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

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 bondvia employment, residence etc.

– Providing financial services to their memberson 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.

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)

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

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)

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

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

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

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