How Credit Unions Invest in Local Communities and Serve as Embedded Intermediaries

In an era where the gap between financial institutions and the communities they serve often appears insurmountable, credit unions stand out as a beacon of hope. These member-owned co-operatives are not merely financial entities; they are embedded intermediaries that play a pivotal role in fostering local development and economic resilience. As we navigate economic uncertainties and social challenges, it is imperative to recognise the significant contributions of credit unions to their communities.

The Foundations of the Irish Credit Union Movement

The Irish credit union movement began as a response to the pressing financial needs of local communities in Ireland during the 1950s. Inspired by the principles of mutual aid and community self-empowerment, the first credit union was established on Donore Avenue, Dublin 8, in 1958. This co-operative model, characterised by its member-owned structure, promotes a sense of community ownership and accountability. Unlike traditional banks that prioritise profit maximisation, credit unions emphasise ethical lending practices, focusing on the well-being of their members.

Key characteristics of the credit union movement include:

1. Member-Owned Structure: Credit unions are governed by their members, ensuring that every voice matters in decision-making processes.
2. Focus on Local Communities: They provide accessible savings and loan products tailored to meet the specific needs of their members, reinforcing their commitment to local development.
3. Ethical Lending Practices: By prioritising responsible lending, credit unions enable members to access affordable credit, thereby enhancing financial resilience.
4. Regulatory Framework: Operating under the oversight of the Central Bank of Ireland, credit unions adhere to rigorous standards of governance, financial stability, and consumer protection.
5. Financial Literacy: They play a crucial role in promoting financial inclusion, especially for individuals underserved by conventional banking institutions.

Bridging the Gap

The distance between government bureaucracy and citizens’ priorities can often lead to disillusionment and decreased public trust in institutions. To bridge this gap, credit unions serve as embedded intermediaries, linking less-connected groups and addressing local priorities. They mobilise resources to implement innovative ideas that benefit rural, urban, and suburban communities alike.

By acting as facilitators, credit unions enable communities to identify, connect, and mobilise their assets. This unique position allows them to enhance the social, economic, and well-being landscape of the communities they serve. As articulated by David McDonnell, CEO of Naomh Breandáin Credit Union, the aim is to “continue to promote NBCU’s importance to its community” through approaches like Asset-Based Community Development (ABCD).

The Rise of Asset-Based Community Development (ABCD)

The ABCD approach offers a valuable lens for understanding the immense potential of credit unions in building stronger communities. It emphasises the importance of recognising and mobilising local assets rather than focusing solely on deficits. This shift in perspective from what’s wrong to what’s strong has profound implications for community and economic development in Ireland.

ABCD challenges the traditional deficit-based approach that tries to solve urban and rural development problems by focusing on the needs and deficiencies of individuals, neighbourhoods, towns, villages, etc. ABCD demonstrates that local assets (people, physical assets etc.) and individual strengths are key to ensure sustainable community development, and that people have a life of their own choosing.

The ABCD approach asks fundamentally different questions:

1. What is it that communities can do best?
2. What do communities require help with?
3. What do communities need outside agencies to do for them?

This approach helps citizens to find answers to each of these questions. It can also show professionals and institutions how to make better use of the resources that they have access to and how to support one another to use them to benefit whole communities and greater citizen-led action. Hence, ABCD is the way to build healthier, safer, prosperous, and more inclusive communities from the ground up, with citizens in the lead.

Regardless of how well-funded an agency is, ABCD invites them to work beyond their administrative boundaries and understand that competent professional intervention cannot replace people, their families, and communities with unique competencies. Since the only people who can build community are those who live, sleep, and work there.

The starting point for communities, funders, commissioners, and practitioners is necessarily a different one. Instead of starting with a focus on what’s wrong, ABCD invites us to start with a focus on what’s strong so that we can use what’s strong to address what’s wrong and make what’s strong even stronger.

This means paying attention to assets that foster community connection and power. However, these assets may not always be obvious; they are often invisible. Nurture Development is therefore focused on making the invisible visible by assisting organisations in using their supportive functions to empower local community initiatives. This requires some risk-taking by agencies that work with communities since it involves them leaving their agendas off the table and instead relocating the authority to set outcomes to local communities.

