Although Australia has a well-established banking industry there are individuals who are not able to access affordable and fair financial products and services or who may resort to relying on riskier credit sources.
This form of financial exclusion can lead to or exacerbate an inability to participate fully in society and can increase the risk of financial stress and hardship. It is often compounded by low levels of financial literacy and knowledge of existing financial products and services.
The Community Development Financial Institutions (CDFI) pilot was established by the Australian Government as part of a wider package of measures initiated in 2009 to build financial resilience and wellbeing among those most at risk of financial and social exclusion. The CDFI pilot is one element of the Financial Management Program run by the Department.
The CDFI pilot project seeks to build the capacity and resilience of disadvantaged and financially excluded individuals by attracting investment and injecting funds into community finance organisations that offer them financial services and products that they would otherwise not be able to access from mainstream sources.
Participating CDFI organisations have received seed funding from the Australian Government to provide appropriate and fair access to financial products and services. These institutions have demonstrated a commitment to supporting vulnerable Australians to get access to financial services. They provide individuals who are able to repay a loan but who are excluded from mainstream banks access to safe and affordable credit, ensuring that credit is appropriate for their means and reflects their ability to repay.
Participating Community Development Financial Institutions
Foresters Community Finance provides fair, affordable credit products, debt counselling and referral to low and fixed income people, delivered through a one-stop shop located in inner city Brisbane.
Community Sector Banking provides services to Indigenous communities in Western Australia, Queensland and New South Wales. Community Sector Banking provides social enterprise business loans, financial literacy training, micro-credit for low income earners and micro-credit personal savings.
Many Rivers Microfinance provides microfinance and mentoring to clients establishing or expanding micro-businesses. Assistance will be provided to marginalised Indigenous and non-Indigenous Australians in selected locations in regional and remote Western Australia, Queensland and New South Wales.
Fair Loans Foundation provides loans and support over the internet Australia-wide to individuals with a net income of less than $60,000 a year. Individuals who currently do not have access to mainstream loans due to credit defaults will be eligible for a loan.
CDFI Pilot evaluation
An independent evaluation of the effectiveness of the CDFI was performed by Westwood Spice and the report on the review has been released.
CDFI Pilot extension
The Australian Government has allocated $3 million in 2013-14 to extend service delivery until 30 June 2014.
The 2013-14 CDFI Pilot Extension selection process is now closed.
Further information is available in the Program Guidelines.