerated once the Great Recession began.

“You can’t separate Black history from American history,” says Tyrone Ross, chief executive officer (CEO) of Onramp Invest, a crypto asset integration platform solution for financial advisors. “We’ve always been well adept and versed in financial education and the ability to be entrepreneurs. It’s just been stripped from us. So it’s OK to write these articles—or have panels or whatever—but let’s start with the history first so people go, ‘Oh, crap. It really was stripped from them, and they’re just trying to get it back.’”

Modern-Day Discrimination

As recently as 2023, the wealth of a White family was more than six times higher on average than that of a Black family. This is a result of inequality, discrimination, racism, and differences in power and opportunity compounding throughout America’s history. It also is why the diminishing number of Black-owned banks is especially of concern, given the role that these institutions play in fighting modern-day systemic racism in the financial sector.

Consider redlining. This unethical and now-illegal practice is used to block off access to important services for residents of certain neighborhoods based on their race or ethnicity. The Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, religion, sex, and national origin, was a start. And yet, although the Fair Housing Act of 1968 and the Community Reinvestment Act (CRA) of 1977 were both intended to eliminate redlining, this kind of discrimination is still seen today.

For instance, 68.1% of loans made from 2012 to 2018 for housing purchases in Chicago went to predominantly White areas; 8.1% went to predominantly Black areas. Banks also lent more money to predominantly White neighborhoods than to every predominantly Black neighborhood combined. This disparity is even starker when looking at individual lenders, with JPMorgan Chase lending 41 times more money in White neighborhoods than Black ones.

Chicago is far from the only place where redlining occurs. From 2015 to 2020, the denial rate for Black home loan applications in Boston was 15.3%, more than three times that of their White counterparts. And in 2018, people of color in 61 cities were more likely to be denied home loans than White residents. If homeowners aren’t moving into—and investing in—a neighborhood, then it means capital isn’t flowing into the community, which leads to poverty and crime having an inescapable presence in the area.

“One in five Black Americans now is unbanked. When you look at our poverty rates, our lack of ownership, lack of homeownership, that all goes back to economic empowerment,” Ross explains. “Economic empowerment starts with banking.”

The Importance of Black-Owned Banks

To understand why Black-owned banks matter, it’s critical to recognize the role that banks play in financial life. A common service that banks provide is access to a checking account, allowing for the safe storage of an individual’s funds, typically in exchange for a minimal fee. In addition to accepting monetary deposits, banks also furnish loans for both individuals and businesses looking to finance crucial purchases. Banks also offer mortgages for real estate purchases. Many banks issue credit cards, which are valuable tools for building the credit history necessary to receive most loans.

Outside of providing financial services, a number of banks have also launched programs on financial literacy for low- and moderate-income communities. It’s difficult, if not impossible, to imagine thriving in the modern economy without taking advantage of the aid that a bank can provide. And if access to these types of services is constantly denied to certain groups, then it’s easy to see how these groups may face more financial difficulties than others.

Black-owned banks offer an alternative for residents who have been consistently discriminated against by other financial institutions. They have typically provided more money to borrowers living in low- and moderate-income census tracts than other banks. Black-owned banks also are more willing to tolerate higher levels of risk than alternative institutions. Our research found that in 2016, 67% of mortgages made by Black-owned banks were either Federal Housing Administration (FHA) mortgages—which typically serve riskier borrowers—or mortgages held “in portfolio,” meaning they are liable to the risk of the borrower defaulting.

Additionally, Black-owned banks tend to focus their lending on small businesses, nonprofits, and Black homebuyers. As of 2018, all Black-owned banks were community banks; these institutions are dedicated to supporting the economies of the communities that they serve. Even during difficult times, Black-owned banks have stuck by their customers. During the 2007–2008 financial crisis, despite a 69% drop in all mortgage lending to Black borrowers, the number of mortgages that Black-owned banks provided rose 57%.

“So there’s lack of lending, there’s lack of funding, there’s lack of access to the ability to acquire assets and build wealth,” Ross says. “The Black community has for years been afraid of banking with traditional institutions. A lot of them live in banking deserts where there are no banks, which is also why you have credit unions, check-cashing places, and payday loans.”

Without Black-owned banks, countless vulnerable consumers could be forced to rely on high-interest loans from pawnshops and payday lenders for their financing. What’s more, Black-owned banks provide customers not only access to the financial resources they need but also the chance to invest in the financial health and well-being of their community and fellow Americans.

“I think we have a responsibility now to realize that—if you really want to be grassroots, and you really want to help Black Americans—get that money in Black banks and then have those Black banks fund the people,” Ross says.

A different book, Black Metropolis: A Study of Negro Life in a Northern City, published in 1945 by two American sociologists is considered a foundational work on the subject of African American sociology and cultural studies. It influenced generations of scholars and activists and is a key resource for investigating the impact of redlining, racial bias in medical-care decision-making tools, and the history of lending discrimination in the United States.

Other Alternatives for Community Funding

Not everyone sees Black-owned, for-profit banks as the solution. Critics argue that true financial justice requires institutions that are entirely separate from a financial system rooted in racism and exploitation.

“I’ve been very critical of for-profit Black banks and the capitalist logic that governs them,” says Professor Guy Mount, assistant professor at Wake Forest University. “In my opinion, member-owned credit unions and nonprofit co-ops are the way forward for Black communities hoping to not only survive within capitalism, but build a viable Black economic alternative to it.”

In fact, that choice is currently available to consumers. Of the Black-owned financial institutions in the U.S.—all listed below—many are credit unions.

Other critics have taken this concept further. In The Color of Money: Black Banks and the Racial Wealth Gap, Mehrsa Baradaran, professor of law at the University of California Irvine School of Law, posits that those in power have pushed the idea of Black-owned banks as a diversionary tactic whenever the African American community demanded more direct solutions to the racial wealth gap. For instance, although Freedman’s Bank remains a critical facet of Black history, the Freedman’s Bureau originally proposed providing newly freed slaves with an allotment of land—they received a bank instead.

More recently, when civil rights leaders began calling for a redistribution of wealth, then-President Richard Nixon co-opted the rhetoric of that same movement to create a civil rights platform centered around “Black capitalism.” He wasn’t the only president to support the idea of banking over financial support. Then-President Bill Clinton introduced legislation with the aim of promoting “community empowerment” via banking. Across party lines, then-Presidents George W. Bush and Barack Obama supported and upheld Clinton’s infrastructure. Former President Donald Trump also made similar promises during his time in office.

Baradaran further argues that—as it is nearly impossible for a segregated community to keep its wealth entirely self-contained—Black-owned banks may actually facilitate the flow of money out of African American communities and into the White economy.

Professor Mount sees it the same way. “By emerging themselves within a White-governed capitalist marketplace, Black banks are facilitating the very extraction of wealth from the communities they purport to serve,” he says.

Black-Owned Banks: State-by-State Breakdown

While the number of Black-owned financial institutions may have declined from their peak, they cumulatively have a significant presence. As of Jan. 31, 2022, the 44 Black-owned banks and credit unions in the U.S. had approximately $9.12 billion in assets. And although 23 states had no Black-owned financial institutions within their borders, several organizations have a presence across the U.S. because of their partnerships with major automated teller machine (ATM) networks. Additionally, many of the Black-owned financial institutions in the country are not-for-profit credit unions.

The majority of Black-owned institutions offer both traditional brick-and-mortar branches and online/mobile services. Even OneUnited Bank, originally an Internet-only bank, now has multiple physical locations across the U.S. Ensuring online accessibility is a smart move considering that, in 2019, approximately 34% of African American consumers were more likely to use mobile banking as their primary method of accessing their accounts.

Below: a list of Black-owned banks and credit unions in the U.S., in alphabetical order.

1st Choice Credit Union

Founded in 1946, the Hospital Authority Credit Union was created to provide financial services to employees of Grady Hospital. In 1991, the organization became known as 1st Choice Credit Union.

