Community Development Financial Institutions Pilot Scheme
The CDFI pilot seeks to build the capacity and resilience of disadvantaged and financially excluded individuals by attracting investment and injecting funds into community finance organisations that offer them financial services and products that they would otherwise not be able to access from mainstream sources.
In 2011, a pilot scheme to help give disadvantaged people better access to financial services was launched by the Minister for Families, Housing, Community Services and Indigenous Affairs, Jenny Macklin.
SVA Consulting had been involved with this project since 2009, when it won a contract to support the Federal Government by scoping the potential for a Community Development Financial Institutions (CDFI) sector in Australia.
The study included researching the extent of financial exclusion in Australia; conducting a gap analysis to identify the financial service needs that are not being met both for individuals and organisations through the commercial banking sector; and recommending sites and a model for Government intervention including the focus for an initial pilot program.
In early 2010, the Australian Government announced that it would commit to funding a pilot project, investing $6.27 million in capacity building funding as well as working with banks to establish an ‘investor circle’ for the selected CDFIs. In June 2010, existing and new CDFIs were invited to apply to participate in the pilot. With further support from SVA Consulting, a tender and evaluation framework was developed. In addition, ANZ and NAB become members of the ‘investor circle’ contributing capital into the organisations.
The CDFI pilot seeks to build the capacity and resilience of disadvantaged and financially excluded individuals by attracting investment and injecting funds into community finance organisations that offer them financial services and products that they would otherwise not be able to access from mainstream sources.
Five CDFI organisations have received seed funding from the Australian Government to provide appropriate and fair access to financial products and services. These institutions have demonstrated a commitment to supporting vulnerable Australians to get access to financial services. They provide individuals who are able to repay a loan but who are excluded from mainstream banks access to safe and affordable credit, ensuring that credit is appropriate for their means and reflects their ability to repay.
The five CDFIs being supported through the pilot program are:
- Foresters Community Finance (provides fair, affordable credit products, debt counselling and referral to low and fixed income people, delivered through a one-stop shop located in inner city Brisbane),
- Community Sector Banking (provides services to Indigenous communities in Western Australia and Queensland, and disadvantaged individuals and families in NSW, Victoria, Tasmania and South Australia.
- Community Sector Banking provides social enterprise business loans, financial literacy training, micro-credit for low income earners and micro-credit personal savings), Many Rivers Microfinance (provides microfinance and mentoring to clients establishing or expanding micro-businesses. Assistance will be provided to marginalised Indigenous and non Indigenous Australians in selected locations in regional and remote Western Australia and New South Wales),
- Fitzroy and Carlton Community Co-operative (focuses on building the financial independence, literacy and advocacy of low income Australians. They operate out of a shop front in Melbourne, Victoria), and
- Fair Loans Foundation (provides loans and support over the Internet Australia-wide to individuals with a net income of less than $50,000 a year. Individuals who currently do not have access to mainstream loans due to credit defaults will be eligible for a loan)
You can read the full CDFI scoping study prepared by SVA Consulting on the FaHCSIA website.
