Through a unique business model, one trailblazing organisation is starting to tap into the nonprofit sector’s combined billions – for the good of all. Liz Henderson reports.


Through a unique business model, one trailblazing organisation is starting to tap into the nonprofit sector’s combined billions – for the good of all. Liz Henderson reports.

Question: which Australian financial institution has some of the country’s leading charities as backers; brokers partnerships between government, business and the community; and is also working with philanthropic organisations to create sustainable communities?

The answer is Community Sector Banking (CSB) – an organisation which almost defies description and breaks the mould in every sense.

“We work on the basis that doing good doesn’t mean you don’t do good business,” says Peter Quarmby, executive director of CSB – Australia’s first and only banking service for community organisations.

A Unique Structure

CSB was sparked by an idea Quarmby had in 1999 to consolidate the buying power of the $50 billion then flowing through the nonprofit sector each year.

The organisation launched in 2002 as a joint venture between 20 community organisations and Bendigo Bank. The nonprofit shareholders include The Brotherhood of St Laurence, Oxfam Australia, Charities Aid Foundation and the Australian Council of Social Services. Each originally bought in for $20,000.

“On the world stage, we’re quite unique,” says Quarmby. “This is the first time the nonprofit sector has come together to form a commercial company designed to bring about social outcomes – to help themselves, if you like.”

Its hybrid structure and innovative services aren’t the only things distinguishing CSB from the likes of ANZ and Westpac. While shareholders will receive a financial dividend this year, for the last five years profits have been reinvested into sector development.

For CSB, it’s about priorities. While the big banks fit philanthropy in under their brand umbrella, improving society through building the capacity of nonprofits is the driving philosophy behind CSB.

Solutions for Nonprofits

While CSB offers many of the same financial services as traditional banks, its products are specially designed for nonprofits.

Capacity-building initiatives range from funds management and solutions for insurance and telecommunications, to a micro-finance facility helping people with low incomes to access credit.

A unique salary benefits card that cuts down on paperwork and costs for salary packaged fringe benefits has been developed, and a vehicle fleet management service for nonprofit organisations was launched in 2008.

The fourth sector

CSB goes well beyond providing financial solutions for nonprofits with ‘fourth sector’ principles underpinning the organisation’s vision. The idea is that bringing together society’s three sectors – commercial, government and community – in a fourth sector engenders greater social change.

CSB uses its networks to connect parties with common goals, leveraging each one’s expertise and resources while maximising gains.

“We play a role of matchmaker,” says Quarmby. “We’re good at bringing together parties from different sectors because we’re a hybrid organisation ourselves.” See the case studies below for examples.

Way of the Future

The creation of CSB is part of a growing worldwide trend towards social banking. “Statistics suggest that over the next decade a minimum of 10% of the world’s capital will be held by social banks,” says Quarmby.

He attributes this to the rise of social responsibility which inspires people’s interest in where their money goes and how it’s used.

“What makes our model successful is that the profit is shared with the sector and reinvested back into the social fabric of Australia – that’s enormously important.”

And if CSB’s growth is anything to go by, social banking has certainly gained a strong foothold in Australia. The organisation has grown 40% in the last 12 months, has around 9,000 individual clients and 2,500 nonprofit clients, and now boasts 28 staff in five offices across Australia.

Affordable Housing – Case Study

CSB has been working with the Tasmanian Community Housing Property Trust and STEPS Ltd to develop affordable rental housing for low-income Tasmanians.

The aim is to build 400 homes over the next 10 years to rent to people in need of affordable housing and address poverty and disadvantage in the state. Built on land set aside for housing by the local and state government, the first 11 homes have been completed.

This is a good example of a fourth sector enterprise as it addresses a social need and aims to provide reasonable returns for investors who funded the project.

“The great thing that came from this initiative is that it has been integrated into the federal government’s National Rental Affordability Scheme,” says Quarmby.

Ecotrust – Case Study

CSB was among the parties invited by the Australian Conservation Foundation and Land & Water Australia to investigate whether a ‘conservation economy’ could empower Northern Australia’s indigenous communities.

This ‘Ecotrust’ model relies on creating niche markets through efficient, sustainable products and services, and CSB’s involvement has included more than a year of research and number-crunching to assess the commercial possibilities.

Philanthropy has also played a vital role with a seed grant of $1 million contributed by the Poola Foundation (Tom Kantor Fund), and CSB is now helping indigenous people in the Kununurra area with strategic planning.