This is a CTP of initiative: FEBEA/Credal (Belgium)
This CTP describes a turning point in the financial and social activity developed by Crédal until 2008. This turning point occurs simultaneously to a change in the direction of the cooperative. The position of general manager was assumed by a new person, Bernard Horenbeek, who started his functions improving and increasing the banking services of the cooperative and evaluating customer satisfaction with the objective to increase the social impact of Crédal. Thus, in the interviewee's words:
The objective was moving away from marginality to becoming a real alternative to mainstream banking
The new management strategy aimed to increase the financial services offered by the cooperative. According to the interviewee, as a socially-oriented credit cooperative, Crédal had been providing support to social movements and the social and solidarity economy sector, both in Brussels and in the Walloon region. However, the new Board of Directors considered necessary at that time to strengthen the social impact of Crédal. To this end, a plan to modernize the management of the bank was introduced. The plan ambitioned to guarantee the security of the cooperative´s social capital, increasing the number of members and enhancing the credit activity. They do so by granting microcredits to entrepreneurs and people experiencing economic or social hardship, or by offering loans to social innovation projects.
Until that moment, Crédal had limited itself to financing, principally, non-profit organizations or cooperatives with social impact. Since 2008, Crédal opens the door to entrepreneurs, groups or citizens with either sustainable or citizen's projects, which aim to meet a social demand
At the same time, Crédal launched a search for external financing through which it obtained public subsidies and monetary contributions from foundations and private entities (e.g. the Fondation “Roi Baudouin”, Dexia Foundation, Triodos Bank, Sowalfin[1]) as well as the Waloon region, the council of Brussels or the European Social Fund program (ESF). These served afterwards to finance the non-profit activities of the bank, such as the mentioned microcredits, counselling programs for entrepreneurs, women entrepreneurs, etc.
As a result of this CTP, the credit union will significantly increase its funds and credits. According to the Crédal's management reports, in only 5 years, the cooperative almost doubled its funds, which in 2014 amounted 27,508,474 Euros. Likewise, the number of members increased from 1,482 (Crédal, 2009) to 2,313 people, of which 2/3 were individuals. This was also reflected in the number of workers. Whereas in 2009 Crédal had a total of 32 workers, the team comprised 43 employees in 2015 (Crédal, 2016[2]). This exceptional growth allowed Crédal to approach new social and economic actors with the aim of building a fairer, more inclusive and sustainable society.
References:
[1] Sowalfin - Partenaire financier des PME. Walloon company financing and guarantee of SMEs
[2] Reference: Crédal (2016). Rapport d'activité 2015. Available (in Frech) in: http://www.credal.be/node/114
Regarding co-production, the role of the new CEO of Crédal, since he assumed his post, in autumn 2008, should be mentioned. Bernard Horenbeek will be the main driver of the cooperative's business strategy change. Without losing sight of the principles and founding values of the initiative, Horenbeek proposed important changes in the financial activity and in the attraction of external resources to the bank's board of directors and workers. This resulted in the launch of financing-raising campaigns, involving subsidies and donations, mainly from the Walloon region, where the initiative develops its activity.
Horenbeek had extensive experience in the field of social and solidarity action. Specifically, he was involved in the creation of numerous projects to provide assistance to the homeless in Belgium and Europe. He had held various positions in government offices related to the social sector (Belgian Government). Prior to his appointment as CEO, he was a member of the Board of Directors of Crédal and had participated notably in the creation of the Crédit Social Accompagné, one of the entity's financial products. This is what Patricia Lacroix[1] collects in his study on the origins of Credal:
“The new director will reinforce or develop a series of activities of participatory management, such as the "affaires des femmes, femmes d'affaires" project, the remarkable collaboration with the Fund of Participation, the financial management of Esperanzah and the presence of Crédal in the annual music festival, the social green credit (credit launched in collaboration with the Brussels regional authorities at 0% interest to facilitate the restoration of private houses” (Lacroix, 2009)
This CTP also coincides with a severe financial and economic crisis that hampers the European banking sector - including also the Belgian - from 2008 on. This financial crisis has also provoked a social crisis that affected all the pillars of the system. As the CEO of Crédal explained in an opinion article published in Le magazine Espace de Libertés [2]:
“The opacity of bank management and the search for maximum profit have created chaos in the financial world. This crisis has caused others, a deep social crisis first and a crisis in public finances afterwards. The crisis undermines public authority, the financial world and social cohesion, with each of its pillars likely to drag others further into disarray” (Horenbeek, 2011).
