WHAT ARE CREDIT UNIONS?
Credit unions are a type of local, community bank. Like banks, they offer a range of financial services, primarily focusing on savings and loans. Unlike banks, though, credit unions operate as a financial mutual, so people’s savings are lent out to other members at low interest rates. Any profit is redistributed among the members or re-invested in the credit union. The emphasis is on providing the best service to members – putting people ahead of profits.
To join a credit union, you have to be within their ‘common bond’, which usually means living, working or worshipping in a specified geographical area - or working for a particular employer. In many cases, organisations – local employers, housing associations, churches and community groups - can also join as corporate members.
Credit unions have a number of clear aims and values:
- Encouraging members to save, as well as borrow;
- Offering loans at fair and reasonable interest rates, taking into account what people can afford to repay;
- Training and empowering members to use money wisely and make informed choices about their finances;
- Using members' savings efficiently and for the mutual benefit of members and the local community
Currently, less than 2% of the population (and 6% of regular churchgoers) are members of credit unions. The sector is growing fast, but is still very small by comparison with some other countries - 30% in Australia, 46% in the US, 43% in Canada, and 75% in Ireland.
If we want a more inclusive financial system that is focused on serving the whole community, including those on lower incomes, then we must all help credit unions to become bigger, better known and easier to access.
JOIN AND INVEST IN YOUR LOCAL CREDIT UNION
Credit unions need a broad mix of members to thrive, including people on higher incomes who can afford to save and borrow larger amounts in order to balance out their smaller, riskier loans. By taking an active part in a credit union, you will be benefiting your local community, including helping people in financial need to borrow and save responsibly. No matter what your income, you can play your part in creating a fairer financial system by joining your local credit union. Most credit unions now accept corporate members, so you could ask your PCC, diocese or community group to invest as well.
HOW TO SUPPORT CREDIT UNIONS
In addition to joining and investing, there are many ways to get involved and support your local credit union and the wider credit union movement whether you're an individual or represent a church, community group or diocese. Getting involved can be a rewarding experience not just for those in financial need and those who directly benefit, but also for those who generously give their time and expertise to support their local communities in this way.
VOLUNTEER WITH A CREDIT UNION
Many credit unions would welcome volunteers with professional skills in IT, marketing and communications, fundraising, volunteer management, as well as banking and finance.
Helping to strengthen the governance of credit unions by becoming an elected director is another opportunity for service, and is crucial to the future development of the sector if it is to compete effectively with other financial service providers.
Start by finding out about your local credit union. Visit one of their branches or access points to see what services they offer and consider becoming a member yourself. Find out who the manager or board members are, and arrange a meeting to ask about their plans and how you or your church or organisation might be able to help them to achieve their goals.
Visit findyourcreditunion.co.uk to get started and find out where your local credit unions are based.
OPEN A CREDIT UNION ACCESS POINT
Although the larger credit unions have their own branches and some operate entirely online, many credit unions use a network of community buildings - libraries, schools, community centres and churches - as access or collection points. If there is not an access point in your neighbourhood already, then think about whether you could offer your church premises. This would ideally be linked to a café or other church-based activities that attract a regular flow of visitors.
Some access points simply provide information about the credit union and field membership enquiries. Others provide a full range of services, where members can deposit savings, apply for loans and make repayments. Typically, collection or access points are open for one or two mornings a week and staffed by trained volunteers. Your credit union may be able to help with set-up costs and training volunteers, but you may have to fund some of this as part of your church's community work. Having a group of willing and able volunteers is also crucial.
If you are setting up as an access point, look for people who are numerate and able to fill in forms, but also empathetic and able to listen. You may be surprised at who offers to help, including people with little connection to the church but who share your vision. You will also need someone to lead and coordinate the project, ideally someone who understands the bigger picture and can help to develop the project.
One of the biggest barriers to the growth of credit unions is lack of awareness. Most people have not heard of credit unions and even fewer people understand how they work. But, when told about them, many people are attracted by what they stand for, and say they would benefit from the services they provide.
You can help by telling your friends and neighbours about credit unions and by publicising their work among your congregation, explaining the important practical and theological reasons for supporting them. Use the materials in our resources section to help you make the case.
It is important that credit unions are not seen as the poor man's bank if they are to grow in a sustainable way, so think about how you could reach different audiences. Credit unions are particularly keen to encourage more payroll saving, and the Church's networks could be very useful in getting the word around to local employers.
We have provided free, downloadable church materials to help you and your church raise awareness amongst your congregation and in your local community.
DIOCESAN SUPPORT FOR CREDIT UNIONS
Dioceses have responded energetically and creatively to the Archbishop of Canterbury’s call to support credit unions. When the Archbishop invited the Bishops to mark International Credit Union Day last year, at least 45 Bishops from 31 dioceses organised some kind of activity in support of more than 50 credit unions across the country. At least 1 in 3 Bishops is now a credit union member.
Here are just some of the local initiatives that dioceses have been involved in:
- Supporting capital-raising campaigns for the local credit union
- Investing some of their own funds in the credit union
- Helping credit unions with marketing campaigns
- Commissioning resources to help credit unions to engage with schools
- Running information days with clergy, in partnership with credit unions
- Setting up local access points in churches
- Training church volunteers to support and champion local credit unions
- Hosting regular meeting with local credit union managers to share ideas and plans.
Learn more about the innovative ways Manchester Diocese have been supporting and promoting their local credit unions and explore the two Diocesan case studies, below.
DIOCESE OF SOUTHWELL & NOTTINGHAM
In 2012, David McCoulogh, Director of Partnerships and Mission, spoke to one of the local credit union directors about what churches could do to help support and promote credit unions.The clear message from the credit union was that they needed more members depositing savings.
The aim of the diocesan 100x100 initiative was to get 100 people from local churches to save £100 with either of the two main credit unions, Nottingham or T2Shires, and leave it there for at least a year. The diocese set a modest target of £10,000, which has been far exceeded; to date, over 150 people have deposited a total of over £80,000.
The diocese has since launched the 25x5 initiative - a similar scheme inviting PCCs and small charities to become corporate members of one of the credit unions by depositing up to £5,000 each. So far, there 17 corporate members have signed up with deposits of £115,000.
DIOCESE OF CHICHESTER
Access to affordable credit is an issue that the Bishop of Chichester takes seriously. In 2013, he hosted an event at the Bishop’s Palace in Chichester to launch a capital-raising appeal for West Sussex Credit Union to enable them to make more loans and eventually become self-supporting – a major issue for many credit unions. To date, around £600,000 has been deposited in the credit union and new investors keep coming. The ‘Patrons Appeal’ was co-sponsored by the Bishop, the Roman Catholic Bishop of Arundel and Brighton and the Lord Lieutenant. The credit union is now opening corporate or community accounts for organisations to deposit money and there is quite a lot of interest from councils and the voluntary sector.
“The backing of Bishop Martin and the Lord Lieutenant was essential to the success of this appeal. By using the Bishop’s Palace as a venue, we were able to attract people who came because their interest had been piqued and they wanted to see inside this historic building! Once there, the Bishop’s support for the credit union was very persuasive and we continue to receive enquiries a year later. Congregations throughout the county are also taking a positive interest and some are now actively promoting credit union membership.”
Jenny King, West Sussex Credit Union