The Village Well in the simplest terms is a local lending organisation, similar to a bank. It’s an alternative to putting money with one of the big banks. As we know, banks take the money you deposit, give you a small return, and then lend that money to other organisations, or people, and charge them interest. So if you deposit $5000, you might get one percent return on it, then they’ll take that $5000 and lend it to somebody else and make five percent return off them. That’s essentially how banks make their money (it’s a bit more complicated, but let’s keep it simple for now).
So instead of giving that $5000 to a bank that will then lend it to a business that you might not know or like or agree with, the Village Well lets you put it into local businesses you love or people you care about. The Village Well sets criteria for all of its lending that aligns it with positive social and environmental impact, and a mandate to lend locally. So your deposit might end up going to a business in the local area that wants to put solar panels on their roof and needs to borrow $5000 for a deposit. It keeps the money local and aligned with your values.
The idea grew out of a conversation I had with a guy named Mike Conway, a good friend of mine in Byron Bay. We were talking about how on a personal level we were occasionally lending money to friends who are starting businesses. We thought, Why don’t we do this together? Isn’t this exactly what we should be partnering on? And before long we realised actually this is something others would want to join too. We brought in another friend, Terence Bell, and started to recruit like-minded people around the idea of a local community lending organisation.
To create the Village Well, we’ve gathered a group of around 20 people around the Byron Bay area who are willing to set it up and commit to being the first investors—understanding that it’s a pilot and there’s learning to do, so we might make some mistakes in the beginning. Once we iron out any kinks, we can offer more people to join in, or even help other communities set up their own Village Well. We’ve set it up as a community organisation (company limited by guarantee) so nobody owns it, there are no shareholders who will be making money out of this other that the small interest that lenders will receive. The founding group of lenders has decided that the Village Well will only lend to local businesses, not individuals. And more than that, local businesses that are helping our local community to become resilient or regenerative. So if a local business is helping solve the climate crisis or ocean pollution or a social issue like homelessness, affordable housing or food security, we will aim to lend to them.
The dream would be that the main banks set the same rules. Imagine if they said, “We will only lend to people who are making their houses more energy efficient.” Or, “We won’t lend to you unless your business has got a social or environmental purpose statement attached to it, or gender balance in its leadership.” But they haven’t, so this is why we have to create the Village Well. I should say, there are some banks like Bank Australia and Beyond Bank that are phenomenal and do have criteria like this. So if you’re ever going to go with a bank, go with those. But the Village Well is geographically targeted, and specifically designed to keep local money local.
What does it look like in practice? Now, let’s say you’re the local butcher. You’ve saved $5000 and put it into the Village Well. That $5000 then gets lent to your friend, the local baker down the road, to buy a second oven so she can employ disadvantaged youth in the bakery. So the butcher’s $5000 which he’s made from the community—the community members bought his meat and gave him that profit—is then going back into the same community to support the baker. It’s a virtuous cycle of money being recycled inside the community and allowing everyone an opportunity to flourish. The added benefit is that the lenders to the Village Well have a vested interest in local businesses being successful, since their money will only be repaid if the baker has a viable business. By keeping it local you protect your investment, help your neighbours, support your community and care for the planet. Does it get any better than that?
