Interest-free lending and ethical investments
The banking industry is traditionally associated with the pursuit of profit and lack of integrity, but it doesn't have to be that way. A bank can simply become a redistributor of cash flows and an investor in businesses. This approach gives rise to systems of ethical investment and conscious banking . Such banks invest only in activities agreed upon both by the management and contributors, for example, planting forests, organic production, supporting local producers or businesses created by socially disadvantaged people.
The purpose of this practice is not to make profit for the owners and shareholders of banks, but to support initiatives that would not otherwise have access to funding and would not be implemented.
For implementation of this practice, it is enough for the participants to be willing to start using it: banks that decide to support ethical and "green" projects, companies that set the rules for P2P loans, and the participants in economic relations are the ones who choose the projects to invest in.
The purpose of this practice is not to make profit for the owners and shareholders of banks, but to support initiatives that would not otherwise have access to funding and would not be implemented.
For implementation of this practice, it is enough for the participants to be willing to start using it: banks that decide to support ethical and "green" projects, companies that set the rules for P2P loans, and the participants in economic relations are the ones who choose the projects to invest in.
Universal Problem
The majority of banks issue loans at interest for the purpose of obtaining private benefits. Because of this, financing is available only to high-margin businesses and enterprises, and local socially-oriented projects or non-profit projects remain unimplemented due to lack of start-up capital.
Solution
Interest-free lending and ethical investment: banks that issue loans do not seek additional interest, and the choice of projects for financing is not determined by profitability, but by the value for the team.
Target Image
In the future, community members will have the opportunity to receive funding for launching projects that lead to an increase in the common good, and not to an increase in private benefits.
Experiment Framework
Banks, work with depositors to decide which projects should and should not be financed. Since the owners of the bank are not managers outside the local community, but its members themselves, the profit remains at the disposal of the community.
Tools and Technologies
- Alternative system of ensuring the reliability of deposits ("savings points")
- Installment plan instead of direct loan, no penalties for late loan repayment
- Deposits without interest income
Scaling Plans
The scheme functions successfully, but it is not widespread enough due to the fact that the banking sector in its classical sense allows investors to get rich very quickly. In turn, they are not ready to give up this opportunity.
Standards and Values
- Common interests and values of the lender and the client
- Control over the financial steps of the bank by the client
- Reliability of payments (in both directions)
- Ethical decision making
- Local community support
Communities
- WIR-bank (Switzerland) is a Swiss bank that created a credit system that allows loans to customers in its own currency, called "WIR" (used in combination with the Swiss franc to create a double currency transaction)
- JAK Medlemsbank (Sweden) is a Swedish cooperative bank (it is owned by all its members in equal share). The initial goal is to serve the interests of the local economy without harming the environment. The ultimate goal is to abolish lending interest as an economic instrument
- Slow Money is a non-profit organization dedicated to stimulating capital flows into local food systems by connecting investors to their communities and promoting new principles of fiduciary responsibility that "puts money back on the land".
Allies
- Companies and ethical investment banks (GLS Bank, Umweltbank, Triodos Bank, Rabobank) provide reduced interest rates for organizations with a Cradle-to-Cradle certificate)
- Communities and interest-free P2P-loan companies for supporting local initiatives (Lending Club, Kiva)
What you could do in the Kruzhok for joining the approach:
- Learn to analyze the financial behavior of large players (what projects are supported by patrons and donors? What is the origin of the funds?).
- Introduce an internal system of interest-free mutual credit and / or local money ("tokens") to support the initiatives of like-minded people and colleagues.
- Implement financial transparency in the Kruzhok's budget, jointly monitor procurement and investments (for example, jointly choose which classes or trips to fund from the club's budget).
- Analyze your own consumption in order to financially support more like-minded producers.
