The specific advantage of banks’ interposition with regard to charitable donations stems from their placement power: branch networks, which give banks an edge in supplying their own financial products and those of others, also put them in a strong position to sell “ethical” products to their customers.
Where profit-seeking intermediaries offer customers financial products earmarked to fund the non-profit sector, organizational and accounting controls are necessary to ensure transparency. Other conditions being equal, two factors may handicap non-profit undertakings in raising debt capital. First, the rule prohibiting distribution of profits may strike the prospective lender as likely to erode operating efficiency in the long run.