• Branches: Auburn Avenue Administrative Office (Atlanta) and Grady Memorial Hospital (Atlanta)
• ATMs: Crestview Health & Rehabilitation Center (Atlanta) and Ponce De Leon Center (Atlanta)
• State: Georgia
• Services: Personal and business checking and savings, in addition to loans (personal, mortgage, etc.)
• Assets: Over $36 million
• Availability: Brick-and-mortar and online

Alamerica Bank

Alamerica Bank was originally organized by a group of prominent Birmingham, Ala., community leaders on Jan. 28, 2000. Alamerica achieved operational profitability after six months of operation.

• Branches: The Alamerica Bank Building (Birmingham)
• ATMs: N/A
• State: Alabama
• Services: Deposit services (business and personal accounts), loan services (commercial and personal loans), internet banking, image statements, and MasterMoney debit cards
• Assets: $18.66 million
• Availability: Brick-and-mortar and online

Brookland Federal Credit Union

Founded in 1999, Brookland Federal Credit Union is a not-for-profit financial cooperative that provides financial services to members of Brookland Baptist Church and their immediate family members. If you join Brookland Federal, you and your family have a lifetime membership.

• Branches: Brookland Federal Credit Union (West Columbia, S.C.)
• ATMs: Via PULSE® and STARS® networks
• State: South Carolina
• Services: Savings, checking, loans, and other services (financial literacy, guaranteed auto protection, etc.)
• Assets: $4.9 million
• Availability: Brick-and-mortar and online

Brooklyn Cooperative Federal Credit Union

Brooklyn Cooperative Federal Credit Union, also known as Brooklyn Coop, was originally founded in 2001. Joining Brooklyn Coop requires a piece of mail as proof of address, a government-issued photo ID, Social Security card or individual Tax Identification Number (TIN), and a $25 membership fee plus a $5 minimum savings account balance.

• Branches: Bedford-Stuyvesant Branch (Brooklyn, N.Y.), Bushwick Branch (Brooklyn, N.Y.), and Chestnut Branch (Brooklyn, N.Y.)
• ATMs: Any ATMs in the CO-OP network
• State: New York
• Services: Banking accounts (checking, savings, etc.), loans, and financial counseling and education
• Assets: $50 million
• Availability: Brick-and-mortar and online

Carver Federal Savings Bank

Carver Federal Savings Bank was founded in 1948 to serve African American communities with limited access to mainstream financial services. The majority of its branches and ATMs are located in low- to moderate-income neighborhoods. Carver Federal Savings Bank is one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Atlantic Terminal Branch (Brooklyn, N.Y.), Bedford-Stuyvesant — Restoration Plaza Branch (Brooklyn, N.Y.), Crown Heights Branch (Brooklyn, N.Y.), Flatbush Branch (Brooklyn, N.Y.), St Albans Branch (Jamaica, N.Y.), 125th Street Branch (Manhattan, N.Y.), and Malcolm X Boulevard Branch (Manhattan, N.Y.)
• ATMs: Atlantic Terminal Branch (Brooklyn, N.Y.), Bedford-Stuyvesant — Restoration Plaza Branch (Brooklyn, N.Y.), Crown Heights Branch (Brooklyn, N.Y.), Flatbush Branch (Brooklyn, N.Y.), St Albans Branch (Jamaica, N.Y.), 125th Street Branch (Manhattan, N.Y.), Malcolm X Boulevard Branch (Manhattan, N.Y.), and all ATMs in the JPMorgan Chase, Wells Fargo, and Allpoint networks
• State: New York
• Services: Personal and business banking, loans, and community cash
• Assets: $751.9 million
• Availability: Brick-and-mortar and online

Carver State Bank

Established in 1927, Georgia Savings and Realty Corp. was a small, private bank as well as a real estate investment and management company. By 1962, Carver had become a full-service commercial bank, thus its name was changed once more to Carver State Bank.

• Branches: Main Office (Savannah, Ga.) and Skidaway Branch (Savannah, Ga.)
• ATMs: Main Office (Savannah, Ga.), Skidaway Branch (Savannah, Ga.), and any ATMs in the Wells Fargo and MoneyPass networks
• State: Georgia
• Services: Personal accounts (checking and savings), business accounts, loans, development programs, and other services (cashier’s checks, money orders, etc.)
• Assets: $91.4 million
• Availability: Brick-and-mortar and online

Citizens Bank

In 1904, originally founded as One Cent Savings Bank, Citizens Bank became the first minority-owned bank in Tennessee. Citizens Bank is the oldest continuously operating Black-owned bank in the U.S.

• Branches: Corporate Headquarters (Nashville, Tenn.), Main Office (Nashville, Tenn.), and Memphis Branch (Memphis, Tenn.)
• ATMs: N/A
• State: Tennessee
• Services: Personal and business banking (checking and savings), credit cards, and loans (personal, business, etc.)
• Assets: $182.18 million
• Availability: Brick-and-mortar and online

Citizens Trust Bank

In 1921, Citizens Trust Bank was created to serve the African American citizens of Atlanta. Today, the bank plays an active role in providing sponsorship support for multiple community organizations.

• Branches: Birmingham (Birmingham, Ala.), Eutaw Branch (Eutaw, Ala.), Cascade Branch (Atlanta), Corporate Headquarters (Atlanta), Westside Branch (Atlanta), East Point Branch (East Point, Ga.), Rockbridge Branch (Stone Mountain, Ga.), and Panola Branch (Stonecrest, Ga.)
• ATMs: Castleberry Inn ATM (Atlanta), Westside ATM (Atlanta), South Dekalb Mall ATM (Decatur, Ga.), Lithonia ATM (Lithonia, Ga.), Rockbridge Plaza ATM (Stone Mountain, Ga.), Stone Mountain ATM (Stone Mountain, Ga.), and Panola ATM (Stonecrest, Ga.)
• States: Alabama and Georgia
• Services: Banking (savings, checking, etc.) and borrowing (loans, credit cards, etc.) services
• Assets: $769.6 million
• Availability: Online and brick-and-mortar

City First Bank

City First Bank is a subsidiary of Broadway Financial Corp. that was founded in 1998. In 2021, City First Bank merged with Broadway Federal Bank to become the largest Black-led MDI in the U.S. and the one of two with more than $1 billion in total assets. City First Bank is also one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Exposition Park Branch (Los Angeles), Inglewood Branch (Los Angeles), and Branch & Corporate HQ (Washington, D.C.)
• ATMs: Exposition Park Branch (Los Angeles), Inglewood Branch (Los Angeles), and Branch & Corporate HQ (Washington, D.C.), in addition to any ATMs in the MoneyPass network
• Locations: California and Washington, D.C.
• Services: Personal and business banking (checking, savings, etc.), small business finance, and cash management
• Assets: $1.37 billion
• Availability: Brick-and-mortar and online

Columbia Savings & Loan

Columbia Savings & Loan has served Milwaukee’s inner city, particularly its growing minority population, since 1924.

• Branches: Columbia Savings & Loan Association (Milwaukee)
• ATMs: N/A
• State: Wisconsin
• Services: Mortgages, church loans, certificates of deposit (CDs), and individual retirement accounts (IRAs)
• Assets: $27.37 million
• Availability: Brick-and-mortar only

Commonwealth National Bank

Founded in 1976, Commonwealth National Bank is a full-service nationally chartered commercial institution. Commonwealth is the sole bank headquartered in Mobile, Ala., out of the 45 banks doing business there. In addition to being the only MDI in Mobile, it is one of two in Alabama.

• Branches: Main Office Branch (Mobile) and Crichton Branch (Mobile)
• ATMs: Main Office Branch (Mobile), Crichton Branch (Mobile), any Publix Super Market ATM, and any PNC Bank ATM
• State: Alabama
• Services: Consumer and business services, in addition to loans
• Assets: $68.14 million
• Availability: Brick-and-mortar and online

Credit Union of Atlanta

Founded in 1928, the Credit Union of Atlanta remained stable and secure throughout the Great Depression. Any profits earned are used to secure better rates for the institution’s members.

