What is a savings group?
Sometimes called savings groups, sometimes called Village Savings and Loan Associations (VSLAs), these are savings-led microfinance groups that work to combat poverty. For those unable to benefit from a formal financial institution, these groups offer participants an opportunity to save, grow their money, and take out loans. Across the eight countries where Plant With Purpose works, the groups will look different. While the bones of the program are set, the model is flexible to fit the needs of different communities.
Groups consist of around 20-30 people. A membership committee is established by group vote. This committee ensures responsibility is shared among all group members and protects the group from one person dominating and taking control. Once the group is established, all members create a constitution containing details on the meeting, rules, and fines.
Though saving small amounts might seem insignificant, the results are huge! By saving small amounts, sometimes a few dozen cents each week, Plant With Purpose partners are equipped to start businesses, send their children to school, and have multiple meals a day.
What Goes On In a Meeting?
Meetings may look different depending on the country, but here’s a general overview:
In a typical meeting, the members gather at a designated location. Some groups will open with a devotional or a time of prayer or worship, though this is not required. The box is then unlocked by three key holders and passbooks, ledger, and all other supplies are passed to the members.
The emergency fund is established to help group members in immediate need. For example, if a member has a death in the family and needs money for funeral costs, the group will vote and decide if the member should receive the requested funds. When money is given to a member from the emergency fund, the money does not have to be paid back. During the meeting, each member gives a predetermined amount to the emergency fund. The emergency fund is usually required by groups. Once all members have given, the meeting continues on to the savings portion.
Typically, group members are able to purchase between one and five shares at a predetermined price. Members are called in a specific order and once their name is called, they go in front of the group to present the money and amount of shares they would like to purchase. They hand the money to the treasurer and their passbook to the bookkeeper, who records the amount for the member's personal record. All members have passbooks, which are small booklets that record savings, loans, and interest activity.
The next phase of a meeting deals with loans. At this time, group members can take out loans or pay back outstanding amounts. Whenever a member wants to take out a loan, they must present the need for the loan and make a case for how they will use the money. Then the group votes to decide whether or not to grant the loan at the desired amount.
When closing up the meeting, selected members count the money and announce it before the group. All members then know the final amount in the savings box. Once this is done, members collect all materials (such as the main ledger) and add it to the box.
At this point, the three key holders come forward and lock the box before the group.
Benefits of a savings group
One benefit to being part of a savings group is community. Through saving money, sharing responsibility, and depending on one another, the group becomes a community that works collaboratively and supports each other.
Another interesting aspect of savings groups? They mostly consist of women. By saving money, many women feel empowered and gain confidence in themselves. With the money they save, many open small businesses. For example, a woman may start a business buying fish where they are plentiful and then selling them in the mountains where fish are few.
These groups serve those who are unable to get loans from formal financial institutions. Members of the group can ask for loans from the savings, which will in time grow through interest.
Want to support savings groups? Consider becoming a Purpose Partner.