The CTP has served to reaffirm the social function developed by an Ethical Banking entity such as Crédal, which knew how to emerge stronger from the financial crisis. Starting in 2008, the initiative posited in value its trajectory, with more than 25 years of good management and commitment to the social and solidarity sector of the country. The leaders of Crédal observed how this crisis was affecting the international banking system and sought to minimize their effects on Crédal's economic activity by ensuring the financing of cooperatives and non-profit organizations with which Crédal has worked traditionally (many of them members of Crédal).
References:
[1] Lacroix Patricia (2009) “Biographie de Crédal”. (printed document facilitated by the initiative)
[2] Source: Horenbeek. B. (2011). L’argent a-t-il un sens? Article published in Le magazine Espace de Libertés”, n.º 397, may 2011, pp. 12-13.
There are a number of events in the history of Crédal related to this CTP. In the first place, the interviewee refers to the foundation of Crédal in 1984 and to the founding objectives of the cooperative. Thus, the cooperative was born with the aim of giving a human dimension to money, and of lending people's savings to associations and social economy enterprises. To this end, Crédal begins a credit activity that expands throughout its more than 30-year history. Particularly noteworthy is the "professional microcredit" activity that Crédal began to develop in 1994, aimed at promoting the self-employment among people experiencing difficulties with difficulties in gaining access to the labor market.
The interviewee also mentioned Crédal's support for projects related to sustainability and environmental protection, such as the "green loan" ("Prêt vert Bruxellois") launched by the cooperative in 2008 in collaboration with the Brussels-Capital Region. This consisted of a zero-interest loan to promote the energy efficiency in residential housing as well as to reduce energy usage and costs for families and improve the quality of housing in those less advantaged municipalities in Brussels.
As a consequence of the CTP, Crédal reinforces its position as an alternative model of banking, which is manifested in a significant increase in external resources obtained by maintaining and establishing collaboration agreements with public and private entities. In 2013, Credal's funds doubled, strengthened from the 2008 financial crisis. The increasing funding allowed Crédal to expand the scope of its work, refocusing on sustainable development projects. Crédal started supporting organic food production and renewable energy projects such as the Leuze-en-Hainaut wind energy project that Crédal supported in 2011[1]:
"There are many citizen initiatives for the re-appropriation of natural resources, food and energy emerging. Crédal supports its emergence and development providing funds. By participating in the financing of the first wind energy initiative in Leuze-en-Hainaut, Crédal shows its ability to adapt to the financing constraints of a previously unexplored area" (Crédal, 2012).
From that moment onwards, Crédal developed new financial products oriented towards a business sector committed to the green economy. Without entering into the complexities of defining what to be a "social entrepreneur" means, the interviewee explains that:
Crédal has committed itself since 2013 to giving credits - through the Impact + credit - to social innovation or entrepreneurship projects with a strong component of sustainability or community service
According to the initiative (Credal, 2011), Crédal has demonstrated to be a dynamic initiative which focuses its efforts on developing new projects to better meet the needs of customers and wider society. Example of this is the research project, launched with the Ministry of Agriculture, on access to land for farmers [2] “working on the problem of housing and alternative forms of access to property” (Credal, 2011).
References:
[1] Crédal (2012). Rapport d'activité 2011.
[2] Crédal (2011). Rapport d'activité 2010.
According to the interviewee, this turning point in the commercial strategy of Crédal did not generate "contestation", in the sense of an explicit criticism or an open opposition by part of the members of the cooperative. However, he perceived certain resistance to change.
Rather than contestation, what we had was some resistance to change, resistance to the new model we proposed
The reasons for this resistance related to the commercial practice that Crédal had been developing until then and which, according to the interviewee, kept the initiative in a marginal role within the Belgian banking sector. The objective of the CTP was to change this position of marginality and turn Crédal into a banking alternative for a wider sector of the population, enlarging the bank's social basis. In order to do this, Crédal focused on attracting profit-oriented companies, but specifically those governed by criteria of sustainability and social justice.
The initiative managed to overcome the initial resistance by proving highly efficient management of the cooperative, with very positive economic results and that guarantee the sustainability of the credit activity that Crédal had been developing since its beginning, as it was explained in the 2010 annual report:
“Crédal is an economic tool which serves both the real and human economy through two main sets of activities. First, through solidarity credit and advice, we allow the creation of new social economy enterprises. Then we support people who have professional projects and do not have access to traditional bank loans. This activity generates a very important return on investment since one Euro invested in the Crédal microcredit yields five to the community (…) Today, more and more people are interested in the activities developed by Crédal, wanting also to give another use to their money. Our shareholders also responded to calls for increasing our funds. These increased by 20%” (Crédal, 2011).
Likewise, the initiative maintained the same criteria and economic, ethical and social requirements followed up to that moment for the credit granting. Crédal analyzes the potential social impact of each fundable project as the creation of jobs and quality employment, the effects on social integration or the environmental effects, etc.