• Branches: Main Office (Atlanta) and Pryor Street Lending Center (Atlanta)
• ATMs: Atlanta Detention Center (Atlanta), Atlanta Public Safety Annex (Atlanta), Credit Union of Atlanta (Atlanta), and Pryor Street Lending Center (Atlanta), in addition to any ATMs in the MoneyPass and STAR networks
• State: Georgia
• Services: Personal savings and checking, business checking, credit builder and personal loans, and payment protection
• Assets: $78.15 million
• Availability: Brick-and-mortar and online

Faith Community United Credit Union

Originally chartered in 1952 as Second Mount Sinai Baptist Church Credit Union, Faith Community United Credit Union became a Community Development Credit Union (CDCU) in 1991. Faith is one of the largest minority-owned credit unions in Ohio, and it is available to anyone who lives, works, worships, or attends school in Cuyahoga County, as well as their family, business, and organization. Membership is also possible through a Select Employee Group (SEG).

• Branches: Faith Community United Credit Union (Cleveland)
• ATMs: N/A
• State: Ohio
• Services: Deposit services, loan services, insurance, and other services
• Assets: $14.94 million
• Availability: Brick-and-mortar and online

Faith Cooperative Federal Credit Union

The story of Faith Cooperative Federal Credit Union is a tale of two different organizations. St. John Federal Credit Union was founded in 1959. It became known as Faith Cooperative Federal Credit Union after it was integrated with Friendship-West Baptist Church’s vision of a microloan bank.

• Branches: Administrative Offices (Dallas)
• ATM: One located “near the Banquet Hall”
• State: Texas
• Services: Savings, loans, and gap protection
• Assets: $2.33 million
• Availability: Brick-and-mortar and online

FAMU Federal Credit Union

On May 8, 1935, six individuals were convinced to deposit $50 to acquire a federal credit union charter, resulting in the founding of Florida A&M College Employees Federal Credit Union. By 1953, the organization renamed to Florida A&M University Federal Credit Union due to its location on the FAMU campus.

• Branches: Office (Tallahassee)
• ATMs: One located in the “first drive-thru lane” as well as any ATMs that are part of American Express, CULIANCE, The Exchange, Honors, Member Access, Plus, Presto, Publix, Walmart, and “other credit unions with the participating listed networks”
• State: Florida
• Services: Accounts (checking, savings, money market accounts), Rattler debit and VISA credit cards, loans, wire transfers, and other services (notary services, bill payments, etc.)
• Assets: $29.2 million
• Availability: Brick-and-mortar and online

Financial Health Federal Credit Union

Financial Health Federal Credit Union has been serving its local community, which is more than 10,000 Indianapolis members strong, since 1971. Membership is limited to employees of Indiana University (IU) Health and its affiliates as well as individuals who live, work, worship, or attend school in one of 12 Indianapolis ZIP codes.

• Branches: IU Health West Hospital (Avon, Ind.), East Branch (Indianapolis), Indianapolis Urban League Branch (Indianapolis), IU Health Medical Tower (Indianapolis), and Sunstone Branch (Indianapolis)
• ATMs: IU Health West Medical Center (Avon, Ind.), IU Health North Medical Center (Carmel, Ind.), East Branch (Indianapolis), Indianapolis Urban League Branch (Indianapolis), IU Health University Hospital (Indianapolis), Methodist Hospital (3) (Indianapolis), and Sunstone Branch (Indianapolis), in addition to any ATMs in the Alliance One network)
• State: Indiana
• Services: Deposit accounts (checking, savings, etc.) and loans (personal, auto, etc.)
• Assets: $36.5 million
• Availability: Brick-and-mortar and online

First Independence Bank

In business since May 11, 1970, First Independence Bank has served the Detroit metropolitan area for 50 years. First Independence is the sole African American‐owned bank headquartered in Michigan, in addition to being one of two banks headquartered in Detroit.

• Branches: Main Office Branch (Detroit), Seven Mile Branch (Detroit), Lake Street Branch (Minneapolis), and University Branch (Minneapolis)
• ATMs: Clinton Township (Clinton Township, Mich.), 1st Floor International Building (Detroit), City County Building (Detroit), Livernois (Detroit), Main Office Branch (Detroit), Seven Mile Branch (Detroit), Lake Street Branch (Minneapolis), and University Branch (Minneapolis), in addition to any ATMs in the FIB, Fifth Third Bank, Huntington National Bank, U.S. Bank, JPMorgan Chase Bank, Bank of America, Wells Fargo Bank, and Bremer Bank networks
• State: Michigan and Minnesota
• Services: Consumer and business services, in addition to loans
• Assets: $664.81 million
• Availability: Brick-and-mortar and online

First Legacy Community Credit Union

The School Workers Federal Credit Union was founded by a group of educators in Feb. 14, 1941. On Jan. 1, 2020, First Legacy Community Credit Union merged with Self-Help Federal Credit Union and now operates as a division of Self-Help.

• Branches: Apopka Branch (Apopka, Fla.), DeLand Branch (DeLand, Fla.), Jacksonville (Kendall Town) Branch (Jacksonville, Fla.), Jacksonville (River City) Branch (Jacksonville, Fla.), Jacksonville (Westside) Branch (Jacksonville, Fla.), Jacksonville Downtown (JEA Tower) Branch (Jacksonville, Fla.), Miami Springs (Miami Springs, Fla.), Tallahassee Branch (Tallahassee, Fla.), Winter Park Branch (Winter Park Fla.), Asheville Branch (Asheville, N.C.), Asheville (South) Branch (Asheville, N.C.), Charlotte Branch (Charlotte, N.C.), Charlotte (Beatties Ford Road) Branch (Charlotte, N.C.), Durham (South Mangum Street) Branch (Durham, N.C.), Durham (West Main Street) Branch (Durham, N.C.), Brevard Branch (Pisgah Forest, N.C.), Greensboro Branch (Greensboro, N.C.), Hendersonville Branch (Hendersonville, N.C.), Kinston Branch (Kinston, N.C.), Laurinburg Branch (Laurinburg, N.C.), Lexington Branch (Lexington, N.C.), Maiden Branch (Maiden, N.C.), Morganton Branch (Morganton, N.C.), Old Fort Branch (Old Fort, N.C.), Raleigh Branch (Raleigh, N.C.), Rocky Mount Branch (Rocky Mount, N.C.), Rosman Branch (Rosman, N.C.), Salisbury Branch (Salisbury, N.C.), Wilmington Branch (Wilmington, N.C.), Wilson Branch (Wilson, N.C.), Windsor Branch (Windsor, N.C.), Columbia (Bush River Road) Branch (Columbia, S.C.), Columbia (Federal Building) Branch (Columbia, S.C.), Greenville (Garlington Road) Branch (Greenville, S.C.), Greenville (Mills Ave.) Branch (Greenville, S.C.), Greenville (Woodruff Road) Branch (Greenville, S.C.), Piedmont (Aviation) Branch (Piedmont, S.C.), and Galax Branch (Galax, Va.)
• ATMs: Apopka Branch (Apopka, Fla.), DeLand Branch (DeLand, Fla.), Jacksonville (Kendall Town) Branch (Jacksonville, Fla.), Jacksonville (River City) Branch (Jacksonville, Fla.), Jacksonville (Westside) Branch (Jacksonville, Fla.), Jacksonville Downtown (JEA Tower) Branch (Jacksonville, Fla.), Miami Springs (Miami Springs, Fla.), Tallahassee Branch (Tallahassee, Fla.), Winter Park Branch (Winter Park Fla.), Asheville Branch (Asheville, N.C.), Asheville (South) Branch (Asheville, N.C.), Charlotte Branch (Charlotte, N.C.), Charlotte (Beatties Ford Road) Branch (Charlotte, N.C.), Durham (South Mangum Street) Branch (Durham, N.C.), Durham (West Main Street) Branch (Durham, N.C.), Brevard Branch (Pisgah Forest, N.C.), Greensboro Branch (Greensboro, N.C.), Hendersonville Branch (Hendersonville, N.C.), Kinston Branch (Kinston, N.C.), Laurinburg Branch (Laurinburg, N.C.), Lexington Branch (Lexington, N.C.), Maiden Branch (Maiden, N.C.), Morganton Branch (Morganton, N.C.), Old Fort Branch (Old Fort, N.C.), Raleigh Branch (Raleigh, N.C.), Rocky Mount Branch (Rocky Mount, N.C.), Rosman Branch (Rosman, N.C.), Salisbury Branch (Salisbury, N.C.), Wilmington Branch (Wilmington, N.C.), Wilson Branch (Wilson, N.C.), Windsor Branch (Windsor, N.C.), Columbia (Bush River Road) Branch (Columbia, S.C.), Columbia (Federal Building) Branch (Columbia, S.C.), Greenville (Garlington Road) Branch (Greenville, S.C.), Greenville (Mills Ave.) Branch (Greenville, S.C.), Greenville (Woodruff Road) Branch (Greenville, S.C.), Piedmont (Aviation) Branch (Piedmont, S.C.), and Galax Branch (Galax, Va.), in addition to any ATMs in the Cashpoint and CO-OP networks
• States: Florida, North Carolina, South Carolina, and Virginia
• Services: Personal and business accounts, loans, and services, in addition to real estate
• Assets: First Legacy operates as a division of Self-Help, which claims more than $1.86 billion in assets.
• Availability: Brick-and-mortar and online

