National Australia Bank (NAB) and Good Shepherd Microfinance have been working hand in hand to address financial inclusion for ten years. This partnership has produced a shared goal of providing fair, safe and affordable financial products and services to one million people living on a low income in Australia by 2018. This means enabling real economic mobility – people moving from financial crisis to a level of stability and resilience.

The need for microfinance is as great today as it was over 30 years ago when the Sisters of Good Shepherd had the foresight to establish their first micro loan program. The number of Australians who have no access to basic financial services – a bank account, credit, or insurance – is around three million and growing.

Since 2003, the Good Shepherd Microfinance and NAB partnership, in collaboration with government and 257 community agencies has delivered 68,200 no interest loans, 9,300 low interest loans and 800 matched savings plans in addition to a range of other initiatives, research and advocacy work to improve financial inclusion in Australia.

StepUP specifically, now in its tenth year of national operation, is a low interest loan that aims to improve financial capabilities and quality of life, by providing access to affordable finance to purchase essential goods and services. These loans are for people on low and limited incomes to ‘step up’ into financial independence from financial exclusion. It is a people-focused alternative to mainstream banks or pay day lenders.

StepUP is the second largest product of Good Shepherd Microfinance. 2012-13 saw the continued growth of StepUP with 2,110 loans drawn-down. This is a 40% increase on 2011-2012.

Why we measure our impact

NAB and Good Shepherd Microfinance have partnered with the Centre for Social Impact (CSI) since 2009 to undertake research into the issue of financial exclusion in Australia. It gives us an understanding on the extent of the issue, which is an important validator to the work we do, and it contributes to evidence-based advocacy and policy reform. Parallel to this, we use research to evaluate the social and economic impact of our programs, adopting the Social Return on Investment Methodology (SROI).

We do this for a number of reasons.  Firstly, by quantifying impact in an economic capacity (value of input compared to value of impact) the methodology provides hard numbers which are understood and valued within senior levels of our organisations and Government. Providing this kind of evidence to current and future funding partners is critical to illustrate the value add and the long-term viability of our programs. In addition, the granular insights provided through this type of research help with resource allocation, the development of new initiatives and improvements to existing programs. To date, we have completed two key reports:

• Small is the New Big: Measuring the Impact of NAB’s Microenterprise Loan program, 2012
• A Little Help Goes a Long Way: Measuring the Impact of the StepUP Loans program, 2013

The SROI methodology adopted for these reports is based on Social, Generally Accepted Accounting Principles (SGAAP). These principles help manage and understand the social, economic and environmental outcomes created by the activity or organisation.

Early successes

SROI is a key way of understanding program effectiveness. NAB and Good Shepherd Microfinance are one of some 200 organisations using it globally.

The SROI evaluation: A Little Help Goes a Long Way: Measuring the Impact of the StepUP Loans Program reveals that the social and economic benefit is valued at more than twice the total cost of the program. This converts into a social and economic return of $2.68 for every dollar invested.  Specific findings include:

• 36% of people receiving a StepUP Loan experienced a positive change in financial literacy
• Almost half experienced a positive change in financial confidence
• 47% experienced a positive change in their financial management (e.g. saving from their pay, paying bills on time, paid more than minimum payment required by their credit card or loan provider)
• 73% experienced a net positive change in economic and social outcomes after receiving a loan
• 64% of people who had previously borrowed from a fringe lender stopped borrowing from those providers.

These outcomes clearly show us the impact our program is having, as well as helps to identify a number of recommendations for improvement which include potential product variations, the provision of additional products and locating StepUP sites to areas impacted by geographical exclusion.

Looking ahead

This research is also being used to progress financial inclusion. The 2013 report A Little Help Goes a Long Way: Measuring the Impact of the StepUP Loans Program has been instrumental in New Zealand’s financial institutions considering investment in similar programs, to provide safe and affordable financial product for those on low incomes.

NAB and Good Shepherd Microfinance will continue to use research to evaluate the social and economic impact of its current and future programs and share these insights publicly. NAB and Good Shepherd Microfinance have two additional SROI reports to be launched later this year to measure the social and economic impact of the No Interest loans Scheme (NILS) and Good Money program.

We will also continue to investigate the issue of financial exclusion in Australia as a key policy and advocacy platform that further validates the importance of our programs.

‘Nominated in two of the three SIMNA award categories, and being alongside nine prominent and well-established not-for-profit organisations in our awarded category such as the Smith Family, the Warlpiri Youth Development Aboriginal Corporation and Reconciliation Australia, we are honoured to be acknowledged.’

Renee Hancock, Good Shepherd Microfinance