Building a new relationship between bank and community

At a time when the state is retreating from providing services such as elderly care, not-for-profit organisations are stepping in to fill the gap. Giulia Rhodes hears from the chief executive of Banca Prossima how the bank is meeting the unique needs of the third sector.

Giulia Rhodes


Sports fields, arts centres, church restoration, care for the elderly and support for those with chronic illness are just some of the 56,000 projects served by Banca Prossima – the first bank dedicated solely to the non-profit sector – since its launch in 2008 by Intesa Sanpaolo.

More than €2.5 billion has been loaned to Italian charities, parishes, cooperatives and other third-sector organisations but, says Marco Morganti, the bank’s chief executive, its work cannot be measured solely in financial terms.

"We set out to create social value.
In the third sector, the thing you are producing is often intangible. Ultimately it is citizenship, trust. That is actually more solid than anything else."


Photo: Marco Morganti, Chief Executive at Banca Prossima.

Meeting the needs of a changing world

As Banca Prossima begins a programme of international expansion – with the first partnerships with local banks opening in Chile and Slovakia – Morganti believes the demand for its services is bigger than ever, both at home and abroad.

“Private donors have less to give. In Italy, as in many other countries, the state is retreating from many services. Where there is public money it is not always well spent. Yet the demand for the services of the third sector is always growing.

"These organisations need money and the traditional banking system does not provide it.”

This, he believes, is down in part to a long-standing underestimation of the true value of the third sector. With more than one million employees in Italy – more than the entire education system – its economic significance is clear, but precise quantification is difficult. Much of elderly care, he says, by way of example, now rests on the shoulders of the third sector. “But this is not always seen. What would be the cost if it wasn’t there? This is the social economy’s real weight.”

Morganti likes to talk about the “private-public” sector. This, he hopes, helps to highlight the crucial role of non-profit organisations in a for-profit economy. “We are absolutely not against profit and growth,” he says. “We – in society, government and banking – need to stop seeing that divide.”

In financial as well as social terms, he argues, Banca Prossima’s model makes sense.

“There is evidence that if you inject money into an organisation it grows faster, it promotes best practice, it becomes sustainable. That in turn creates more of that intangible social impact, builds community, supports the economy. That is a virtuous pathway.”
It's not just about the money

At Banca Prossima, decisions about where money should be lent – based on a carefully-developed, highly-specialised rating model that widens 20% normal credit inclusion – take into consideration these intangible assets as well as the traditional financial ones.

“We look at the picture differently.”

"We need to determine that an organisation will be able to repay a debt"

“so we look not just at their material assets but also at their value to the community, their cultural significance. This in part guarantees their sustainability.”

Sometimes, adds Morganti, new projects will have no existing value to demonstrate. A dedicated Social Enterprise Development fund – into which half the bank’s profits are channelled – enables loans to these higher-risk projects and helps get them off the ground.

Networking allows clients to draw on the experiences of others in a similar situation or sector. Benefits range from promoting best practice to innovation, cutting costs and increased efficiency.

Morganti, unsurprisingly, is proud of the work being done by Banca Prossima. So much so, he says, that he would welcome some imitation. “We remain unique. I think of our bank as like a citizen with plenty of money – and a civic duty. We build links. Italy, despite all today’s problems, remains a wonderful community of communities.”

Case study: Helping to build communities

Four years ago, Banca Prossima was approached by the priests of Santa Maria della Stella, a fairly typical Italian parish church in the small Piedmont town of Rivoli.

They hoped to build a new community centre, providing a place for children, young adults, groups from the church and the wider local community to meet, socialise, exercise and study. An underground car park would generate some income, but a loan of €1 million was needed.

Impressed by a solid business plan and efficient organisation, Banca Prossima agreed. Hoping to reduce the parish’s interest repayment, the bank also introduced the priests to its unique crowdfunding platform. Called Terzo Valore, this allows individuals, companies and institutions to lend money to non-profit groups without risk, their capital being guaranteed by the bank.

“Within 50 days they collected €700,000 at zero interest and our “classic” loan  was reduced to 300.000 €. So, they pay less for the interest” says Morganti. “They were able to repay their debt quickly and offer even more services. They completely revitalised the parish and their relationship with the community. That is how it should work. It may sound a little grandiose but I believe this new relationship between bank and society is a step in the progress of civilisation.”

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