First Security Bank and Trust Company

First Security Bank and Trust Company is located in the heart of Oklahoma City. The bank was among the state’s top ten participating banks in the SBA’s Paycheck Protection Program, supporting local small businesses hardest hit by the subsequent economic lockdowns. According to First Security’s website, 96% of its PPP loans went to minority-owned businesses throughout 2020 and 2021.

• Branches: Main branch (Oklahoma City, Oklahoma).
• ATMs: N/A
• State: Oklahoma.
• Assets: $149.2 million
• Availability: Brick-and-mortar and online.

GN Bank

In 1934—after working closely with Federal Home Loan Bank of Chicago—13 African American men founded Illinois Service Federal to provide a savings and loan association for Black Chicagoans. The institution was acquired by Groupe Ndoum in 2016, which led to its name change to GN Bank in 2018.

• Branches: Main Office (Chicago) and Chatham Office (Chicago)
• ATMs: N/A
• State: Illinois
• Services: Personal checking and savings accounts as well as business services, lending services, and credit cards
• Assets: $65.94 million
• Availability: Brick-and-mortar and online

Greater Kinston Credit Union

Greater Kinston Credit Union was founded in 1952 and provides a variety of loans and deposit accounts. People who live, work, worship, or attend functions in Lenoir, Greene, Jones, Craven, and Pitt counties in North Carolina are eligible for membership.

• Branches: Branch Office (Kinston, N.C.)
• ATMs: Part of the CashPoints network
• State: North Carolina
• Services: Debit and credit cards; deposit (checking, savings, etc.), nonprofit, and youth accounts; mortgage and personal lending; and other services (automated services, branch services, etc.)
• Assets: $14.11 million
• Availability: Brick-and-mortar and online

Hill District Federal Credit Union

Hill District Federal Credit Union got its start in 1970 and has provided financial services to its members for 50-plus years. People who live, work, or worship in Pittsburgh’s Hill District—as well as members of an organization that provides economic assistance in the same area—are eligible to join this institution.

• Branches: Hill District Federal Credit Union (Pittsburgh)
• ATMs: N/A
• State: Pennsylvania
• Services: Debit and gift cards, savings, checking, loans, other services (money orders, financial literacy classes, etc.)
• Assets: $14.8 million
• Availability: Brick-and-mortar and online

Hope Credit Union

In 1995, members of Anderson United Methodist Church organized Hope Federal Credit Union to help low-income Jackson, Miss., residents with asset development, cooperation, and self-empowerment. Hope has since spread across the Deep South through its sponsors and by merging with other financial organizations, the most recent with Tri-Rivers Federal Credit Union in 2017. In June 2020, Netflix invested $10 million into Hope as part of its $100 million initiative to support economic opportunities for Black communities.

• Branches: Arba Street Branch (Montgomery, Ala.), McGehee Road Branch (Montgomery, Ala.), College Station Branch (College Station, Ark.), Little Rock Branch (Little Rock, Ark.), West Memphis Branch (West Memphis, Ark.), Central City Branch (New Orleans), Elysian Fields Branch (New Orleans), Mississippi Coast Branch (Biloxi, Miss.), Drew Branch (Drew, Miss.), Greenville Branch (Greenville, Miss.), Itta Bena Branch (Itta Bena, Miss.), Medical Mall Branch (Jackson, Miss.), University Boulevard Branch (Jackson, Miss.), Louisville Branch (Louisville, Miss.), Moorhead Branch (Moorhead, Miss.), Shaw Branch (Shaw, Miss.), Terry MS Branch (Terry, Miss.), Utica Branch (Utica, Miss.), West Point Branch (West Point, Miss.), Crosstown Branch (Memphis, Tenn.), Harvester Lane Branch (Memphis, Tenn.), Madison Avenue Branch (Memphis, Tenn.), and Ridgeway Branch (Memphis, Tenn.), in addition to any credit unions in the Shared Branching network
• ATMs: Arba Street Branch (Montgomery, Ala.), McGehee Road Branch (Montgomery, Ala.), College Station Branch (College Station, Ark.), Little Rock Branch (Little Rock, Ark.), West Memphis Branch (West Memphis, Ark.), Central City Branch (New Orleans), Elysian Fields Branch (New Orleans), Mississippi Coast Branch (Biloxi, Miss.), Drew Branch (Drew, Miss.), Greenville Branch (Greenville, Miss.), Itta Bena Branch (Itta Bena, Miss.), Medical Mall Branch (Jackson, Miss.), University Boulevard Branch (Jackson, Miss.), Louisville Branch (Louisville, Miss.), Moorhead Branch (Moorhead, Miss.), Shaw Branch (Shaw, Miss.), Terry MS Branch (Terry, Miss.), Utica Branch (Utica, Miss.), West Point Branch (West Point, Miss.), Crosstown Branch (Memphis, Tenn.), Harvester Lane Branch (Memphis, Tenn.), Madison Avenue Branch (Memphis, Tenn.), and Ridgeway Branch (Memphis, Tenn.)
• States: Alabama, Arkansas, Louisiana, Mississippi, and Tennessee
• Services: Personal (checking and wealth-building accounts, personal loans, credit cards, etc.) and business (checking and loans) banking, in addition to transformational deposits
• Assets: $616.1 million
• Availability: Brick-and-mortar and online

Howard University Employees Federal Credit Union

Originally chartered on Oct. 11, 1935, Howard University Employees Federal Credit Union (FCU) provides financial services to employees of Howard University and their family members. Those who join Howard University Employees FCU have a lifetime membership.

• Branches: C B Powell Building (Washington, D.C.)
• ATMs: Part of the CO-OP and CULIANCE networks
• Location: Washington, D.C.
• Services: Accounts (savings, checking, etc.) and loans
• Assets: $10.6 million
• Availability: Brick-and-mortar and online (home loans only)

Industrial Bank

Industrial Bank first opened on Aug. 20, 1934, and is one of the larger Black-owned banks in the U.S. In addition to a wide variety of financial services, Industrial Bank offers free financial education programs.

