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Collaborative Saving Concepts

As a concept, collaborative saving includes a range of practices. Key shared characteristics of these practices are the intentional contributions to a shared 'pool' or 'pot' of resources (e.g., money), and the explicit agreements about how these collectively saved resources will be managed for the benefit of a shared community or collective of individuals (e.g., money can be loaned to members interest free, invested, used to purchase community resources, provide insurance for loss-of-income while sick, etc.,).

This concept is most commonly implemented in terms of informal collaborative finance agreements. There are a wide range of different approaches. Associated English terms for collaborative financial practices of this type include: savings pools; saving groups, lending circles; peer-to-peer lending associations; rotating savings and credit associations (ROSCA); accumulating savings and credit associations (ASCA); community-based financial orginisations (CBFOs); and savings and internal lending communities (SILC). There are also a range of specific terms in other languages, including arisan (Indonesia), chama (Swahili-speaking East Africa), hui (會) (Chinese communities in East and Southeast Asia), likelembas (Democratic Republic of Congo), stokvel (South Africa), tontines (West Africa), tanomoshiko or mujin (pre-1945 Japan), and many more.

Regardless of terminology, these informal collaborative financial practices form part of broader community-driven practices that have a long history and are intertwined with other mutual-aid systems and cooperative practices. As such, these collaborative savings practices have often contributed to a range of broader formalised collective agreements: Benefit Societies, Benevolant Societies, Mutual-aid Societies, Tool Libraries, Time Banks, etc., Rather than include these broader contexts here, there are resource lists on various forms of mutual-aid systems and cooperative practices being planned.

The following is a work-in-progress exploration of related concepts and collection of resources - constructive comments and suggested additional resources very welcome.

Types of Community Approaches to Managing Savings

Collaborative Saving in Collectives

This approach focuses on the role of financial transparency for shared savings/loans as part of intentionally co-creating a collective practice within a community.

In this context, collectives are groups that forms around specific project (or purpose in the world) with individuals each contributing financially and managing those shared funds transparently to achieve collective goals (including supporting individuals within the collective achieve goals that align with the group project/purpose).

While this typically focuses on savings as the accumulation of financial contributions, and the loaning of (or collaborative use of) accumulated funds by the collective members. However, this concept may extend to support collectives where contributions/loans are not limited to the financial contexts.

This concept is broadly compatible with multiple technical/structural implementations of collective saving/loan practices.

For an example, see the GreaterThan guide to Collaborative Funding (with cobudget) For contextualised examples of the value of these approaches see discussions about collaborative finance in relation to mutual-aid and food-sovereignty, see: publicly available contributions or ssb cypherlink to an ongoing discussion on Scuttlebutt.

Reciprocity Savings Pools / Genuine Wealth Bank

The savings pool concept is one implementation of collaborative saving that highlights the value of trust within a small collective. For example, see how this approach has been developed in Aotearoa New Zealand by Living Economies Educational Trust based on a model developed by the JAK Bank in Sweden.

Key features include:

  • Pools operate transparently to all members, with any relevant internal agreements documented appropriately.
  • Internal agreements include a clear process for making group decisions, such as that all decisions about the pool be made jointly by all members following X process.
  • Each pool member is expected to contribute to the pool regularly, according to the group agreements (e.g., a set monthly amount, intermittent savings, a yearly minimum as a lump sum, etc.,).
  • Surplus funds in the pool are available to members as interest free loans that can be requested and are granted (or not) using an agreed decision process (for example, some pools require consensus for a loan to be granted, others allow dissenting members the option of opting to remove their pool contribution so it isn't part of a particular loan rather than blocking it going forward).
  • When borrowers repay a loan, they pay back the loan principal, and then also deposit reciprocity savings in the group for an agreed amount of time (or amount).
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  • Once you have paid the reciprocity in full, you can withdraw it or leave it in the pool as part of your savings and to build the capacity of the pool to enable others to borrow.
  • Pool members can withdraw their own savings at any time simply by notifying other pool members, provided that (1) the money is currently available instead of tied up in loans, and (2) the member does not have any outstanding reciprocity agreements.
  • Pools usually rely on a banking account to hold their collective savings (with all members able to deposit, and at least two signatories for withdrawals) and one or more members tend to do the groups accounting and administration unpaid. Note that pools needs to be careful to remain within relevant legislative guidelines.
  • Most pools have regular real-time meetings (such as shared dinners) as well as ways to communicate between meetings. A such, while pools can be any size, they are often kept small (10-20 members) to foster trust and encourage a culture of broader, non-financial, forms of mutual support.
  • As an example, say 10 friends contribute ~$40/month and anyone can request a loan from the pool, which is approved case-by-case (using a tool such as Loomio where appropriate terms can be decided for each case). Each agreement will include reciprocity so, if you have saved for 5 months you have $200 in the pool, but you want to take out $250 to buy something so you request a loan and it accepted with the expectation that you repay $300 to the pool (i.e. you repay twice what you borrowed). So, in this example you borrowed $50 ($250-200), and repay $300 to end up with $250 savings within the pool and this contributes to what others can then borrow.

