Liz Chadwick works for JFF in Newcastle and Northumberland. Here she describes the process of setting up a new credit union to serve a rural area.
Traditionally, credit unions have been small, non-profit financial organisations set up by members with something in common to benefit their community. That common factor may be living in a geographical area or working in the same organisation. This is known as a common bond.
The great strength of a credit union is that it offers a reliable source of loans to the members along with a culture of saving.
Recently there have been changes in our area because the strength of the credit unions also became weaknesses at the very time when demand for loans was highest following the financial crash in 2008.
Some of our Credit Unions, being community focused, had traditionally had the ability to access grant funding from funders like the Northern Rock Foundation to recruit staff but from 2008 this grant funding trickled slowly to a halt and workers had to be made redundant.
The Governing Body of Board Members drawn from the community lacked the time and the professional training to run an entity which needed to operate on the same platform as high street banks. Conforming to regulations, marketing and growing.
The very title credit union seemed to lag behind the times yet meanwhile big banks were pulling out of our towns.
A small group of people in Tynedale the largest but most sparsely populated area in England reacted to these problems by setting up their own community bank. Tynedale Community Bank (TCB) was launched by The Archbishop of York in November 2015. Growth was steady and deposits came in but the loan book was low.
In another part of Northumberland a credit union (CUSEN) with a strong membership and large loan book was heading into difficulties. Income had dropped dramatically and reserves were dwindling. A change team, which I chaired, looked at all options and then recommended merger with one or other of the two largest North East Credit Unions. This process was slow and a risk of liquidation for CUSEN became a strong possibility.
however, whilst networking at the launch of Lifesavers Virgin Money event in November 2016 a solution presented itself. Why not approach TCB with their strong leadership and a healthy deposit book to merge with the struggling CUSEN which operated in an area of high need for loans. This merger to create a larger flourishing community bank is progressing well and the I am now involved with trying to recruit volunteers from churches to help. A variety of roles present themselves, compliance, customer service and governance. All of which should be within the capabilities of many in our congregations. Many churches and individuals are already involved in vital work like food banks, toddler groups and youth work but this is completely different because it is something that could benefit everyone and not just a specific group .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 community in this way
Change is slow and needs to be done well. We can lead the way and help communities to flourish.