• Branches: Harlem Banking Center (Manhattan, N.Y.), Frelinghuysen Banking Center (Newark, N.J.), Halsey Street Banking Center (Newark, N.J.), Anacostia Gateway Banking Center (Washington, D.C.), Forestville Banking Center (Washington, D.C.), Georgia Avenue Banking Center (Washington, D.C.), Oxon Hill Banking Center (Washington, D.C.), and U Street Banking Center (Washington, D.C.)
• ATMs: Forestville Office (Forestville, Md.), Oxon Hill Office (Oxon Hill, Md.), Harlem Office (Manhattan, N.Y.), Frelinghuysen Office (Newark, N.J.), Halsey Street Office (Newark, N.J.), Anacostia Gateway Office (Washington, D.C.), Ben’s Chili Bowl (Washington, D.C.), D.C. Court of Appeals (Washington, D.C.), D.C. Superior Court (2) (Washington, D.C.), Georgia Avenue Office (Washington, D.C.), Nationals Park (Washington, D.C.), and U Street Office (Washington, D.C.), in addition to any ATMs in the Allpoint network
• Locations: Maryland, New Jersey, New York, and Washington, D.C.
• Services: Personal (loans, checking, etc.) and business (services, loans, etc.) services
• Assets: $748.28 million
• Availability: Brick-and-mortar and online

Liberty Bank

Liberty Bank was originally chartered in New Orleans in 1972. After acquiring United Bank and Trust Co. in 2009, its service grew across the Greater New Orleans area. With branches in nine states, Liberty Bank is one of the largest Black-owned banks.

• Branches: Montgomery Liberty Bank (Montgomery, Ala.), Tuskegee Liberty Bank (Tuskegee, Ala.), Liberty Bank Forest Park (Forest Park, Ill.), Kansas City Liberty Bank (Kansas City, Kan.), Louisville Liberty Bank (Louisville, Ky.), Southdowns Liberty Bank (Baton Rouge, La.), Southern Heights Liberty Bank (Baton Rouge, La.), Canal Street Liberty Bank (New Orleans), Crowder Boulevard Liberty Bank (New Orleans), Franklin Avenue Liberty Bank (New Orleans), General DeGaulle Liberty Bank (New Orleans), Gentilly Boulevard Liberty Bank (New Orleans), Woodward Avenue Liberty Bank (Detroit), Jackson Liberty Bank (Jackson, Miss.), Kansas City Liberty Bank (Kansas City, Mo.), and Liberty Bank Memphis (Memphis, Tenn.)
• ATMs: Montgomery Liberty Bank (Montgomery, Ala.), Tuskegee Liberty Bank (Tuskegee, Ala.), Liberty Bank Forest Park (Forest Park, Ill.), 4850 State St. (Kansas City, Kan.), Southdowns Liberty Bank (Baton Rouge, La.), Southern Heights Liberty Bank (Baton Rouge, La.), 910-B Decatur St. (New Orleans), 2714 Canal St. (New Orleans), 2800 Gravier St. (New Orleans), American Can (New Orleans), Canal Street Liberty Bank (New Orleans), City Hall (New Orleans), Crowder Boulevard Liberty Bank (New Orleans), Dillard — Rosenwald Hall (New Orleans), Franklin Rouses (New Orleans), French Market (New Orleans), General DeGaulle Liberty Bank (New Orleans), Gentilly Boulevard Liberty Bank (New Orleans), Lafon Nursing Facility (New Orleans), Lockheed Martin Buildings 102 & 350 (New Orleans), Orleans Sheriff (New Orleans), Xavier University (2) (New Orleans), Jackson Evers International Airport (Jackson, Miss.), Jackson Liberty Bank (Jackson, Miss.), Student Center (Jackson, Miss.), Tougaloo College (Jackson, Miss.), Union Station (Jackson, Miss.), and Liberty Bank Memphis (Memphis, Tenn.)
• States: Alabama, Illinois, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, and Tennessee
• Services: Personal (checking, savings, etc.), business (checking, savings, etc.), and institutional (cash management, corporate financing, etc.) services
• Assets: $1.08 billion
• Availability: Brick-and-mortar and online

Liberty Savings Federal Credit Union

Hudson County School Employees Federal Credit Union was founded in 1951 by William and Catherine Miller. The name was changed to Educational Federal Credit Union 1977 before becoming Liberty Savings Federal Credit Union nine years later. Membership is open to anyone who lives, works, worships, or attends school in Hudson County, N.J., or falls within a lengthy list of employment, education, and organizational eligibilities.

• Branches: City Line Branch (Bayonne, N.J.), Five Corners Main Branch (Jersey City, N.J.), and North Hudson Branch (Union City, N.J.)
• ATMs: City Line Branch (Bayonne, N.J.), Five Corners Main Branch (Jersey City, N.J.), and North Hudson Branch (Union City, N.J.), in addition to any ATMs in the CO-OP network
• State: New Jersey
• Services: Deposit accounts (checking, IRA, etc.), loans (auto, mortgages, etc.), insurance services, and investment counseling
• Assets: Liberty claims $115 million
• Availability: Brick-and-mortar and online

Lower East Side People’s Federal Credit Union

Lower East Side (LES) People’s Federal Credit Union was originally organized in 1986 to promote economic justice and opportunity in New York City neighborhoods. Individuals interested in joining LES People’s FCU will need to open a share (savings) account and must be one of the following: individuals who live, work, volunteer, worship, attend school, or belong to any organization located in the Lower East Side, Central Harlem, East Harlem, or the North Shore of Staten Island; any organization or business located in these communities; residents of New York City who have an annual income of less than $48,500; anyone who lives in an Housing Development Fund Corp. (HDFC) co-op building; graduates of the Getting Ahead personal financial management class; anyone affiliated with one of its Select Partner Groups; or a family member of an existing member.

• Branches: East Harlem Branch (Manhattan, N.Y.), Lower East Side Branch (Manhattan, N.Y.), and North Shore Branch (Manhattan, N.Y.)
• ATMs: Any ATMs in the CO-OP network
• State: New York
• Services: Personal (checking, money market, etc.) and business (savings, checking, etc.) accounts as well as loans (personal, auto, etc.)
• Assets: $87.63 million
• Availability: Brick-and-mortar and online

Mechanics & Farmers Bank

Founded in 1907 by nine businessmen, Mechanics & Farmers Bank (M&F) is a state-chartered commercial bank. By 1935, M&F Bank became the first lending institution in North Carolina to receive Federal Housing Administration (FHA) certification. Mechanics & Farmers merged with Fraternal Bank & Trust in 1921 and acquired Mutual Community Savings Bank in 2008.

• Branches: Charlotte Branch (Charlotte, N.C.), Corporate Headquarters (Durham, N.C.), Durham Branch (Durham, N.C.), Durham Branch — Durham-Chapel Hill Boulevard (Durham, N.C.), Greensboro Branch (Greensboro, N.C.), Raleigh Branch — East Hargett Street (Raleigh, N.C.), Raleigh Branch — Rock Quarry Road (Raleigh, N.C.), and Winston-Salem Branch (Winston-Salem, N.C.)
• ATMs: Any ATMs in the Wells Fargo, JPMorgan Chase, and Bank of America networks
• State: North Carolina
• Services: Personal (checking and savings accounts, loans, etc.) and business (commercial checking and savings, loans, etc.) services, in addition to wealth management
• Assets: $482.54 million
• Availability: Brick-and-mortar and online

Mount Olive Baptist Church Federal Credit Union

Mount Olive Baptist Church Federal Credit Union is a faith-based, not-for-profit financial institution. It received its federal charter on Oct. 21, 1997. Mount Olive Baptist Church members and their immediate families are eligible to join this organization.

• Branches: Mount Olive Baptist Church FCU (Arlington, Texas)
• ATMs: N/A
• State: Texas
• Services: Loans (auto, unsecured, etc.), savings accounts, direct deposits, and wire transfers
• Assets: $10.33 million
• Availability: Brick-and-mortar and online

Oak Cliff Christian Federal Credit Union

Officially chartered on Sept. 22, 2008, Oak Cliff Christian Federal Credit Union is a Christian-based financial institution sponsored by Oak Cliff Bible Fellowship. Members, employees, students, or family of Oak Cliff Bible Fellowship (and its subsidiaries) are eligible to join the organization.

• Branches: Oak Cliff Christian FCU (Dallas)
• ATMs: N/A
• State: Texas
• Services: Loans, financial products (IRAs, money market, etc.), direct deposit, money orders, and credit reports
• Assets: $6.49 million
• Availability: Brick-and-mortar and online

Omega Psi Phi Fraternity Federal Credit Union

Founded in 1986, Omega Psi Phi Fraternity Federal Credit Union is open to members of the fraternity, including its chapters, districts, and other related organizations, and their families, in addition to employees of both the fraternity and the credit union itself.

