Last month Community Finance Ireland (CFI) welcomed 150 members from the European Federation of Ethical and Alternative Banks and Financiers (FEBEA) to Ireland for its annual conference.
Ethical finance is a phrase we hear a lot these days as the public becomes more concerned about how their savings and pensions are invested. The thought of making a profit from, for example, the arms industry is abhorrent to most people. Ethical finance investments, however, consider not only the expected financial returns- there is also a commitment to honesty, transparency, integrity, and fair dealing.
For me, there are three key components of ethical finance:
- Use of money – excluding harmful sectors, supporting eco-friendly initiatives and sustainable practices. Ensuring positive impacts on communities and promoting social justice
- Transparency – Being clear and open about how money is used
- Governance –Collaborative and participatory structures
CFI is an all-island organisation and has been helping voluntary led groups play an integral part in their local communities for the past three decades, and since 2001 we have invested £92 million in community groups on both sides of the border, with over £50m of that invested in Northern Ireland.
The type of organisations we help have included GAA clubs, wellness centres, food cooperatives, church groups, digital hubs, mountain rescue teams and cycling schemes. Our main criterion? Just that the loans we provide are used for the long-term benefit of local communities and that the organisation has the capacity to repay the loan.
For example, in Armagh CFI helped to create a field of dreams for the ladies GAA team.
For years, the Armagh Ladies’ County Board were like nomads, without a home of their own, and forced to criss-cross the county to find suitable venues to train or play.
But now, thanks to help from CFI, they are the first inter-county ladies’ GAA ladies football team to have their own dedicated training facility after we helped them redevelop a former GAA pitch.
This story illustrates perfectly the vital role ethical finance now plays in helping not-for-profit organisations prosper – making possible what communities need whether it’s training facilities, a space to worship or bring people together, to work remotely, or to open social enterprise businesses.
Traditional lending systems find it difficult to provide holistic credit facilities to the diverse community and voluntary sector, and to focus on the benefits of investing in people and communities rather than the bottom line and profit margins. In fact, most chief executives of major banks would have a few sleepless nights if, like CFI, a quarter of their loan book was unsecured.
On the other hand, they would be highly envious of our default rate in Northern Ireland, which is just over 1%.
The main reason for this is that all our relationships are built on trust and are not solely business transactions – and we devote a considerable amount of time to building these relationships.
As social and ethical finance continues to grow in importance, we have a responsibility to ensure that communities understand their potential to drive positive change.
As the representative organisation for FEBEA in Ireland and the UK, CFI is committed to raising awareness of the crucial role that ethical finance plays in fostering sustainable, inclusive development for all.
- Dónal Traynor has been group chief executive of Community Finance Ireland (communityfinanceireland.com) since 2020.
