Getting the Stainforth and District Credit Union going

Background	The Stainforth and District Credit Union stemmed from long standing links between three local churches, the Catholic Church, the Methodist Church and the Church of England. These churches held regular prayer groups and justice and peace groups and it was from these groups that the idea of forming a Credit Union was first mooted. A study group was formed, consisting of members from the local churches and also people outside the church groups. With the help of links with a successful Credit Union, St. Columba's in Bradford, the Association of Credit Unions and the National Federation of Credit Unions, a training programme was undertaken over two years with a view to forming a Credit Union in the Stainforth parish. The core requirement was the involvement of 21 people, with a Management Group of 15. Following monthly meetings and training, the Stainforth and District Credit Union was finally registered in October 1993.
Management structure	At an Annual General Meeting members : elect the Supervisory Committee, which oversees the overall operation of the Credit Union, makes audit checks on the books and on pass books, etc. elect the Management Committee which is responsible for the management of the Credit Union, following policies and procedures laid down and approved by the Registrar of Friendly Societies; it is empowered to appoint sub-committees e.g. credit committee, junior committee and money laundering officers (whose role is to take appropriate steps to avoid the use of ill-gotten monies e.g. from crime or tax evasion) appoint the Auditors.
Training is ongoing for any new officer or member of a committee.	The Officers comprise the Chair, Treasurer, Secretary, together with the Vice-Chair, Vice-Treasurer and Vice-Secretary. There are no paid members; they are all volunteers, putting in a lot of time and effort. Andrew Breese - Treasurer (2000). He joined the local Credit Union very early on and has previously been the Chair.
Method of operation	It took up to 2 years after registration for the Stainforth and District Credit Union to get all its financial procedures and practice into place. Transactions were recorded manually in ledgers and were extremely time consuming. Deposits or withdrawals were collected from 4 collection points for one hour a week - after Mass/church services; at the local bingo hall; at a school.
Funding the infrastructure	With support from various funding sources (government, Tudor Trust, European Regional Development Fund (ERDF), English Partnerships, the Rural Development Commission (now Yorkshire Forward) and Our Lady and St. Thomas Church in Sheffield), Stainforth and District Credit Union bought a building for £12,000, which was refurbished for a further £100,000 to provide a shop front banking facility, a cafe and offices, together with a flat to let on the first floor (as a means of bringing in revenue).
Forming a Company to buy premises	In order to safeguard members' monies, a separate limited by guarantee company was formed to purchase the building, the Stainforth Development Initiative. These new premises opened in 1996. Stainforth Development Initiative funds have provided for a supervisor in addition.
Membership	By 1995 there were approximately 100 members of the Credit Union. This had grown to 350 by 1997, a year after opening the community bank. At May 2000 the membership now stands at c. 550 members and 300 juniors (having had up to 630 local residents as members since starting). Membership more than doubled in the12 months after the opening of the converted premises at 1 Station Road - from around 150 to 350. It was at this time that the collection points were changed from 4 to 1 - the Credit Union building - now open 6 days a week in the mornings and manned by volunteers. In view of the money transactions, two people work in the community bank at all times.
Financial system	The Stainforth and District Credit Union is responsible for the costs involved in running the community bank (rent, heat, light, telephones, computers, insurance, etc.) and rental of the office in East Lane House, together with auditing costs. 20% of the declared profits are then held as general reserves. Credit Unions must build up general reserves of 10% by the 20% rule. The remainder is then distributed to members as a dividend, pro rata according to their shares; the Credit Union aims to pay a bonus of at least 3% to shareholders on an annual basis.
Lending facilities loan default procedure	In the early days, it was common for members to seek low cost loans of £50, £100 or £150. Nowadays it is more usual for loans to be for larger amounts (typically for holidays, towards a car, house improvements). The Credit Union depends for its income on interest earned from its Reserve Fund (with Unity Trust Bank) and interest from the loans obtained by members, together with grants and donations. It is a constant balancing act between making savings and spending monies to grant loans in a controlled way. The Stainforth and District Credit Union currently has approximately 60% of its funds out on loan. Current assets (including £60,000 funds out on loan) total £120,000. A decision on a loan application is normally made within 2 working days of the interview if the loan falls within the Credit Union's policy; otherwise an application has to be considered at the next meeting of the Management Committee (monthly). The key to minimising defaults on loan repayments is good management practice, based on recognition at a very early stage that there is a repayment problem. The Stainforth and District Credit Union operates a weekly arrears run and the managers are trained to recognise trends on non-payment. Up to 3 reminder letters are sent before court action is taken to obtain redress. At the end of the financial year bad debts amount to approximately 4% of loans granted. The Credit Union does use its discretion in handling sympathetically those genuine cases who have defaulted with good reason.