• Branches: Omega Psi Phi Fraternity Federal Credit Union c/o CAMO (Toccoa, Ga.)
• ATMs: N/A
• State: Georgia
• Services: Accounts (single, joint, etc.), share draft checking, loans, and credit cards
• Assets: $5.1 million
• Availability: Brick-and-mortar and online

OneUnited Bank

OneUnited Bank was the first online-only Black-owned bank and is the largest Black-owned bank in the U.S. Originally founded in 1968 as Unity Bank and Trust Co., OneUnited has financed almost $1 billion in loans thus far, predominantly in low- to moderate-income communities.

“Everyone is talking about OneUnited Bank now, but what they’re not focusing on with OneUnited Bank is they’re heavily engaged in financial education and financial literacy in the cities that need it most,” Tyrone Ross, CEO of Onramp Invest, explains. “So I feel like right now, when you support OneUnited, again you get those end roads into their programs they already have instituted to provide access to financial education and financial literacy.”

• Branches: Compton Branch (Compton, Calif.), Corporate Office and Crenshaw Branch (Los Angeles), Miami Branch (Miami), Corporate Headquarters (Boston), Grove Hall Branch (Dorchester, Mass.), and Roxbury Branch (Roxbury, Mass.)
• ATMs: Part of the MoneyPass network or Chase Bank ATMs
• States: California, Florida, and Massachusetts
• Services: Checking, savings, and secured VISA credit card
• Assets: $572.66 million
• Availability: Brick-and-mortar and online

OPTUS Bank

The story of OPTUS Bank began in 1921, with the founding of Victory Savings Bank by a group of African American leaders. OPTUS is committed to helping anyone, regardless of background or situation, build their wealth and improve their lives.

• Branches: Main Branch (Columbia, S.C.)
• ATMs: Corporate Office (Columbia, S.C.) and Main Branch (Columbia, S.C.)
• State: South Carolina
• Services: Personal (IRAs, consumer loans, etc.) and business (transaction accounts, merchant services, etc.) banking
• Assets: $615.38 million
• Availability: Brick-and-mortar and online

South Side Community Federal Credit Union

Since 2003, South Side Community Federal Credit Union has offered access to credit and savings services, in addition to financial education, for its members. Individuals are eligible for membership if they live, work, worship, attend school, or belong to an organization within Chicago’s South Side.

• Branches: South Side Community Federal Credit Union (Chicago)
• ATMs: N/A
• State: Illinois
• Services: Accounts (savings, checking, etc.), loans (payroll advance, payday alternative, etc.), financial education classes, and other services (transfer sweeps, money orders, etc.)
• Assets: $6.3 million
• Availability: Brick-and-mortar and online

Southern Teachers & Parents Federal Credit Union

With more than 80 years of service, Southern Teachers & Parents Federal Credit Union provides personalized financial services to its members. Those eligible for membership include alumni, employees, parents, and students of Southern University; employees in Louisiana’s Assumption, East Baton Rouge, Lafourche, and West Feliciana parishes; employees in Thibodaux and the Lafourche Parish Juvenile Justice Facility; and their family members.

• Branches: Main Office (Baton Rouge, La.) and Lafeda Branch (Thibodaux, La.)
• ATMs: Part of the CULIANCE network
• State: Louisiana
• Services: Accounts (checking, savings, and youth), loans, and other services (VISA debit and credit cards, financial counseling, etc.)
• Assets: $29.8 million
• Availability: Brick-and-mortar and online

St. Louis Community Credit Union

Originally chartered in 1942 as Teachers Credit Union, St. Louis Community Credit Union offers both financial services and several programs to support consumers in the local community. Individuals who live or work in St. Louis City, Franklin, and St. Louis County in Missouri—as well as in St. Clair, Madison, Monroe, and Jersey counties in Illinois—are eligible for membership, in addition to their families.

• Branches: Ferguson Branch (Ferguson, Mo.), Florissant Branch (Florissant, Mo.), Richmond Heights Branch (Richmond Heights, Mo.), St. John Branch (St. John, Mo.), Benton Park Branch (St. Louis), Delmar Divine Branch (St. Louis), Gateway Branch (St. Louis), LifeWise STL (St. Louis), Midtown Branch (St. Louis), South City Branch (St. Louis), Southtown Branch (St. Louis), Sullivan Branch (St. Louis), Urban League of Metropolitan St. Louis — Peter Bunce Campus (St. Louis), Jennings Branch (St. Louis), University City Branch (University City, Mo.), and Wellston — MET Center (Wellston, Mo.)
• ATMs: Part of the CO-OP network
• State: Missouri
• Services: Loans (auto, personal, etc.), accounts (savings and checking), business development, advocacy, and insurance (life, accidental death and dismemberment (AD&D), etc.)
• Assets: $397.31 million
• Availability: Brick-and-mortar and online

The Harbor Bank of Maryland

Originally opening its doors in September 1982, The Harbor Bank of Maryland offers banking and other financial services, primarily in the Baltimore metropolitan area. Harbor Bank was also the first community bank in the U.S. to have an investment subsidiary and the first to receive funding from Fannie Mae via the Community Development Financial Institution (CDFI) program. Harbor Bank is one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Fayette Branch (Baltimore), Harbor East Branch (Baltimore), Northwood Commons Branch (Baltimore), Pimlico Office (Baltimore), Research Park Office (Baltimore), Science & Technology Park Branch (Baltimore), Randallstown Office (Randallstown, Md.), and Silver Spring (Silver Spring, Md.)
• ATMs: Fayette Branch (Baltimore), Harbor East Branch (Baltimore), Pimlico Office (Baltimore), Research Park Office (Baltimore), Science & Technology Park Branch (Baltimore), and Randallstown Office (Randallstown, Md.), in addition to any ATMs in the AllPoint network
• State: Maryland
• Services: Personal (checking, mortgages, etc.) and business (checking, savings, etc.) banking, in addition to loans (personal, mortgage, and business)
• Assets: $350.98 million
• Availability: Brick-and-mortar and online

Tioga-Franklin Savings Bank

Founded as Tioga Building & Loan Association on March 31, 1873, TBLA was a facet of Philadelphia’s banking community through the Spanish-American War, Word War I, the stock market crash of 1929, World War II, and every financial event up to OPEC oil shock of 1973. That year, TBLA merged with the Franklin Savings and Loan Association to form the Tioga Franklin Savings Association. Then in July 2000, the bank was renamed Tioga Franklin Savings Bank and became a member of the FDIC, making it Philadelphia’s oldest chartered bank. Tioga-Franklin Savings Bank is one of the four banks that are considered Black-operated instead of Black-owned.

• Branches: Main Branch (Philadelphia)
• ATMs: N/A
• State: Pennsylvania
• Services: Personal (checking and savings) and business (checking, savings, etc.) banking, in addition to loans (personal, mortgage, and business)
• Assets: $72.63 million
• Availability: Brick-and-mortar and online

Toledo Urban Federal Credit Union

Toledo Urban Federal Credit Union originally opened its doors on July 21, 1996, to help its members achieve economic empowerment. Membership in the first community development credit union in Toledo, Ohio, is available to individuals who live, work, worship, perform volunteer services, or participate in associations headquartered in the central city community, in addition to their families.

• Branches: Toledo Urban Federal Credit Union (Toledo, Ohio)
• ATMs: N/A
• State: Ohio
• Services: Checking and share accounts, loans (personal, tuition, etc.), credit and ATM/debit cards, credit counseling, and other services (notary service, overdraft protection, etc.)
• Assets: $18.5 million
• Availability: Brick-and-mortar and online

United Bank of Philadelphia

Originally founded in 1992, United Bank of Philadelphia offers personalized banking services in the Greater Philadelphia area to both individuals and businesses. By providing financing to small businesses in urban areas, United Bank supports their growth and allows them to create jobs with livable wages, thus improving the economic condition of those working in the local community.

