Guide to Giving
MEDIA, JOBS & RESOURCES for the COMMON GOOD
News  |  Innovation

No Interest Loans Delivers Positive Outcomes - Report


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


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. She was the editor of Pro Bono Australia News from when it was founded in 2000 until 2018.


Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au


Write a Reply or Comment

Your email address will not be published.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



YOU MAY ALSO LIKE

Innovative uses of philanthropic funds to tackle complex social problems

Libby Ward-Christie

Monday, 19th August 2019 at 4:29 pm

Social enterprise helping vulnerable Aussies find meaningful work

Luke Michael

Tuesday, 6th August 2019 at 5:34 pm

Case study: Assessing an impact investment fund using an impact audit

Geoff Mulgan

Tuesday, 23rd July 2019 at 8:24 am

Market, what market? Why bottom up innovation is so rare in human services

Nicholas Gruen

Tuesday, 23rd July 2019 at 8:10 am

POPULAR

NDIS help arrives for Australians experiencing homelessness

Luke Michael

Friday, 9th August 2019 at 4:42 pm

Disability groups call for better quality plans in NDIS review

Luke Michael

Monday, 12th August 2019 at 4:51 pm

Gillian Triggs to shine a light on Australia’s refugee treatment

Maggie Coggan

Monday, 12th August 2019 at 5:04 pm

Australians’ generosity a “mixed bag”

Maggie Coggan

Tuesday, 20th August 2019 at 8:23 am

Subscribe to News
pba inverse logo
Subscribe Twitter Facebook

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

You have Successfully Subscribed!