Also see:

Rotating savings and credit associations (ROSCAs) / merry-go-rounds / lending circles

Another form of collaborative savings functions as an informal practices within communities that don't have access (or can't trust) financial institutions. These tend to form as small groups within geographically-located communities, to rely on trust, and run for short time-frames.

Rotating savings and credit associations (ROSCAs) seem to be the most well known of these in English:

  • While there are variations, a ROSCA typically involves a small group of individuals meeting regularly for a set time-frame to manage an agreed combined peer-to-peer savings and lending system.
  • In contrast to some other forms of savings pools, ROSCAs are characterised by the money regularly rotating rather than accumulating in a stored form (such as in a bank). As an example, a ROSCA may be formed between ten friends, each of whom bring $50 every week to the meeting, the organiser stores these savings, and then at the end of the month one participant is given the whole 'pot' of $2000 based on a pre-agreed allocation rules. This continues until each member has received the pot (and then may start over or not). For those who receive their lump sum early in the distribution cycle, it’s an interest-free loan. For those who get their share toward the end, it’s a form of forced savings. Default rates are nil.
  • These informal micro-finance groups have a long history, having been documented all around the world and associated with a wide range of terms, including: susu in West Africa and the Caribbean, tandas in Mexico, and tanomoshiko (頼母子講) in Japan, and lending circles in North America - see more)
  • There are some FinTech platforms being developed to facilitate these practices, for example see Aturia Africa and MaTontine, and ChamaPesa

Also see:

Accumulating savings and credit associations (ASCAs)

Accumulating savings and credit associations (ASCAs) are a more structured alternative to ROSCAs that similarly form through informal community-based collaborations for saving in circumstances where financial institutions are not available/untrustworthy.

In an ASCA, the contributions collected at each meeting are accumulated, rather than redistributed at the end of each meeting like in a ROSCA. With this accumulating fund, the group can lend to its members (interest free or with an agreed rate of interest - if interest is earned on loans this can become income earned for savers, adding incentive for members to keep their savings with the group). Typically used for longer periods of time than each ROSCA and a member of the group is appointed to manage an internal fund by investing some of it - keeping records and lending surplus out. After a pre-agreed period (often 6–12 months) all the loans are called back and the fund, plus accumulated profit, are distributed to the members.During this time, With the group’s consent, the money may be loaned to the community to earn interest income.

See: https://wiki.p2pfoundation.net/Accumulating_Savings_and_Credit_Association

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Community-based financial organisations (CBFOs)

At the other end of the scale, community-based financial organisations formalise collaborative savings practices often scaling up beyond the level of small-group trust to rely centralized management and governance structures that steward the larger group with the shared goal of collaboration (broadly speaking) rather than peer-to-peer collaboration.

