Highlights Opportunity Amid Crisis for Credit Unions

(June 9, 2008 - New York, NY)  Triggered by the subprime crisis, “The dominant financial system in the U.S. is being questioned in a way it has not been before,” Federation President / CEO Cliff Rosenthal told a convening of socially-oriented cooperatives, banks, and policy advocates in the city of Quebec on June 5.  The catastrophic losses and the widespread economic distress present “an unprecedented opportunity to bring the credit union and cooperative message to millions of Americans,” he argued.

The World Social Finance Summit was organized and sponsored by the Belgium-based  International Network of Investors in the Social Economy (INAISE) and, locally, by Quebec’s Desjardins Caisse d’economie Solidaire, a member of the renowned Desjardin credit union network. Over 150 delegates attended from five different continents, from as far away as Togo and Cameroon, Scandinavia, Brazil, the Philippines, British Columbia, and Australia.

Stressing the urgency for action, conference speakers laid out a series of interrelated crises: the financial crisis, the energy crisis, the environmental crisis, the escalating food crisis, and a growing water crisis.  In every sense of the word, the present situation is “unsustainable.” The financial system, in particular, must be transformed: instead of making people merely a means to produce profit, finance must serve human needs.  Return on investment must account for environmental and social costs.

Many institutions have done precisely that. Some are small grassroots organizations; others are relatively large, complex banks and hybrid entities that operate internationally.

Bancocomunidad, a microlender inspired by the Grameen Bank of Bangladesh, serves the indigenous poor of the Oaxaca region of Mexico.

Banca Etica in Italy, was established nine years ago by 21 organizations. Today it has 12 branches throughout the country with four more on the way. and 64 local groups of shareholders.  It finances cooperatives, fair trade enterprises, environmental businesses, renewable energy, housing, and microenterprise programs.

Triodos Bank, established in the Netherlands in 1980, is a mission-driven institution that focuses on the environmental, social, and cultural sectors; its base is composed largely of individual depositors, who place social return ahead of receiving market-rate interest. It has established socially responsible mutual funds, microenterprise, and venture capital funds.

Another major participant was the Charity Bank in England, which was capitalized with the help of foundations, trusts, and other philanthropies that wanted to leverage their contributions by funding social investments.  Charity Bank enjoys great flexibility because it is both a registered charity and a regulated bank.

The largest institution represented, and the one best known in the U.S., was Vancity – Vancouver City Savings Credit Union, the $14-billion (Canadian) credit union based in British Columbia.  The credit union prides itself on “going against the grain”: it has a “triple-bottom line” with social, environmental, and financial dimensions, which it summarizes as “people, planet, and profit.” Among its sustainable funding activities, it supports community development efforts among First Nations (indigenous Canadians).  Vancity’s Chris Dobrzanski agreed that the time is ripe for pressing for the transformation of banking, which has evoked widespread popular “revulsion at subprime practices.”

Rosenthal found broad agreement with his assessment of three major challenges faced by social and cooperative finance institutions across national lines.  “First, global capital standards designed with large banks in mind are a major threat to the survival of smaller, socially-oriented institutions.  A second major threat comes from the increasing crush of regulations, which again have a disproportionate effect on small institutions.  Finally, there is the threat of demutualization, or conversion to for-profit status with the loss of mission.”
 
The conference closed with a declaration signed by the participants, including the Federation, which affirmed the basic common values underlying the social finance movement: placing human needs first.

© 2008 National Federation of Community Development Credit Unions.