• Branches: Center City (Philadelphia) and Progress Plaza (Philadelphia)
• ATMs: C-Town Supermarket (Philadelphia), City Hall (Philadelphia), Criminal Justice Center (Philadelphia), Masjidullah Inc. (Philadelphia), Philadelphia Traffic Court (Philadelphia), Police Districts (Philadelphia), The Fillmore-Philadelphia (Philadelphia), and West Philadelphia (Philadelphia)
• State: Pennsylvania
• Services: Personal and business banking (checking, savings, etc.), in addition to loans (U.S. Small Business Administration (SBA) and commercial loans)
• Assets: $57.23 million
• Availability: Brick-and-mortar and online

Unity National Bank

Unity National Bank was founded in 1963 and chartered in 1985. “In February 1989, through a series of transactions and diligent efforts, it was acquired from Bay Bancshares by local minority leaders,” the bank’s history reports. Unity focuses on helping to rebuild the community with an emphasis on commercial loans and mortgages. It also works closely with civic organizations and agencies, such as the NAACP and the Third Ward Redevelopment Council.

• Branches: Atlanta Branch (Atlanta), Blodgett Branch (Houston), and Fort Bend Branch (Missouri City, Texas)
• ATMs: Atlanta Branch (Atlanta), Blodgett Branch (Houston), and Fort Bend Branch (Missouri City, Texas), in addition to any ATMs in the Select network
• States: Georgia and Texas
• Services: Business and personal services (loans, checking and savings accounts, etc.)
• Assets: $209.01 million
• Availability: Brick-and-mortar and online

Urban Upbound Federal Credit Union

Urban Upbound Federal Credit Union was founded in 2004, to provide six integrated programs to individuals living in public housing and and other low- and moderate-income neighborhoods. Urban Upbound offers affordable financial services to its members.

• Branches: Urban Upbound Federal Credit Union (Long Island City, N.Y.)
• ATMs: N/A
• State: New York
• Services: Savings, share certificates, and personal and small business loans
• Assets: Over $2 million
• Availability: Brick-and-mortar and online

Virginia State University Federal Credit Union

Authority to establish Virginia State College Federal Credit Union was granted on Oct. 19, 1938. On May 22, 1979, the organization’s board of directors voted to change the name to Virginia State University Federal Credit Union.

• Branches: Virginia State University Federal Credit Union (South Chesterfield, Va.)
• ATMs: Virginia State University Federal Credit Union (South Chesterfield, Va.)
• State: Virginia
• Services: Loans, accounts (checking, savings, etc.), insurance, and other services (wire transfer, direct deposit, etc.)
• Assets: $12.5 million
• Availability: Brick-and-mortar and online

What is the History of Black-Owned Banks in the United States?

The first Black-owned bank, True Reformers Bank, was chartered in 1888. These banks emerged as a response to racial discrimination and the lack of access to financial services for Black Americans. Over the years, they have faced significant challenges, including economic downturns and systemic racism, but have persisted as key players in supporting Black economic empowerment.

How Do Black-Owned Banks Help Their Communities?

Black-owned banks provide access to financial resources for underserved populations, particularly in low- and moderate-income areas. They offer services like loans, mortgages, and credit that may not be available from larger, mainstream financial institutions due to discrimination or redlining. They also tend to reinvest in the local community by prioritizing small businesses and nonprofit organizations.

How Can Consumers Support Black-Owned Banks?

Consumers can support Black-owned banks by opening accounts, taking out loans, and using banking services from these institutions. Many Black-owned banks offer brick-and-mortar branches and online/mobile banking, making it easier to access their services.

The Bottom Line

Black-owned banks play a crucial role in promoting financial equity and combating systemic racism in the U.S. banking system. While historically challenged by discrimination, economic crises, and financial instability, these institutions continue to provide essential banking services, such as loans and mortgages, to underserved Black communities.

By focusing on financial literacy, small businesses, and supporting homeownership in Black neighborhoods, Black-owned banks help bridge the racial wealth gap. However, they also face significant hurdles, including limited resources and competition from larger institutions. Despite these challenges, supporting Black-owned financial institutions is vital for fostering economic empowerment, and their continued presence highlights the ongoing fight for financial justice and racial equality in America.

Fact checked by Suzanne Kvilhaug
Reviewed by Ebony Howard

In December 2017, President Donald Trump signed a new tax bill into law. Known previously as the Tax Cuts and Jobs Act (TCJA), the reform has far-reaching impacts on many areas of tax and financial planning. One significant area of impact is estate planning by raising the exemption on the estate tax. Keep reading to learn more about how this law affects the strategies for estate planning.

Key Takeaways

• President Donald Trump signed the Tax Cuts and Jobs Act in 2017.
• The law brought sweeping changes to the U.S. tax system, including to estate planning.
• Under the TCJA, the estate tax exemption more than doubled between 2017 and 2018.
• The generation-skipping tax was also raised.
• More people can give away their wealth without incurring income taxes until the end of 2025.

Changes Under the Tax Reform

The tax reform legislation raised the estate tax exemption to $11.18 million per person and $22.36 million per married couple for 2018. That was a significant increase over prior limits. The estate tax exemption for an individual is $13.61 million in 2024 and $13.99 million in 2025 (an increase to account for inflation). This eliminates any federal estate taxes on amounts under those limits gifted to heirs during your lifetime or left to them upon your death.

The new legislation effectively eliminated the federal estate tax for all but the wealthiest individuals. It is worth noting that as with most of the provisions of the act, these rules are set to expire at the end of 2025. At that time, the exemption amounts will revert to previous levels, adjusted for inflation.

Generation-Skipping Tax

The generation-skipping tax rate exemption also increased to the same amount as above for individuals and married couples. This increase also expires at the end of 2025.

The method used to calculate inflation on these exemptions and other related areas has been changed. Instead of the traditional Consumer Price Index (CPI), which was previously used, inflation and exemptions are calculated based on the chain-weighted CPI, a modified measure of inflation that adjusts for “situation bias,” or accounts for the shifting purchasing behaviors of consumers. The chain-weighted CPI generally yields a lower rate of inflation.

What This Means for You

The temporary increase in the exemptions for the federal estate tax and the generation-skipping tax means that until the end of 2025 (unless Congress repeals or extends these rules), many will be able to give away more of their estate to their heirs without paying estate taxes.

The tax law has obvious benefits for beneficiaries, but its introduction doesn’t eliminate the need for estate and tax planning. Trump’s tax reform did not repeal the estate tax for those states that assess one. If you live in one of the following states, your assets are subject to the appropriate level of any state-imposed estate tax:

• Connecticut
• District of Columbia
• Hawaii
• Illinois
• Maine
• Maryland
• Massachusetts
• Minnesota
• New York
• Oregon
• Rhode Island
• Vermont
• Washington

Note

With many states facing substantial fiscal challenges, it’s not beyond the realm of possibility that some states that currently don’t have an inheritance tax might consider enacting one in the future.

Individuals facing state-level estate taxes should consider tactics such as a disclaimer and a bypass trust or a qualified terminable interest property (QTIP) trust—both of which allow a degree of flexibility in the allocation of the assets in your estate, to minimize the impact of taxes on their estate.

With the increased exemption limits, lifetime gifts of estate assets can be made without concern of triggering federal gift and estate taxes, except for those with estates over the exemption amounts. Gifting can also be done by shifting assets likely to experience high levels of appreciation. This can shield the appreciation of those assets from future estate taxation in your estate once the exemption limits expire after 2025.

Warning

Lifetime gifts are not entitled to a step-up in cost basis as with assets transferred to heirs upon your death. This means that before gifting appreciated assets like shares of stock, be sure to consider the tax impact upon the recipient of the gift.

A Strategy to Protect Your Spouse

You may want to consider the spousal lifetime access trust as a way to protect your spouse. This is an irrevocable trust that removes the assets from your estate and transfers them to an irrevocable trust for your spouse’s benefit.

