Can a Strong Commitment to CSR Be a Substitute for Traditional Marketing?
Aug. 25, 2022
At groundbreaking financial institution OceanFirst Bank, the answer is yes.
OceanFirst Bank is a thriving commercial enterprise. The financial institution, which recently joined the Satell Institute, holds $12 billion in deposits, has branches from Baltimore to Boston, reported more than $100 million in earnings last year, and is the second largest commercial bank headquartered in New Jersey. Which is why it’s surprising, to say the least, that it spends next to nothing on traditional marketing.
“We feel that the money we’re spending in the community is the marketing,” says OceanFirst’s chairman and CEO, Christopher Maher, who also serves as president of the bank’s philanthropic arm, the OceanFirst Foundation. “If customers see us at a food pantry or on the side of a produce bus that we sponsor down in Vineland, that’s better marketing than spending our money on a billboard.”
Untraditional? Absolutely. But the unique approach embraced by OceanFirst—which more than 25 years ago became the first financial institution in America to create its own philanthropic foundation—is proof positive that Corporate Social Responsibility and community support aren’t merely nice things to do; they’re powerful strategies for driving success.
How It All Started
OceanFirst got its start in 1902 as a building and loan association, the kind we all recognize from the classic movie It’s a Wonderful Life: Community members pooling their assets to help each other buy homes. It was a successful approach, but by the 1990s the organization was facing a challenge—it couldn’t raise the capital it needed for growth and expansion.
The solution hit upon by then-CEO John Garbarino and the board was to transform the organization into a publicly traded corporation. As part of its IPO strategy, they envisioned taking 10 percent of the money raised—a net of $13.4 million—and endowing a foundation that would benefit the community, primarily in OceanFirst’s home turf of Ocean and Monmouth counties. But there was a wrinkle: no financial institution had ever done that before, and banking regulators wouldn’t immediately approve it. In fact, they offered Garbarino a choice: if the bank didn’t create the foundation, OceanFirst could do its IPO right away. But if OceanFirst insisted on having the foundation, approval for the IPO would take at least a year—and might never come. Garbarino took the gamble, and regulators eventually relented.
“Hats off to my predecessor,” Maher says. “We’ve build an incredible business. Capital markets were important. But the foundation was also important.”
Indeed, OceanFirst’s approach has been everyone’s gain. Not only has the OceanFirst Foundation given away $45 million since 1996, but more than 100 other banks across the country have now followed the OceanFirst model and launched their own foundations. “It’s well over a half a billion dollars, and could be close to a billion dollars, of philanthropy that was created because of this model,” says Maher.
Serving the Community
Meanwhile, the OceanFirst Foundation has become a bedrock in the communities it serves, supporting an array of nonprofit initiatives in housing, education, youth development, and the arts, while also playing a crucial role in helping communities deal with catastrophic events like Superstorm Sandy and the COVID pandemic. And its contributions aren’t just financial; it also plays a leadership role. “We like to support organizations beyond the check,” says Kathy Durante, pictured at left, the foundation’s executive director. “We bring folks together.” (One example: a recent conference it hosted for dozens of New Jersey nonprofits.)
That’s been good for the community—and for the bank, whose brand is now indelibly linked with CSR. “Most of our customers are as likely to have seen us in their volunteer commitments or out in the community as they would anywhere else,” says Maher. “That’s why our contribution budget at the bank is far larger than our marketing budget.”
The Importance of CSR
The commitment to CSR has been crucial in another area, too: helping OceanFirst attract and retain talent, particularly among younger workers. “We produced, for the first time this year, an ESG report for the bank,” says Maher. “We have investors whom we would like to understand what we’re doing, but probably the primary audience we’re talking to is potential recruits to join our company. We’re a talent-led business in an industry where relationships are the key to the business. So if we don’t have the best people, we’re not going to have the best bank.”
Given its close ties to the community, joining the Satell Institute was a no-brainer for OceanFirst. Durante had the opportunity to attend SI’s Spring 2022 Private CEO Conference at the Franklin Institute and came away energized. “As a first-time attendee I was impressed by the presentations, the ideas exchanged during the roundtable discussions, and the impressive membership,” she says. “Our philanthropy, until recently, has been focused on supporting New Jersey nonprofits, and so the conference presented a unique opportunity for me to learn about and connect to the nonprofits and other leaders having an impact in the Philadelphia area.”
So what’s next? OceanFirst is focused on increasing volunteerism among its employees—this fall it will hold its inaugural Community First Day, literally shutting down its branches for an afternoon in order to give employees the opportunity to volunteer at nonprofits—while also making a robust commitment to diversifying its employee base. “When we look at our world, it is shockingly less diverse than a lot of other segments,” Maher says of the banking industry. “And I don’t think the financial system in our economy is going to fully serve the entire economy until the diversity of our community is reflected in our banks.”
But as always, doing good and doing well aren’t mutually exclusive. Maher notes that New Jersey is the most diverse state in the country. “If this is going to be a significant market for you, having a diverse staff is going to help you be more competitive,” he says. “And it’s also the right thing to do.”