Scale
Scaling fair and affordable products to meet the needs of millions of customers
There’s a big gap between supply and demand for fair and affordable financial products.
We’re focused on narrowing that gap by finding what works for people in financially vulnerable circumstances and scaling it up to meet demand.
To do this, we invest in community finance providers who are expert in serving customers who would otherwise be excluded, and we use our funding to leverage in investments from others.
The community finance sector doesn’t have the scale to meet demand on its own and we need banks and other commercial providers to play a bigger role.
Increasing the provision of affordable credit
Holly Piper
Fair4All Finance
Boosting community finance
Community finance providers like credit unions, Community Development Finance Institutions (CDFIs) and other social lenders are a lifeline for many.
We’re helping them grow to provide more affordable credit:
- We’ve committed £70m in investments and grants to credit unions and CDFIs to preserve and increase their lending capacity
- We’re working closely with specialist lenders and social investors to attract more lower-risk capital into community finance
- We’re funding transformation projects, particularly in technology platforms, to make more digital tools and systems available to enable future growth
- We’re developing community finance capabilities through our Leadership Learning Programme, focused on strategic planning and change
in investments and grants to credit unions and CDFIs
Case studies
Attracting capital
In 2022 we made a £1.6m investment in Great Western Credit Union to support the growth of their business and further improvement of their technology infrastructure.
Throughout 2023 their loan book grew by £1.6m as they served around 10,000 customers with loans.
Part of our investment could be unlocked through matched funding as more funding was needed for their growth. Through ethical retail investment platform Ethex, GWCU was able to raise nearly £1 million from over 300 retail investors which we matched pound for pound.
This was the first time a community finance provider had successfully raised money from private investors, serving as a blueprint for other providers for their own future fundraising.
Tackling food poverty
Food Club is a partnership between Fair for You CDFI and supermarket group Iceland. It aims to stop food poverty during school holidays by providing interest-free micro loans of up to £100 for grocery shopping.
Since 2019 we’ve invested £7.5m in Fair for You to grow their lending, transform their technology infrastructure and develop new products.
Our investment helped Fair for You support more than 60,000 customers in 2023 during the cost of living crisis, showing how quickly dormant assets funding can have a direct impact on people in society who are struggling.
Food Club is used by customers in the most financially vulnerable circumstances with 50% of customers being a single parent and in the lowest income deciles. Beyond an immediate ability to buy food, 57% of customers reported reduced stress, anxiety or depression about their finances.
Preserving lending
We launched our Covid-19 Resilience Fund in April 2020, within a month of the first lockdown hitting. It was designed at speed in consultation to help identify the risks of the pandemic to community finance providers and people in vulnerable circumstances.
The Fund provided £3.9m to 31 community finance organisations, who prior to the pandemic had collectively lent over £138m in 2019 and served 136,000 customers.
Our grants helped preserve c50% of their lending capacity in this unprecedented time. From April 2020 to April 2021 cumulative surpluses for grant recipients were £1.5m. Without the Fund cumulative losses would have been £2.3m over the same period, risking the demise of these organisations.
Indicators show that lending to customers in vulnerable circumstances recovered swiftly after an initial shock and that this lending has since been sustained.
Affordable credit Scale Up Programme
- £37m committed in social investments, grants and guarantees to seven CDFIs and credit unions
- Investee growth rate of 33% in 2024 versus 6-8% growth rate of the unsecured credit market
- Investees responsibly lent £107m of affordable credit to people in financially vulnerable circumstances in 2024
- 79% of loans issued were under £1,000, 32% were under 52 weeks and 37% were to lone parents with dependent children
- Investees are seeing improvements in profitability in a challenging economic environment and are securing a range of external funding to support future growth