The past decade has witnessed scandals, corruption, and greed in the financial sector. The U.S. and Ireland, in particular, have produced many examples of how financial misbehavior damages people and the economy. Bankers have suffered an unprecedented loss of respect in the eyes of the public, and “finance,” for some, has become synonymous with “corruption.” Not surprisingly, The New York Times concluded in 2012 that “the misconduct of the financial industry no longer surprises most Americans. Only about one in five has much trust in banks, according to Gallup polls, about half the level in 2007.”
In the midst of this greed and corruption, is anyone exercising soulful leadership in finance? Is anyone showing an alternative path?
Partners for the Common Good, in the U. S., and Clann Credo, in Ireland, have been faithfully pointing the way to an alternative approach to finance for years. They believe that the purpose of finance is to serve the common good, and they have discovered innovative ways to do that in the midst of a culture that does anything but. For example, in the conservative banking industry, where revolutionary ideas often meet with resistance, the founder of Clann Credo, Sr. Magdalen Fogarty, pushed the envelope by continuously urging bankers to embrace new ideas: “Why not give it a try?”
Clann Credo, founded in 1996, pioneered the idea of social finance in Ireland. With a mission to “design and promote innovative Social Finance products and services” which “contribute to inclusive prosperity and develop social capital in a way that benefits everyone,” Clann Credo launched its work. Having grown steadily over time, in 2011 it provided more than 10 million Euros in loans to nearly 100 projects which would not have qualified for bank loans.
Partners for the Common Good, created in 1989, serves as a “collaborate vehicle for religious institutions to help the poor and empower the marginalized” through providing loans to people who would not otherwise qualify for credit. To date, PCG has provided loans to more than 100 organizations engaged in economic development, and won a Presidential Award for Excellence in Microenterprise Development in 2001.
Equal Exchange, for example, a U. S. company funded by PCG, partners with Latin American farming cooperatives to pay a fair price to poor farmers for their coffee beans. From selling coffee to religious communities and churches, Equal Exchange has expanded to selling in grocery stores and other retail outlets. A successful business, Equal Exchange has also influenced large coffee businesses to offer fair trade products.
Ballybunion Sea and Cliff Rescue received funding from Clann Credo when it needed a new lifeboat. The organization trains and deploys volunteers to rescue people at sea, and, since its founding in 1986, has carried out over 250 rescues. An all-volunteer organization, Ballybunion Sea and Cliff Rescue has successfully raised funds in its community for 28 years to keep its operations going.
Not only do the loans bring about economic development, they also keep providing capital to new projects when they are repaid. Both PCG and Clann Credo report a high rate of repayment, higher than the rate of repayment that most banks experience with loans to businesses. These loans contribute to economic development and are, at the same time, a good financial investment.
Financial tools are powerful. Like any powerful tools, they can be used for ill or for good. Partners for the Common Good and Clann Credo demonstrate the power of financial instruments when used for good. “Finance” need not be synonymous with “corruption.” May others draw inspiration from PCG’s and Clann Credo’s innovation and vision, and follow in their path.