As those who work with communities know, community building does not work well when outcomes are already predefined. The dilemmas is that many local communities are not well organised. This is where credit unions can be immensely helpful

Credit Unions as Community Animators

In 2023, Naomh Breandáin Credit Union began exploring how to leverage the ABCD approach to deliver on its strategic objectives. By fostering a cooperative spirit and encouraging members to improve their wider community well-being, as well as that of their families and fellow members, credit unions can contribute significantly to the sustainability of their communities.

Commitment to Sustainability

The Irish League of Credit Unions has been appointed as ambassadors for the Sustainable Development Goals (SDGs) by the Department of the Environment, Climate and Communications. This leadership role reflects the commitment of credit unions to drive forward Ireland’s progress toward sustainability. The integration of sustainability within the operating principles of credit unions aligns closely with various UN SDGs, including:

• No Poverty: Ending poverty in all its forms everywhere.
• Zero Hunger: Achieving food security and promoting sustainable agriculture.
• Quality Education: Ensuring inclusive and equitable quality education for all.
• Decent Work and Economic Growth: Promoting sustained, inclusive, and sustainable economic growth.

Community Engagement and Development

While credit unions have traditionally engaged with their local communities through sponsorships and volunteer initiatives, the events of the COVID-19 pandemic prompted a paradigm shift. A growing number of credit unions began to adopt a community development approach, actively supporting new and existing groups to build their cooperative ethos.

Naomh Breandáin Credit Union, for instance, employs a community animator who assists local citizens and associations in discovering, connecting, and mobilising their assets to address pressing issues. This role is crucial in fostering a sense of community ownership and enabling members to take charge of their financial futures.

Measuring Social Impact

The importance of measuring social impact cannot be overstated. Initiatives like the Social Return on Investment (SROI) studies conducted by Donore Credit Union and Naomh Breandáin Credit Union have revealed the significant social dividends generated by their community investments. For every euro invested, Donore Credit Union reported generating approximately ten euros in social value, while Naomh Breandáin Credit Union demonstrated that their investments could on some occasions, yield as much as twenty euros in social value.

These findings underscore the necessity for credit unions to articulate and measure their social impact, allowing them to communicate their value to both members and the broader community effectively.

Seven Practices for Community Investment

Based on observations of credit unions as embedded intermediaries, several practices emerge as essential for investing in local communities:

1. Solidarity and Advocacy: Credit unions can lend weight to local community development efforts by advocating for causes that resonate with their members.
2. Convening Power: With established trust, credit unions have the ability to bring together diverse stakeholders to address mutual concerns and advance community interests.
3. Sharing Economic Power: By acting as fiscal agents for local community groups, credit unions can enhance local economies and improve well-being.
4. Sharing Personnel Skills: Credit union staff possess a wealth of knowledge and expertise that can be leveraged to support community building.
5. Sharing Space: Many credit unions have facilities that can be made available to local community groups, fostering goodwill and social cohesion.
6. Relocating Authority to Community Alternatives: Credit unions can empower residents to recognise their competencies in providing mutual care and support.
7. Hosting a Community Animator: Employing a community animator can catalyse local assets and foster community cohesion.

These practices illustrate how credit unions can invest their resources to serve community priorities effectively.

Conclusion

As we reflect on the role of credit unions in our society, it becomes clear that they are more than mere financial institutions. They are integral to the fabric of our communities, serving as embedded intermediaries that bridge gaps and foster connections. By investing in local development and prioritising the needs of their members, credit unions contribute significantly to the economic, environmental and social well-being of the communities they serve.

In a time when trust in traditional institutions is waning, the cooperative model of credit unions and asset-based community development presents a compelling framework for strengthening community bonds and ensuring better institutional alignment with local communities' concerns. It is essential for us to support and advocate for these institutions that not only provide financial services but also empower individuals and communities to thrive. Doing so makes sound economic, environmental, and democratic sense.

The two credit unions are only happy to share what they are learning in each local context and to share promising practices. They believe credit unions as trusted embedded intermediaries can shape the national conversation and advocate for more community-centred integrated approaches to various concerns, including climate crises, emergency preparedness, loneliness, age well in place, food sovereignty, and community and economic development priorities. Why not join them?

Cormac Russell, July 2025