Financial recording: accounting and auditing	Initially the Credit Union depended on recording transactions manually in ledgers; with an explosion of interest in using the facilities following the move into its own premises, this put unacceptable pressure on those involved in administering the scheme, which was only relieved once a computerised accounting system was afforded and put into place in April 1997. Any group of people considering setting up a Credit Union needs to ensure that it has a fully operational computerised accounting system in place from the outset. From ledger to computer - the ledgers are still used to record daily cash flow.   The Credit Union now boasts a sophisticated management and accounting system, CUMAS, provided by Gordon Struth of GS Systems. A Help line and free management service is provided as part of this package which is was specifically developed for Community Credit Unions. For further information on the costs of the programme and maintenance charges, use email to contact Gordon Struth direct by clicking on his name. The changeover from a manual recording of transactions to the implementation of a computer programme has caused auditing problems over the past 2 years due to the different ways of calculating interest. These have now been resolved. It does highlight the need, however, for any new Credit Union to have an up-to-date computerised accounting system in operation from the outset.
Spin off for the local community - regeneration schemes in Stainforth	In 1996 the Rural Development Commission (now Yorkshire Forward) held a regional competition for bids relating to regeneration projects for a total of £1 million over 3 years. Building on the early success of the Stainforth Credit Union which showed the willingness of the local community to act in concert, a Stainforth bid was made, led by the Town Council and supported by the Community Forum, Stainforth Together and the Stainforth Development Initiative. This bid, which had to be match-funded, was successful. It has enabled East Lane House to be purchased and converted to accommodate several new flourishing initiatives in the local community: a Technology Centre an Opportunity Centre (which provides help and advice to those seeking work without the pressures sometimes experienced by the unemployed in the Job Centres); 250 people have found work through this route over the last 3 years a Nursery (private Day Nursery) an office for the Credit Union East Lane House, 60 East Lane - the new Community Resources Centre It has also provided funds to refurbish the Library and to provide facilities for starter workshop units locally. 24% of the £1 million available was provided by the Rural Development Commission (now Yorkshire Forward); 50% came from EU funds and the remainder from the Town Council and other organisations. This funding ended in April 2000. Funding was obtained from the Single Regeneration Budget (SRB) in October 1998 to provide for computers and training in their use and to enable a computerised accounting system to be installed.
Current developments:credit union training; planning the expansion of the credit union system to north Doncaster	Credit Union Training A new local group, Community Based Solutions, (email: cbsltd@btinternet.com) has been formed which is looking at long-term training needs of credit unions. In association with the National Association of Credit Union workers and the Open College network, residential courses are available at Plato College, Oxford. Expansion of the credit union system Many communities find the lengthy development and training needs to establish a credit union hinder progress. The Credit Union Rural Empowerment Project seeks to avoid this. By expanding the common bond to neighbouring communities, credit unions could become accessible to a greater number of people. This new initiative is funded by Yorkshire Forward and the EU. This funding supports 2 members of staff, a full-time trainer (Andrew Breese) and an administrative assistant, both to manage the Stainforth and District Credit Union and to build on the expansion project, with the ongoing help of volunteers. In addition, a further member of staff is being funded by the Intermediate Labour Market (ILM) to work in the Opportunity Centre for one year. An administrative assistant has been funded to help the proposed expansion.
Helping an economically and socially disadvantaged community with its financial transactions	Many people in communities such as Stainforth have no bank account and with often very low incomes, no chance of setting one up. To overcome the difficulties posed by modern financial arrangements, for instance where no cash is handed over when employees' wages are paid, it has been necessary to set up appropriate alternatives which allow local people to cash cheques without too much disadvantage. The Stainforth and District Credit Union accepts cash or a cheque made payable to the Credit Union. Cheques made to a Third Party have presented a problem in the past and the cheques have been refused by the local High Street banks; the Credit Union has managed to circumvent this difficulty (which is not experienced uniformly throughout the country) by clearing these cheques through St. Columba's Credit Union in Bradford which still maintains strong links with the Stainforth and District Credit Union. A good example of the disadvantages and costs involved to the person concerned of using alternative means of cashing Third Party cheques, is that a £10 refund from the Inland Revenue could entail a charge from a cash converter of 7%-10% commission, with a minimum charge of £5 and a handling charge of £2, resulting in an overall cost of £7 and an actual refund of £3 only. The Credit Union monies is held in a High Street bank account. A person needing a bank account for job purposes is able to give this bank account information to the employer, for a charge of £1. Monies accrued by the Credit Union from this charge are held in a separate fund.
Success stories	There have been many local success stories since the Credit Union began operating in this old coalfield community. For instance: One local resident who owed monies to a legal money lending organisation was found to be liable for £600 interest repayable over 20 weeks (about £120 per month) on a debt of £1,000. He was a member of the Stainforth and District Credit Union and so the Credit Union took over the debt, with the person now paying the Credit Union £40 per week, £30 of which was towards paying off the loan and £10 towards his own savings. He finished paying off the loan a week early and during that time had accrued £350 in savings. He has recently obtained a new loan of £700. Another member faced with no heating two winters ago borrowed £50 for coal. Now a regular saver, he has over £500 in his account. Success does not only come from successful loan repayments. A week before Christmas one member was faced with a family drug problem. Her son was feeding his habit any way he could. Faced with missing loan repayments and a miserable Christmas, the member approached the Credit Union. As a result her loan repayments were suspended until February and the loan was rescheduled.

The information on this page is based on an interview with Andrew Breese - Treasurer - June 2000