"CBFOs range from informal (decentralized, unsophisticated) to formal (sophisticated) community-owned financial institutions with an array of products and services, paid staff,and often centralized management and governance structures." see: IFAD Toolkit: Community-based financial organizations (2014)

Breadfunds - collective funds for insuring against temporary loss-of-income

Resources

Guides for Implementing Collaborative Financial Practices

The Group Savings Resource Book - A Practical Guide to Help Groups Mobilize and Manage Their Savings (2002)
Guides to Collaborative Funding and Collaboration Communication Tools by the GreaterThan Collective The Savings Groups Information Exchange (SAVIX) - "provides transparent and standardised data on Savings Groups and is the most comprehensive database in the sector. SAVIX uses 23 standard performance indicators, (reminiscent of the MIX’s “sweet sixteen” from its early days). It reports on 129 partner organisations in 21 countries, with a cumulative outreach of 63,000 groups and over 1.4 million members—roughly 30 percent of the estimated total outreach of the sector" Mix’s MMT interviews with people in NZ Savings Pools
SSB thread on savings pools: %+zYA9WF9cY+HqGLzqS1H7FdUdK45tUmTqiZ85p+RNOQ=.sha256

Tools for Collaborative Financial Practices

While there are no dedicated tools that support both collaborative saving and community-driven practices found so far, the following offer examples of tools supporting one or the other.

Digital Platforms for Collaborative Financial Practices

  • Self Help Group Digital Platform "is a free, open source mobile app for facilitators who lead Self Help Groups (SHGs) and an online dashboard for managers who lead savings group programs." by Code Innovation - there is an associated app co-designed by Self Help Group facilitators around the world and intended to help with the governance and record-keeping within self-help groups. Code Innovation also has videos about how "self help groups create resilience for women members and their families".
  • Chamapesa - building on the beta phase the 'Tailsman android app', this is a proposed smartphone app and open network for decentralized savings and lending inspired by traditional savings circles, as used by people around the world for centuries, see the whitepaper by Ken Griffith, and Ian Grigg - note that the website is currently unavailable. There is apparently a documentary on Chamapsea (by Proof of Work Media, Recorded in Kenya, Feb 2018) but the link lists it as as unavailable at the moment.
  • Charmasoft - a pay-for-service platform that "enables group administrators to easily and efficiently track all contribution accounts within the group."
  • G-Money - "built on the principle that communities are the strongest agents of change… a payment services platform that allows informal groups to save and lend together as they see fit", however it is currently operating only in Kenya and Uganda
  • m-acasa a ROSCA platform in Kenya (appears to reduces the concept to the financial-liquidity elements rather than the community-building aspects)
  • eMoneyPool - a platform for ROSCAs in America (also appears to reduce the concept to financial-liquidity elements rather than the community-building aspects)
  • AZ Fund Chain - currently in beta this promises to be a "digitalized and decentralized version of good old money circles (ROSCA) concept. Start your own trusted private money circle between your friends and family using… blockchain technology making it transparent and reliable."
  • StepLadder a UK version of a ROSCA platform (that, once again appears to reduce the concept to financial-liquidity elements rather than the community-building aspects in that it functions via matches to groups of people with the same financial goal, rather than self-selecting community-based groups).
  • CoBudget is a tool to "allocate funds collaboratively and transparently, enabling everyone to get involved." This tool is often used to decide how to spend the funds managed by an Open Collective but can be used on its own as well - see more
  • Open Collective - an open-source platform built for ongoing collaborative communities, designed to facilitate transparent financial management within a collective. It includes options to set up individual collectives to use along with a regular bank account (or there are fiscal host for collectives that want to make transactions without needing to legally incorporate). The tool is free, and there is no cost to contribute funds to a collective, although there are some transfer fees for processing out-going payments - nfp groups can apply for a fee waiver.
  • Circles - "a basic income made to promote local economy within your community on the xDAI blockchain… The goals of this are to foster local economic interactions, and to value those things which are not seen, are invisible, or are not valued under our current system. Circles is building new networks to acknowledge those fundamental things that in the current system don't have a euro value." Note that this is intended to redistribute and move-money-around to provide a basic income; not for accumulating savings "The goal of this is that you and your network are motivated to use your circles instead of sitting on them, which supports a flowing, vital economic system instead of a stagnant one."

Choosing a Bank

Sample of media coverage of collaborative financial practices

Sample of academic studies of collaborative financial practices

Also see:

Recommended:

tags: collaborative-practices commoning community-building resource-sets finances key-concepts

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CC BY-NC 4.0

Created on lands of the Wurundjeri people by E. T. Smith (2020) to help amplify resources and tools intended to support the mutual-aid practices developed by a wide range of communities. Licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

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E. T. Smith
I am a researcher and resource curator using this space to draft and share early-versions of projects. For context, see: https://hackmd.io/@Teq/Bio
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