Since its establishment in 2007, the Social Finance Foundation has channelled more than €262 million in loan funding to 2,220 community projects across Ireland. From sports halls to sensory gardens, these loans have helped local groups deliver facilities that might never have materialised had commercial loan finance been sought.
Countrywide, playgrounds, community cafes and sports halls have been built thanks to this form of funding, but what exactly is social finance and why is demand for it growing?
Social finance provides affordable loans to community groups, voluntary organisations, and social enterprises that struggle to access credit from mainstream banks, says Donal Traynor, chief executive of Community Finance Ireland. “These projects often lack traditional collateral or profit-driven models, with mainstream banks often deeming them high-risk.
“Social finance fills this gap by prioritising social impact over profit, enabling initiatives like community centres, sports facilities, arts and heritage, faith projects and green energy initiatives to proceed. It is lending with a heart.”
RM Block
Clann Credo differs from traditional finance lenders by helping organisations achieve their social, economic and financial potential on terms and conditions that may not be available to them commercially, says Clann Credo chief executive Mary Lawlor. “The social finance products we offer are market-led and comprise bridging and variable term loans. We also work closely with our customers, providing a level of advice and support that may not be available elsewhere.”
Clann Credo’s bridging loans are essential for community groups and charities, providing cash flow for projects that have grant approval, but need to be completed before the grant is issued, says Lawlor. “Our term loans are particularly useful for communities seeking to launch new services, purchase assets or expand in response to a growing demand for their services.”
Community Finance Ireland is seeing strong demand for grassroots sports and volunteer-led community projects wanting to own their own facilities, says Traynor. “That has seen significant investment in the likes of community halls, multipurpose sports facilities like astro-turf pitches, community walkways and community gyms.
“We have also recently experienced an uptick in the number of faith-based groups seeking finance to purchase or develop their own places of worship.”
Similarly, the demand for Clann Credo social finance has increased significantly over the 10-year period since 2013, driven by the increased availability of social finance in Ireland and heightened awareness of the offering, he adds.
“It has also been driven by an increased level of ambition, professionalism and organisation among community groups and social enterprises.”
Traynor says that Community Finance Ireland is seeing the biggest impact in the large number of groups coming to them to bridge the gap in finance for Government grants. “Several grants given to grassroots organisations are done so with the proviso that there is matched funding from a third party or that the organisation has the capital to front the project and the grant is only paid out retrospectively once the project completes.
“This can often be an obstacle for groups as they don’t have the funds to get started and so where our social finance offering comes in is in offering finance to bridge that gap and help them to get started,” says Traynor.
Beyond the rise in applications, the nature of community projects is also shifting. The Social Finance Foundation’s 2022 annual report noted a growing share of loan requests from environmental and biodiversity-focused groups, alongside strong demand for energy efficiency and rural regeneration projects. This reflects how social finance is evolving in Ireland, from funding traditional community halls and sports facilities to enabling climate action, digital innovation and more sustainable forms of local enterprise.
To date, there has been an over-reliance on support from Irish banks whose macro interest rate movements are set by the European Central Bank, says Traynor. “This has a direct impact on the affordability for Irish borrowers by influencing the cost of new and existing finance available to them.
“One example of how our counterparts in Europe are unlocking growth for the VCSE [voluntary, community and social enterprise) sector is in France, where they have implemented a compulsory 90-10 solidarity bond. The way this works is that companies with more than 50 employees are obliged to offer their staff, in addition to regular saving schemes, an optional solidarity-savings fund, which allocates five to 10 per cent of its assets to eligible (unlisted) social enterprises.
The remaining 90 to 95 per cent is invested in classic (listed) companies, mostly following socially responsible investing principles. Essentially, 10 per cent of public sector pension funds are used to invest in the social economy. Ireland could take a leaf out of that book.”
Closer to home, Community Finance Ireland has worked with several different Government departments in Northern Ireland to unlock finance for the social economy, says Traynor. “In late 2024, Community Finance Ireland built on its relationship with the Department for Communities, unlocking £13 million in Financial Transaction Capital, funds that are made available by way of repayable support to the VCSE sector.
“This is a first-of-its-kind collaboration and is working wonders for us in Northern Ireland and is something that can be easily replicated in the Republic.”
Clann Credo’s main source of lending capital comes from the Social Finance Foundation, which was established in 2007 by the Government to provide loan funding to social lenders. “This funding is very welcome and allows us to operate effectively,” says Lawlor.
“In addition to this, we continue to seek alternative sources of lending capital, with a particular emphasis on low interest rates. As part of this process, we recently announced that we were seeking to attract private investors, organisations and large businesses to provide us with an extra stream of lending capital. Such lending by private investors, organisations and large businesses is relatively common in other countries where social finance is available, such as the US.”
Pallasgreen Templebraden Community Council is leading the way in providing the services and facilities that their local community requires, thanks to a social finance loan from Community Finance Ireland, says Traynor.
“Using social finance loans from Community Finance Ireland to bridge the gap in grant funding, the group has installed a new community playground, a sensory garden and walkway, and renovated their community hall.” The revitalised community hall hosts weekly exercise classes, youth club activities and is home to the Blasta Cafe which has become a hub for locals to meet and enjoy some of Anne O’Dowd’s delicious home bakes.
“Located in the village of Pallasgreen in the east of Co Limerick, the dedicated team of volunteers at Pallasgreen Templebraden Community Council have worked effortlessly to find innovative solutions to starting work on the various projects they recognised were lacking, but essential in their local area,” Traynor says.
This investment has had a huge positive impact on the local community, providing a hub for people to meet, socialise, play sport and a safe space for their children to play. It has also had a wider-reaching impact, providing tourists visiting the local area for the mountain walks a place to stop for a break.
In 2024, Clann Credo issued 234 loan offers to community groups, charities and social enterprises across Ireland valued at more than €32 million. This reaffirmed the ambition and determination of such organisations to deliver sustainable community development, says Lawlor.
“This demand for social finance and Clann Credo’s response resulted in 113 new customers and a loan book position of €53.3 million at year end. Clann Credo supports the development of local and regional projects and services that are led by a collective community process and deliver a social benefit. The organisation recognises the positive social impact potential of social, cultural and economic projects and focuses lending across several areas of activity to deliver sustainable community development.”
