No interest loans change lives

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1 GROWING PROGRAMS No interest loans change lives 82% 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. 7% experienced a net improvement in social and health outcomes. This includes a change in confidence, self-esteem, personal relationships and participation in society. 7% improved their financial capabilities including budgeting, saving money and maintaining an emergency savings fund. Our flagship program NILS is a national community-based initiative offering clients on low incomes access to fair, safe, no interest credit, up to a value of $1,2. NILS has no fees, charges or interest payments, and can be used for essential household goods and services. This year 2,378 loans were written, the highest ever in a 12-month period, totalling almost $22 million. This year s write-off rate was 5.66 per cent. Women are the primary borrowers (68 per cent) with the typical age of 35-, the average loan amount was $92 and the main items purchased continues to be fridges and washing machines. However, the loans are increasingly being accessed for other items such as lounge suites, beds and mattresses, personal computers and televisions. According to the research report Life Changing Loans at No Interest An Outcomes Evaluation of Good Shepherd Microfinance s NILS, 1 the program reaches Australia s most vulnerable people. It found that for every dollar invested in NILS, a social and economic return of $1.59 is created. $2.5 of social and economic value is achieved when only the actual financial costs are considered. General household appliances Other Fridges Washing machines Household furniture Computers Repairs/maintenance Vehicle repairs Vehicle registration Beds Delivery Health related Outdoor equip Loan purpose (%)

2 Annual Report 21 Community led Reach Impact Number of loans Value of loan capital ($m) ,266 21,11 22,39 2, % 55% 8% 3% were living under the poverty line were severely financially excluded of clients who had previously used fringe credit stopped live in a single parent family with dependants. 1. Bennet, S. Georgouras, M. Hems, L. Marjolin, A. and Wong, J. (213). Life Changing Loans at No Interest: An Outcomes Evaluation of the Good Shepherd Microfiance s No Interest Loan Scheme (NILS), Centre for Social Impact (CSI), University of New South Wales, for Good Shepherd Microfinance. 13

3 Community led Taking the path less travelled With more than 3 per cent of Aboriginal or Torres Strait Islanders considered to be financially excluded, this group represents some of the most vulnerable people in our community. Over the past two years we ve successfully partnered with several organisations to deliver the NILS program to Aboriginal and Torres Strait Islander people and others living in remote communities. This has included 2 locations in Far North Queensland, Rockhampton, Darwin, the Kimberley and the Anangu Pitjantjatjara Yankunytjatjara (APY) Lands. Together with our six local providers, we ve faced a number of challenges and learnt from our shared experiences. For example the delivery of items acquired through a NILS loan can be problematic due to the large distances and cost of transportation, and difficulty in delivering during the wet season. Initially, this challenge was partly alleviated by delivery subsidies through our energy inclusion program and the former Home Energy Saving Scheme (HESS). More recently we ve addressed this issue working with our partner The Good Guys who are offering free delivery through our online buying service, Good2GoNow. The development of partnerships with strong and resourceful organisations has meant efficient use of resources, increased awareness of NILS, an holistic approach to money business and more effective community engagement. This work has been made possible due to funding from the Australian Government Department of Social Services. 22 per cent of NILS clients identify as Aboriginal or Torres Strait Islander people. Remote service NILS 213 & 21 Total Loans delivered 519 Loan amounts $2,787 1 Photo: NILS Client of Echuca Neighbourhood House

4 Annual Report 21 Reach Managing home energy costs Australian electricity prices have increased 5 per cent over the past four years and further rises are expected in the future. 2 In 212, we partnered with the Australian Government to administer a subsidy program, distribute funding to the network, provide training and build an online buying service as part of the former Home Energy Saver Scheme (HESS). The program enabled NILS borrowers to receive a subsidy to help purchase an energy efficient appliance which would then help to reduce their ongoing energy bills. Clients also made significant savings if they chose to buy their appliance through our online buying service - Good2GoNow. Almost 6,5 appliances were subsidised as part of our energy inclusion program through HESS which ended on 3 June 21. We ve estimated that over the next 1 years clients will save more than $1 million in reduced energy costs and around 23, tonnes of CO 2 emissions. 2,617 2, Fridges Households with low income spend on average almost 1 per cent of their gross household weekly income on total household energy costs, around three times that of households with high income. 2 Washing machines Single parents with dependent children spend the highest proportion of gross income on household energy costs. 3 Clothes dryers Energy Ombudsmen across Australia have expressed their concern at the high numbers of consumers contacting them with credit issues a strong indicator of the growing issue of energy affordability. $,37,278 5,275 6,98 $ of subsidies provided to enable affordable purchases Energy inclusion Number of NILS loans to buy energy efficiency items Number of energy efficient appliances 2. Australian Energy Market Commission, 213 Residential Electricity Price Trends report, Sydney cited in Australian Government Department of Industry 21 Energy white paper green paper. 3. Australian Bureau of Statistics Household Energy Consumption Survey, Australia.

5 Community led Going the distance Megan Blacklow is a microfinance worker at the Port Douglas Neighbourhood Centre. She provides NILS clients with access to safe, fair and affordable loans for essential goods, such as fridges and washing machines. At the National NILS Conference in June 21, Megan won The Gavan Podbury Award for NILS Excellence, for having gone above and beyond the call of duty. One of Megan s many fans is Jenny Chapman from the Port Douglas Neighbourhood Centre s Loan Assessment Committee. Megan has a lovely rapport with her clients, says Jenny. She nurtures connections and remains constantly focused on the NILS concept of safe, fair and affordable credit for low income households. Megan s enthusiasm and dedication to her role as NILS coordinator is quite inspiring. Her insight, hands-on and down to earth business approach continues to go from strength to strength. Shona Barbour, Treasurer of the Port Douglas Community Service Network Management Committee, agrees. Shona says that when Megan commenced her position in 28, she identified that the Mossman Aboriginal community was the most in need of NILS. Today, 9 per cent of our NILS clients are from the Indigenous community. The majority of these clients are only able to access NILS because of Megan s regular outreach, Shona says. An unscrupulous door to door salesman had been active in that community and these vulnerable people were signing contracts at exorbitant interest rates, placing them in long term financial crisis, says Shona. Megan began driving to the Mossman Community Centre and Mossman Gorge Aboriginal community every fortnight to ensure that people had access to NILS. Megan also identified that the existing promotional material was not appealing to the Indigenous community, and a local artist was commissioned to provide artwork for our advertising campaign, which has been extremely successful. The mutual trust and respect between Megan and her clients is clearly evidenced through her clients 1 per cent repayment rate. 16 Photo by Mylene Heidke. L R Megan Blacklow, Betty Olbar, Mandy Stone, Molly Hart and Tharrwiilnda Hart.