Money: Savers show their heart

If you want to invest while helping others, consider social banking, says Faith Glasgow

Many of us fret vaguely about environmental degradation, human rights or sustainable development. We want to do something to help; we might even support Oxfam or Greenpeace, and perhaps invest in an ethical fund or two. But we can also make money work hard in the cause of developmental issues while it is earning interest. It is a philosophy that is popular in the US and in parts of northern Europe. Now it is taking off here.

Social banking, as it's called, means financial institutions can use savers' deposits to lend spec-ifically to appropriate enterprises (which may otherwise find it hard to get backing) at fair rates, while still paying their customers a decent rate of interest.

For many years social banking in the UK was dominated by the Co-operative Bank, which takes an ethical stance on all its loans and issues a wide range of affinity credit cards - for Greenpeace, Amnesty International, Help the Aged and Oxfam, among others.

Since 1995 the social banking arena has been broadened by the presence of the Dutch-founded Triodos Bank; it takes a proactive approach in ensuring its savers are able to help the sector (or even a specific organisation) where their interests lie. Triodos has seen savings growth of 50 per cent in the UK alone during 1998, so its efforts appear to be paying dividends.

The bank stresses that it will "lend money only to businesses, projects and charities delivering real social and environmental benefits". These include organic farming projects, renewable energy businesses, sustainable transport, social housing and complementary healthcare organisations and Third World fair trade companies.

What does such a policy mean from the point of view of the bank's savers? "Our general policy is to pay savers reasonable and competitive interest rates," explains Susan Jenkins, a Triodos spokeswoman. "On the whole we don't aim to match headline rates, partly because they tend to be short- term sweeteners to attract customers and we feel that's rather dishonest. But we want to offer a good spread of rates so that customers can make the choice. They may focus more on returns, or they may opt for a greater social commitment and rather lower rates."

The Social Investor account is currently paying 3.5 to 4 per cent gross on pounds 5,000 plus, depending on how much notice you're prepared to give. The Young Saver account (designed as a long-term fund for a child's future) pays the same rates across the board. A mini-cash ISA is also available, paying 5 per cent tax-free.

If you want to channel funds into a specific social cause, you may opt for one of several "partnership accounts". These include the North.South plan, which provides so-called "microcredit" for small-scale Third World businesses and social projects. These modest loans at decent commercial rates enable them to establish and expand their enterprises without being crippled by debts to local loan sharks. Savers into the North.South plan earn 2.75 per cent gross on pounds 5,000 at 90 days' notice.

Another option is the Organic Saver Account. Through this, funds have been made available to such projects as the Organic Milk Suppliers' Co- operative, the Henry Doubleday Research Association (Europe's largest organic garden association) and the organically based Hambleden Herbs. This account pays 3.5 per cent at 90 days' notice on pounds 5,000.

"We find people prefer these pooled accounts where they don't have to nominate a specific cause," says Ms Jenkins. "But some savers with a particular project in mind do opt for the Social Target account." Under this, they can choose how much of an interest rate cut they are prepared to stomach, and the bank then lends at a correspondingly lower rate to the chosen project.

If you are prepared to accept lower financial returns for a greater social benefit, you might consider making an investment with Shared Interest, a co-operative lending society set up in 1990 to promote the ideals of fair trade.

Again the money deposited is lent to Third World producers on fair terms. Usually the loan takes the form of credit so that the producers can finance orders for goods. But it has a knock-on effect, in that their profitability enables schools and other businesses to be set up.

Among the producers to have benefited from Shared Interest's efforts are Cafe Direct, whose coffee is sold in Oxfam shops and in supermarkets. Organic honey from the Tabora co-operative in Tanzania (also available in Oxfam shops) is another fruit of Shared Interest's involvement.

Because the society is owned and controlled by its members, they shape its loans policy. The flipside of this, however, is that if it makes a loss in excess of reserves from past years, the members are liable for the shortfall, while any net profits affect the level of interest they receive.

"Membership of Shared Interest will not make you rich," the literature says pointedly. "But we intend that over the long term the interest we pay exceeds any charges we make against capital, so that an individual member receives an acceptable annual return on average."

Normally, interest is fixed at 4 per cent below base rate; currently it stands at 1.25 per cent. The maximum investment is pounds 20,000; the minimum is pounds 100.

n Contacts: Co-op Bank, 0161- 832 3456; Triodos, 0117-973 9339; Shared Interest, 0191-233 9101.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Life and Style
Living for the moment: Julianne Moore playing Alzheimer’s sufferer Alice
health
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
News
people
Life and Style
love + sex
News
people
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
News
i100
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
Arts and Entertainment
Jeffrey Archer holds up a copy of 'Kane and Abel', a book he says was ripped-off by Bollywood
books
Life and Style
food + drink
Arts and Entertainment
Fay Weldon suggested authors should tailor their work for Kindle readers
books
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers