Credit Unions Developments in the role of supporting communities

1. Credit UnionsDevelopments in the role of supporting communities Presentation to Co-operative Forum Conference Trinity College 31st July 2010 Mark Bailey President Irish League of Credit Unions

2. Credit Unions are:- • Democratically controlled financial co-operatives, owned and controlled by their members and governed by a volunteer board of directors • Membership is based on shared common bond via employment, residence etc. • Providing financial services to their members on a not-for-profit basis at reasonable rates of interest consistent across all members, focused on social finance objectives • Empowering their members by giving them greater control over their financial services and better consumer protection.

3. Credit Unions – Ireland • Northern Ireland & Republic of Ireland - 103 in Northern Ireland 398 in ROI • Membership = NI 371,000 ROI = 2.5 million • Assets = NI £915 million+ ROI €13 billion • Loans = NI £490 million+ ROI €6billion • Average loan size = NI £3,500 ROI€8,900 • Differentiated regulation via the Central Bank & Financial Services Authority (ROI) and the Department of Enterprise, Trade and Investment (NI)

4. What is Social Finance? • The provision of finance by organisations which seek a social return or social dividend as well as a financial return • Social finance is distinguished from mainstream finance in that it prioritises social gain • Micro-credit is one aspect of Social Finance which is focused on extending credit to enable business development • Micro credit can be offered as Social Finance or as business lending

5. Credit Union Social Finance Initiatives • Lending to those already indebted or on low incomes (40%) • (encouraging saving; offer small loans; repay at same interest rate as all other members) • Lending to those moving from welfare to work, encouraging members to start their own businesses (35%) • encouraging savings, offer loans • Lending method • (direct member loans)

6. Credit Union Social Finance Initiatives • Lending to community development groups for set up costs (15%) • Community development facilities • Sports facilities • Social economy projects which are employment and development related e.g. Community Crèche, Community cafe • Lending method • Loans to limited companies • Investments in co-operative structures

7. Credit Union Social Finance Initiatives • Lending to community enterprise groups for set up costs (10%) • Enterprise parks • Business incubation units • Affordable housing • Community services • Health centres • Libraries • Training Centres • Highest single investment to date €8 million • Lending method • Invest in co-operative structure • Loans to a limited company

8. Legislation • Republic of Ireland • Allows credit unions to lend to groups or societies • Cannot pool funds or invest in a ‘Central Treasury’ for Social Finance • Northern Ireland • credit unions cannot lend to groups or societies • Cannot pool funds or invest in a ‘Central Treasury’ for Social Finance

9. The Credit Union Difference • Social Finance and Micro-Credit offered as an integral part of the service • Focus is always on development of the member and the community • It is never charity; it must have a financial return for the credit union Thank You