| Summary: | Many communities in Canada are experiencing high levels of unemployment, poverty,
social breakdown and environmental degradation. In an effort to address these problems,
individuals, community groups and all levels of government, are experimenting with an
approach to development called community economic development (CED). CED is a
grassroots, bottom-up process that focuses on the creation of stable, viable, and equitable
local economies. In trying to implement CED strategies, communities and individuals face
many obstacles, one of the most significant of which is a lack of capital. Credit unions are
locally-owned and controlled co-operative financial institutions with access to significant
pools of “local” capital and therefore logical places for communities to turn. This thesis
explores ways these institutions can support community economic development in their
communities.
An examination of the literature and interviews with credit union leaders and CED
practitioners, demonstrate that most credit unions are not involved in CED lending. Nor are
they particularly committed to CED ideals. This being said, however, the research shows
that there are a few credit unions, in both Canada and the United States, that do participate
in CED. These credit unions--some with a holistic commitment to CED, others with a
partial commitment--support CED in a variety of ways, only one of which is through
financing. In addition to providing access to capital, these credit unions fulfil other support
functions such as providing technical assistance, building “community” and supporting
community infrastructure development.
Credit unions that participate in CED are not typical of the credit union movement.
Most credit unions do not play a role in supporting community economic development in
their communities. The study found that there are significant barriers to their participation in
CED, barriers such as a lack of vision, the nature of CED lending, and competition from
private financial institutions. In order for credit unions to participate in CED, these barriers
must be removed. Ways to reduce some of the barriers are explored in the thesis. The
research shows that in order to be able to participate in CED, credit unions require: a
committed leadership, staff with community development expertise, new deposits of capital, a
means of subsidizing the costs of CED lending, and institutional mechanisms that reduce risk
as well as government support. Ways for credit unions to fulfil these needs are outlined.
Lastly, research findings are summarized and conclusions are drawn about the role individual
credit unions can play in CED. The kinds of initiatives credit union centrals, governments
and planners can adopt to support credit unions in this work also explored.
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