NDIS Criterion
MEDIA, JOBS & RESOURCES FOR THE COMMON GOOD
NEWS  |  Social Innovation

No Interest Loans Delivers Positive Outcomes – Report


Thursday, 1st May 2014 at 10:07 am
Lina Caneva, Editor
An independent review of Good Shepherd Microfinance’s No Interest Loan Scheme (NILS) has found that the program diverts clients away from predatory lenders such as fringe credit providers and goods rental services.

Thursday, 1st May 2014
at 10:07 am
Lina Caneva, Editor


0 Comments


FREE SOCIAL
SECTOR NEWS

 Print
No Interest Loans Delivers Positive Outcomes – Report
Thursday, 1st May 2014 at 10:07 am

An independent review of Good Shepherd Microfinance’s No Interest Loan Scheme (NILS) has found that the program diverts clients away from predatory lenders such as fringe credit providers and goods rental services.

The independent evaluation by the Centre for Social Impact showed that NILS created positive changes in clients’ financial capabilities.

“More than three million people in Australia don’t have access to a moderate amount of credit, a basic transaction account or general insurance,” CEO of Good Shepherd Microfinance, Adam Mooney said.

“The NILS program provides an alternative for people on low incomes enabling them to realise their own economic wellbeing, as they define it themselves, through appropriate and affordable financial services.”

The NILS program offers no interest loans of up to $1,200 to people on low incomes for the purchase of essential household goods and services. Operating for 33 years, Mooney said the program had provided loans to more than 125,000 people on low incomes, with repayment rates consistently above 95 per cent.

The report, “Life Changing Loans at No Interest: An Outcomes Evaluation of Good Shepherd Microfinance’s No Interest Loan Scheme”, found that:

  • 82 per cent of clients experienced a net improvement in economic outcomes, such as savings in food and utilities expenses as well as greater financial independence and ability to absorb one off unexpected shocks.
  • 74 per cent of clients experienced a net improvement in social and health outcomes. This includes improvements in confidence, self-esteem, personal relationships and participation in society.
  • 47 per cent of clients improved their financial capabilities including budgeting, saving money, maintaining an emergency savings fund and comparison shopping.
  • Four out of five clients who had previously used fringe credit stopped after accessing a NILS loan.

The research also found that for each dollar invested, $1.59 of social and economic value is returned overall.

“This means that clients are less likely to need expensive government and other services such as emergency relief, housing, mental health, corrections, income support and more likely to move towards income generation, self sufficiency and broader economic contribution,” Mooney said.

Good Shepherd Microfinance’s NILS program is offered through a partnership with the National Australia Bank (NAB), the Australian and state governments and 257 connected local community organisations in 609 locations.

NAB’s annual Measuring Financial Exclusion in Australia report found that of the three million people financially excluded in Australia, 35 per cent are young people aged 18 to 24 and more than 40 per cent are in employment.

NAB Group Executive, Personal Banking, Gavin Slater said that greater transparency of the fringe lending sector is required in order to fully understand why some people aren’t accessing mainstream credit products.

“There are many people in our community living pay cheque to pay cheque, without a safety net to help them manage unexpected expenses. When they’re faced with emergencies, such as the car they rely on to get to work breaking down, they do not have any means to repair or replace it.

“Those excluded from mainstream credit are often forced to turn to fringe lenders and can find it difficult to manage basic payments, getting caught in a cycle of debt,” he said.

Both organisations have called on the Australian Government’s Financial System Inquiry to more fully understand the fringe lending sector and opportunities for industry, community and government to work together to substantially extend safe, fair and affordable alternatives.

For a full copy of the report visit: www.goodshepherdmicrofinance.org.au/NILSreport


Lina Caneva  |  Editor |  @ProBonoNews

Lina Caneva has been a journalist for more than 35 years, and Editor of Pro Bono Australia News since it was founded in 2000.

FEATURED SUPPLIERS


Brennan IT helps not-for-profit (NFP) organisations drive gr...

Brennan IT

Yes we’re lawyers, but we do a lot more....

Moores

Helping the helpers fund their mission…...

FrontStream Pty Ltd (FrontStream AsiaPacific)

NGO Recruitment is Australia’s not-for-profit sector recru...

NGO Recruitment

More Suppliers


YOU MAY ALSO LIKE

Report Explores Financial Wellbeing in Australia

Lina Caneva

Thursday, 28th September 2017 at 12:03 pm

Good Money Microfinance Celebrates Five Years of Three-Way Partnership

Lina Caneva

Tuesday, 5th September 2017 at 12:27 pm

Social Impact Investments Could Address Housing and Homelessness

Rachel McFadden

Tuesday, 8th August 2017 at 8:16 am

POPULAR

Disability Advocacy Group Fights to Restore State Funding

Luke Michael

Thursday, 9th November 2017 at 8:37 am

Red Cross Moves to Wage-Based Fundraising Model

Lina Caneva

Thursday, 16th November 2017 at 8:30 am

New Same-Sex Marriage Bill Looks to Protect Faith-Based Charities

Luke Michael

Monday, 13th November 2017 at 5:25 pm

Donors Looking for a Personalised Experience to Give More – Study

Lina Caneva

Wednesday, 8th November 2017 at 1:43 pm

Write a Reply or Comment

Your email address will not be published. Required fields are marked *


NDIS Criterion
pba inverse logo
Subscribe Twitter Facebook

The social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!