By Dr Anne Sarzin, Editor UTS News

"Australia lacks specialised financial institutions to support community enterprises", says Professor Mark Lyons of the Australian Centre for Co-operative Research and Development (ACCORD).

Professor Lyons, a Co-director of ACCORD - a joint venture between UTS and Charles Sturt University initiated and supported by the NSW Department of Fair Trading - says globalisation has created pockets of financial disadvantage within Australia's major cities and in some rural areas.

Within those pockets of disadvantage with their long-term unemployed, there are innovative community groups with proposals for enterprises that could create jobs, adding to community infrastructure and connecting the communities with the larger economy. "These proposals generally need access to finance and business advice to become a reality but Australia lacks the specialist community development finance institutions (CDFIs) that embrace the importance of local economies, business and social enterprise."

According to ACCORD Research Fellow Kathryn Parker, CDFIs are emerging worldwide to serve the finance needs of communities. "What really distinguishes them is their intermediary role and mentoring, helping with aspects such as business plans and marketing."

ACCORD's General Manager and Senior Research Fellow, Garry Cronan says that in the past decade there's been an "incredible amount of energy" invested in changing the macro-level of regulation throughout Australia. "But there has not been a similar amount of attention paid to community-based, mutual co-operative, supportive and sector organisations and structures," he says. "These organisations play an important role and yet institutional restructuring to allow flexibility and innovation has not occurred in Australia. We still have inconsistent legislation around Australia, so very small initiatives springing up might not be able to operate legally. I don't know if you can set up CDFIs in Australia without that enabling framework."

Richard de Simone of the Foresters ANA Friendly Society and ANA Ethical Superannuation Fund said his organisation placed co-operative values in a modern framework. The Society has set up a superannuation fund that invests at a reasonable interest rate in non-profit community organisations, obtaining a 5.5 per cent positive return, possibly one of the highest returns in Australia. "We might be idealists but we can still produce the goods."

The Society has also helped dozens of communities set up their own micro-finance schemes, enabling poorer people in local communities to invest small amounts so that in emergencies they can borrow interest free.

By 2020, the size of Australia's underclass and the level of debt will have grown significantly, according to Duncan Power of Charities Aid Foundation Australia. "We have to start now and get some serious CDFIs off the ground because in 20 years time they will be even more relevant- we have to set up pilots while we start to lobby government to secure changes. You can't be a small bank and survive anymore but you can be a creative loan fund and mutual as well."

Elizabeth Cham of Philanthropy Australia suggests community foundations inculcate a sense of giving in baby boomers, recipients of inherited wealth.

Ted Smeaton of the Benevolent Society, which is active in south-western Sydney, deplores the difficulty of seizing a community business opportunity when it takes 18 months to get venture capital.

Chief Executive of Work Ventures Australia, Steve Lawrence, says the grant mentality discourages people from trying anything new. "We know the social challenges are there and so the need for new ways of doing things is growing. There is nothing that brings organisations more quickly to the table to do deals with the community sector than the offer of tax breaks - where is the social and political leadership in this country that can campaign for that type of change?"

Supported by the NSW Premier's Department, ACCORD is undertaking a study in the Hunter Valley to document community strategies and the emergence of a CDFI trade association to represent those impeded by current regulatory devices.