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Credit Unions, Microfinance and the Third Sector
Last modified: 2010-06-09
Abstract
ANZTRS Conference
The Third Sector as Civil Society in Australasia: Identity, Role and Influence in the New Century
‘Third Sector Organizations –– Value and Role in Civil Society’.
Abstract – Credit Unions, Microfinance and the Third Sector
Credit unions in Australia position themselves within the financial services industry rather than the third sector. Although originally established to address social exclusion most credit unions now operate in mainstream retail banking due to regulation, competition and ‘mission drift’.
The paper explores the role credit unions can play as third sector organisations using case studies of 3 community based credit unions (Traditional Credit Union, Maleny Credit Union and Fitzroy Carlton Credit Co-operative) and their differing approaches to financial sustainability.
The paper engages the debate on microfinance in Australia and examines the opportunities presented by the new federal government Community Development Finance Institution pilot for re-engagement with social exclusion.
Specific themes explored include that:
• microfinance is context based and different contexts produce different approaches and institutions;
• microfinance is not inherently sustainable and Australian and international experience shows institutions need significant donor support;
• mutuality does not determine an interest in microfinance, different entities may engage with social exclusion (e.g. mutuals, corporates or government);
• financial sustainability is a necessary if not sufficient condition for overall sustainability; and
• financial sustainability can be achieved through innovative capital raising, mixed income streams and targeted donor support from government, corporates and philanthropic sources.
Mark Swivel
May 2010
The Third Sector as Civil Society in Australasia: Identity, Role and Influence in the New Century
‘Third Sector Organizations –– Value and Role in Civil Society’.
Abstract – Credit Unions, Microfinance and the Third Sector
Credit unions in Australia position themselves within the financial services industry rather than the third sector. Although originally established to address social exclusion most credit unions now operate in mainstream retail banking due to regulation, competition and ‘mission drift’.
The paper explores the role credit unions can play as third sector organisations using case studies of 3 community based credit unions (Traditional Credit Union, Maleny Credit Union and Fitzroy Carlton Credit Co-operative) and their differing approaches to financial sustainability.
The paper engages the debate on microfinance in Australia and examines the opportunities presented by the new federal government Community Development Finance Institution pilot for re-engagement with social exclusion.
Specific themes explored include that:
• microfinance is context based and different contexts produce different approaches and institutions;
• microfinance is not inherently sustainable and Australian and international experience shows institutions need significant donor support;
• mutuality does not determine an interest in microfinance, different entities may engage with social exclusion (e.g. mutuals, corporates or government);
• financial sustainability is a necessary if not sufficient condition for overall sustainability; and
• financial sustainability can be achieved through innovative capital raising, mixed income streams and targeted donor support from government, corporates and philanthropic sources.
Mark Swivel
May 2010