The advantage is that those assets are out of your estate, allowing you to take advantage of the increased estate tax exemption before the 2025 deadline, while still retaining a degree of control over those assets via your spouse during their lifetime.

Be warned, though, that SLATs come with downsides. Should you divorce, you have no claim to the assets in the SLAT. It is also critical to ensure that, should you both use a SLAT, the trusts are not identical. This helps to avoid the risk that the trusts will be deemed to be substantially identical, in violation of the reciprocal trust doctrine, which could invalidate the trust.

Accidental Disinheritance

One potential unintended consequence of the higher exemption limits is that some heirs may unintentionally be disinherited.

Many estate plans are set up to use a bypass trust, which directs a trustee to use any remaining estate tax exemption amount to fund the bypass trust. This would be done before distributing the remaining assets in the estate to the intended heirs.

The size of the bypass trust in a case like this could cause some heirs to be unintentionally disinherited. Those with this type of provision should review their estate planning documents.

The Life Insurance Option

Life insurance is a popular way to help heirs cover any estate taxes that might be due in conjunction with a large estate over the exemption limits. With the increase in the exemption, the prevalence of these exemptions may wane.

These policies can now serve as a backstop for the estate, allowing grantors to pass assets in a tax-efficient manner and providing liquidity in cases where some of the estate assets are illiquid, such as real estate or an interest in a business.

What Are the Tax Rates for U.S. Taxpayers?

The tax rates for individual taxpayers are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The threshold for each tax rate changes each year based on inflation and is different for married couples filing jointly and other tax filers. But, the rates are set to revert to their original levels after the TCJA expires at the end of 2025.

What Happens to the Tax Cuts and Jobs Act after 2025?

Many provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This includes marginal tax rates, the increased basic standard deduction, and the credit for other dependents among others. Experts suggest that extending the expiring cuts would cost taxpayers an additional $4 trillion over 10 years.

What Type of Tax System Does the U.S. Have?

The United States functions under a progressive tax system. This means that the rate at which individual taxpayers are taxed is based on how much they earn. As such, your taxes increase if you earn more income while those with lower income levels are taxed less.

The Bottom Line

Tax reform has resulted in many changes for taxpayers, beginning with the 2018 tax season. Estate planning is one area that has been impacted, but like most of the tax reform legislation, the impact is temporary and will largely revert to the prior rules after 2025.

Especially for those with larger estates, it is wise to review your current estate planning documents to ensure that they still do what you intended for them to do and to ensure that you are taking full advantage of any opportunities under tax reform.

ETFs can help investors diversify their portfolio through a single investment product

Exchange-traded funds (ETFs) are investment funds that trade on stock exchanges, similar to individual stocks, and typically track an index, sector, commodity, or asset class. They offer
investors diversification, as a single ETF can hold a broad mix of securities, reducing risk compared to investing in individual stocks. ETFs also tend to have lower expense ratios than actively managed mutual funds and provide liquidity, allowing investors to buy and sell shares throughout the
trading day at market prices.

Key Takeaways

• Leading ETFs offer investors an opportunity to broadly diversify their holdings through a single investment with a low expense ratio and/or higher returns compared to competitors.
• We screened for the equity, bond, fixed income, commodities, and currency ETFs providing the highest one-month total returns for February 2025.
• These funds include XES, XMPT, CMBS, UNG, FXY

Below, we outline the top equity, bond, fixed income, commodities, and currency ETFs that generated the highest returns over the last month. We have excluded leveraged and inverse ETFs, as well as funds with less than $50 million in assets under management (AUM).

All data are current as of Jan. 27, 2025.

Equity ETF with the Best 1-Month Return: SPDR S&P Oil & Gas Equipment & Services ETF (XES)

• One-month performance: 12.9%
• Expense Ratio: 0.35%
• Annual Dividend Yield: 1.22%
• 30-Day Average Daily Volume: 48,460 
• Assets Under Management (AUM): $240.4 million
• Inception Date: June 19, 2006
• Issuer: State Street

The SPDR S&P Oil & Gas Equipment & Services ETF (XES) offers investors exposure to the U.S. energy industry’s equipment and services sub-sector. By employing an equal-weighted
strategy, XES provides balanced exposure across its holdings, reducing the concentration risk associated with larger-cap companies. As of Jan. 24, 75% of the portfolio is in stocks of oil and gas equipment and services companies, and 25% of the portfolio is in oil and gas drilling.

Bond ETF with the Best 1-Month Return: VanEck CEF Muni Income ETF (XMPT)

• One-month performance: 2.4%    
• Expense Ratio: 1.98%
• Annual Dividend Yield: 5.3%
• 30-Day Average Daily Volume: 176,335
• Assets Under Management (AUM): $199 million
• Inception Date: July 12, 2011
• Issuer: VanEck

The VanEck CEF Muni Income ETF (XMPT) offers investors exposure to the municipal bond market by investing in closed-end funds that hold municipal bonds. This approach provides access to a
diversified portfolio of municipal bonds managed by various fund managers.

Fixed Income ETF with the Best 1-Month Return: iShares CMBS ETF (CMBS)

• One-month performance: 0.95%      
• Expense Ratio: 0.25%
• Annual Dividend Yield: 3.3%
• 30-Day Average Daily Volume: 65,065
• AUM: $436 million
• Inception Date: Feb. 14, 2012
• Issuer: iShares/BlackRock

The iShares CMBS ETF (CMBS) provides targeted exposure to U.S. commercial mortgage-backed
bonds, offering investors access to a specific segment of the mortgage-backed securities market.

Commodities ETF with the best 1-Month Return: United States Natural Gas Fund LP (UNG)

• One-month performance: 15.9%
•  Expense Ratio: 1.06%
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 13,123,380
• AUM: $665 million
• Inception Date: April 18, 2007
• Issuer: Marygold

The United States Natural Gas Fund (UNG) is an ETF designed to closely track the daily price movements of natural gas using its Benchmark Futures Contract, primarily the near-month natural gas futures trading on the NYMEX. UNG had a strong one-month performance, as natural gas prices have rallied following colder-than-anticipated weather in the United States.

Currency ETF with the Best 1-Month Return: Invesco Currency Shares Japanese Yen Trust (FXY)

•  One-month performance: 0.77% 
• Expense Ratio: 0.4% 
• Annual Dividend Yield: N/A
• 30-Day Average Daily Volume: 144,980 
• AUM: $396 million 
• Inception Date: Feb. 12, 2007
• Issuer: Invesco

The Invesco Currency Shares Japanese Yen Trust (FXY) is an ETF designed to track the price of the Japanese yen through physical yen holdings. The yen serves as Japan’s national currency and is managed by the Bank of Japan, the country’s central bank.

How We Chose the Best ETFs

We selected the best ETFs across five areas of focus—equities, bonds, fixed-income, commodities, and currencies—utilizing a screener by VettaFi. In each case, we sorted ETFs according to the specified category and ranked them by highest one-month returns. We then filtered out any ETFs that employ a leveraged or inverse strategy, as well as any with less than $50 million in assets under management. Finally, for currencies ETFs, we excluded any funds focused on cryptocurrencies from our screen.

How to Invest in ETFs

To invest in ETFs, start by researching and selecting an ETF that aligns with your financial goals, risk tolerance, and investment strategy—whether it tracks a broad market index, a specific sector, or a commodity. Open a brokerage account with a platform that offers ETF trading, then place an order
just like you would for a stock. Consider factors such as expense ratios, liquidity, and tracking accuracy to ensure you’re getting the best value for your money. Depending on your time horizon and risk tolerance, ETFs typically require minimal maintenance and are often considered long-term, buy-and-hold investments.

The Bottom Line

ETFs are versatile and cost-effective investment options that provide diversification, liquidity, and tax efficiency, making them ideal for both new and experienced investors. With minimal maintenance required, they offer a simple way to gain exposure to broad markets or specific sectors while managing risk.

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As of the date this article was written, the author does not own any of the above ETFs.