References:
Crédal (2012). Rapport d'activité: 2011.
Regarding the anticipation of the CTP, the interviewee mentions his personal involvement -as a member of the cooperative´s board of directors- in the design and implementation of the bank's new business strategy. This strategy had very significant consequences, both in economic terms and in their capacity to have an impact. However, it seems that only those most directly related to the management of the cooperative, such as the Board of Directors, the staff directors, and the employees, foresaw the importance of this turning point.
This CTP is directly related to the outbreak of the 2008 economic crisis. Therefore, it would seem reasonable to presume that most of the members of Crédal may have understood that moment as a critical one for the cooperative, even without having an in-depth knowledge on the changes derived from it. As mentioned above, the situation was the opposite.
Despite this, the leaders of Crédal congratulate the initiative's ability to anticipate the effects of the 2008 crisis and to take the necessary measures so that this external event caused no harm to the cooperative, as the annual report [1] acknowledged:
“Crédal was able to avoid the shocks of late 2008 financial crisis. The challenge in 2009 was to ensure sound management to protect the cooperative from possible replications of that crisis. To this end, we have modernized management and accounting tools. The economic environment is changing and we have ensured Crédal has more efficient financial management tools that allow us to adapt to the context and to our clients” (Crédal, 2010).
Finally, it is worth mentioning that Crédal produces an annual report describing the main objectives of the new strategy, as well as the annual results in terms of income accounts, number of associates, clients' profiles, as well as a list of all the Credits granted to projects of social interest, etc. The compared data presented in 2010, 2011 and in the following reports, allow Crédal members to know the scope of the measures introduced since 2008 (resulting from this CTP).
[1] Reference: Crédal (2011). Rapport d'activité 2010.
Crédal draws several lessons from this CTP. Firstly the internal reflection that takes place regarding the role that the initiative can play in promoting new models of society and, in particular, their ability for becoming a key player in the civil economy, by giving the economy "a more human face" ("un economie á visage humaine") and putting financial resources at the service of the common good it is worth noting.
According to the respondent, there is an urgent need to draw the path to a new economy:
Based on a culture of entrepreneurship that integrates elements of solidarity, ethics and prioritizes social and environmental responsibilities over short-term profit
Indeed, as these ethical and responsible practices have proven to be economically efficient, the cooperative prioritized them in order to anticipate forthcoming societal challenges.
Also and second, as from the year 2008, a cultural change takes place within the organization: an evolution in the mission and future vision of the cooperative.
According to former CEO of this credit cooperative, Bernard Horenbeek [2] , the financial crisis has proven that the fundamental principles of the initiative are correct and robust and Crédal can become a real alternative for citizen´s interested in ethical banking, as he explains in the next quotation:
“Defending ethical and alternative finance does not mean being marginal finance. On the contrary, ethical finance and social economy must take their place and assert themselves as credible partners meeting citizens, entrepreneurs and the public authorities. As societal needs continue to increase, the issue of the growth of Crédal arises as a matter of responsibility” (Crédal, 2010).
This CTP allowed Crédal to confirm its position as an alternative and solvent ethical credit cooperative which strengthened from the financial crisis. And this is because, according to the interviewee, the entity has been able to remain faithful to its founding principles such as transparency and independence, and support to the real and social economy.
Crédal remained true to the principles settled by its founders and wanted to keep the transparency of investments and a human face.
Crédal has learned to develop - from its beginnings - a large capacity for adaptation to the social and economic challenges, maintaining a flexible and modern structure and betting on innovation and experimentation. According to its directors, "a complex structure is not essential but a flexible one", which enables them to serve social justice, sustainability and social economy.
Thus, as a consequence of this CTP Crédal has opted for research and innovation. The management team has proposed the creation of a new internal body – the called “Bureau d’etudes”[1]- as a Research & Development department to enhance its knowledge on the fields of social economy, sustainable development, and citizen´s initiatives. The object of this office is explained by the initiative [2] as follows:
“A new department must now be created in Crédal: the research and development one. It is a matter of creating a creative dynamic within our group that allows Crédal to ask ourselves fundamental questions without taboos and without bias. What new ways should we put in place to mobilize resources? How can these funds be made available for the construction of tomorrow's world? What partnership can we envisage with the banking world? Should Crédal be given banking status? Whatever the answers to these questions might be, they will have to integrate the fundamental principles of Crédal and to reflect its values and its social, economic and environmental commitments” (Crédal, 2010).
References:
[1] Source: http://www.credal.be/bureau-etudes
[2] Reference: Crédal (2010). Rapport d'activité: 2009.
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