How are savings pools administered?

• pools operate transparently, and all decisions are made jointly by the pool members, with everyone having an equal say in loan agreements and other pool decisions
• pools require written confidentiality agreements from all members at the time they join the pool
• pools, in exceptional circumstances, might give a dissenting member the option of opting out of a particular loan, so that the dissenting member neither blocks a loan going forward nor participates in its risks
• pools require a mutually agreed form of security against loans, especially larger loans
• pools might purchase an item on behalf of a member, and own the item until the loan has been repaid in full
• pools require written (legally-enforceable) loan agreements
• A pool volunteer keeps the above records without payment
• pools open a shared bank account for a few volunteers, allowing all members to deposit and requiring two signatories for withdrawals
• pools keep any bank interest (if any) to defray any operating costs of the pool, rather than distributing it to any member as income
• A pool volunteer (or rotating team of volunteers) provides all members with monthly statements of each member’s savings, loan, and reciprocity points balances
• pools measure reciprocity commitments with a simple points system, with point credits given on a monthly basis whenever members have a positive balance (savings) and points debited each month when members have a negative balance (loans)
• pool members can withdraw their own savings at any time simply by notifying other pool members, provided that (1) the money is currently available instead of tied up in loans, and (2) the member does not have any outstanding reciprocity agreements
• pools usually do their own accounting and administration, perhaps in a simple spreadsheet, and software is also available

Precedent

For centuries, people have recognised the benefit of pooling their resources. Examples from the last century include co-operatives, buyers’ clubs, investment syndicates and the like.

Living Economies’ approach to savings pool is a model adapted from the very successful Swedish JAK Bank, which has been providing its members with interest-free loans for over fifty years.

Savings pools in Aotearoa New Zealand

The Aotearoa New Zealand approach has been developed by Living Economies Educational Trust, following a visit by Board Trustee Bryan Innes to the JAK Bank. At first, Bryan called this approach the “Genuine Wealth System” to highlight one of the core value principles of savings pools, which is that people find wealth within community, not in a bank. For whatever reason, however, the name ‘savings pools’ is the one that’s found a place in the media.

There are now successful savings pools all around New Zealand. Since 2009 people have paid off cars, loans, and credit cards. They’ve funded travel and made essential house modifications. They’ve even paid off mortgages!

Organic NZ Magazine has published an excellent introduction to savings pools, written by Frith Chamberlain, the Chairperson of Soil & Health’s Mid Canterbury Branch. Frith participated alongside many of our Trustees in a November 2017 Savings Pool hui, hosted by Awhi Tautoko Trust.

We encourage you to read Frith’s article.

Alongside providing a solid explanation of savings pools, the article shares Frith’s own experiences in a savings pool. We’ve decided to take a page from his book and share additional personal stories from pool participants across NZ. Stories are anonymised to preserve pool confidentiality.

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P’s story

My introduction to Savings Pools took place at a public meeting in March 2013.

The idea sounded innovative and I loved the concept of being able to have access to interest-free funds and also to support others to have this same access.

What finally sold me was the ‘group consensus decision-making policy’ that offered me security, inasmuch as nothing could happen to the fund unless I agreed. So it was with a sense of apprehension and also adventure that I joined with 12 others, some of whom I’d met in passing and others whom I’d not previously met, and we agreed to form a group. I started depositing small amounts of excess money into the shared bank account to see how it would go while not risking too much.

It soon became apparent that participating in our Savings Pool had some unanticipated spin-offs.

At the time I was experiencing huge stress with credit card debt of up to $30,000 accumulated over the years, and for the first time I am now credit card free! Where I used to pay interest on loans (credit cards) to purchase essentials (medical bills) and non-essential goods and services (fab shoes) I can now access non-interest bearing funds and be self-disciplined in my spending and saving.

I now choose to save into the pool (instead of the bank), but because I have to apply and get agreement to draw out funds (never any problem), I am no longer subject to the impulse buying of the plastic cards.

This year I formed a second pool with my children and grandchildren. Together we look forward to a future free of the crippling effect interest has had on our lives. As a family we’ve become closer and more supportive of each other than ever before. There’s now trust and respect that didn’t have an opportunity to grow when we lived such separate lives, each dealing with financial stress independently.

I find it immensely satisfying that Savings Pools have been a doorway to my financial freedom and that I’m now able to support and contribute to the financial freedom of others.

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B’s story

In May 2013, I heard of a Savings Pool through Living Economies and the Green Dollars association I belong to. I had done the round of the banks trying to consolidate my debt and had been turned down by them all. My life had become a downward spiral of escalating debts. A divorce followed by a tragic family loss had escalated the emotional turmoil and hardship I found myself in. All felt hopeless until I attended the first meeting of the newly formed Savings Pool.

After introducing myself, I mentioned upfront that I had neither savings nor money available to contribute to the pool and due to my present situation was actually looking for a loan to get out of debt.

A week later, the group had not only agreed to my joining but also lent me $12,000.00 allowing me to get rid of my credit card debt in full, the balance of my car repayments and some major outstanding bills. In return my car was accepted as security while I continued to drive it and I started repaying to the Savings Pool the amount of money I had been paying the finance company for my car – a single shift of where my money was going.

I felt such relief and was smiling from ear to ear when I left the bank after paying all those debts off and when I met one of the group that day, was told it had been a privilege to have been able to help and how good it felt for the group to have been able to contribute to my improved situation.

I had not realised at the time this situation could be seen from that angle. Being the happy receiver of such help when you are in need always feels good, even when it is quite hard to ask for it in such difficult circumstances. It was a totally new concept to me that it could feel so good for others to be offered the opportunity to help.

This emotional link created through the act of lending and borrowing between friends was truly gratifying for both parties and an unexpected benefit of being part of the group.

It turned out for me that being a member of the Savings Pool has not been just about the money but also about making new friends, sharing ideas and resources, brainstorming practical solutions together. It felt very supportive and I am highly grateful to have been accepted as part of the group.

The cherry on top of the (already iced!) cake is that at the end of repaying my interest-free loan, I will have accumulated a similar amount in savings – something that would have been impossible while I was in debt. So while helping myself, I am also helping others, as my loan repayments and savings contributions are made available to the pool, to lend to someone else right away.

This is a very satisfying system as it gives me a sense of instantly being able to pay it forward, when I had nothing to contribute originally. A truly win-win and uplifting situation.

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S’s story

I was introduced to savings pools by some good friends who were members themselves. They explained that the savings pool was a great way to help one another with cashflow and money matters.

I loved the idea, as I grew up in a small European community where funds were lent and borrowed freely, which worked great and brought the community together. I also liked the idea of talking about money freely as I would with my family (who still live in Europe).

The savings pool helped me start my business.

Soon after I joined, I received an interest-free loan of $10,000.00 for starting my dream business. This loan was backed by the stock of products that I bought with the business.

I was impressed by the ease and openness of the group, and the legally correct process it followed. I felt very good being able to start my business on terms that felt human and caring rather than dictated through an impersonal banking process.

That was two years ago. My business has since reached an annual turnover of $1.5M, exporting products into over 30 countries and growing steadily. I am very grateful to have such caring supporters from the savings pool.