1.Traditional Rotating Funds
Communities around the world use rotating funds. Rotating funds enable members to save quickly for amounts that can be hard to achieve on their own.
How it works:
- every week or month everyone in the group contributes to the common fund
- every week or month one person takes the whole pot
- continues until everyone has received the whole amount once
Who gets the pot is usually decided by lottery or negotiation: for example, if someone in the group needs money suddenly, they may ask to have their turn first or on a certain date.
"Hands" variation: members can pay in multiples of a standard amount, sometimes called "hands". For example, a group may decide to have a "hand" of £20. Each member can put in one hand or multiple hands as long as they do this every week or month. The member will receive the whole pot on rotation once for every hand they put in. Someone paying in 4 "hands" worth every month will receive the whole 4 times over duration of the fund and someone putting in 1 hand per month will receive once.
Did you know: rotating funds are the origin of the "Building Society". Today, Building Societies are mortgage-giving banks like Nationwide and YBS but originally they were people saving together from their wages until they could afford the deposit for one person in the group to build their house: a "building society". Once one had a house, the whole group would continue saving for the next person until everyone had a house, often in the same neighbourhood.
2.Food Cooperatives & Community Purchase Groups
A community purchase group is neighbours, friends or family saving together to purchase something that will benefit them all at once or that creates savings by purchasing in bulk (food cooperatives) or to support a common cause. There are dozens of food cooperatives already using Kin. Kin Cooperative is working with Cooperation Town to support neighbourhood food cooperatives across the UK.
How food cooperatives work:
- members contribute a weekly amount (usually around £5)
- one member (the treasurer) requests money every time an order is made to pay for the food purchase
- food is delivered and divided among the members as agreed
If there is money left over, this can build up towards a bigger order later on or for a community party or can be divided back to the members.
Other community purchase groups:
A group of residents may want to buy solar panels for the roof of their estate or a local car park to power their homes and save on prices. Or they may want a new community playground. These are all forms of community purchase. Members of a community purchase group usually contribute equally or by an agreed formula, e.g. "each according to their means" or over a period that will lead to equity in the end.
Did you know: There are many community organisations that could be community purchase groups if they think about what they are doing as mutual aid (people working together to benefit everyone) and not charity (a group of people who have something, helping those without it). For example, a community cinema is a group of people collectively buying a movie to watch together. This could be run as a ticketed event with organisers and customers or in the spirit of mutual aid as a community purchase where everyone is equal.
3.Solidarity Funds
Solidarity funds are group of people putting money in to support themselves or members of their wider community if a sudden need arises.
Some solidarity funds are very large with hundreds of individuals putting in small amounts every week. They have an agreed process for members requesting and being given access to funds - sometimes a trusted group of members, sometimes a vote put to all of the group members and sometimes there are different rules depending on how much is requested.
Solidarity funds can be repayable, i.e. an interest-free loan (see Number 5), or they can be grants. Sometimes the same fund is used for both.
Did you know: Solidarity funds have the potential to transform communities - and they can involve individuals as well as local organisations. For example, 500 people in a local area putting an average of £2 per week would have a fund of more than £25,000 in the first 6 months and each individual would only have put in £50.
4.Self-employed / Christmas Fund
Sometimes called "bread funds", groups of freelancers all over the world have created savings clubs to help them manage sudden losses of income. Many self-employed people do not receive holiday pay or sick pay and Christmas can also be a time where there is less work and less income. Starting a savings club with people in the same situation can help you create strong savings habits and a safety net.
How it works:
- members pay in as much and as often as they think appropriate
- when they need their funds, they request the amount from the group
Usually members can only request what they have put in but some groups may decide to create a solidarity fund as well to help newer members especially if they are saving more than they are requesting.
5.More Traditional Accumulating Funds
Interest Free Savings and Loan Fund: is when members effectively allow their savings to be available to others in the group on the basis that they will pay it back.
- everyone in the group commits to contribute to the common savings fund. It can be every day, week or month, it can be the same amount for all the members or different amounts depending on how the group decides members can access the funds (on kin group pages you can always see the total each member has contributed and requested).
- a member requests a loan and explains how they will pay it back. The group agrees to make the loan.
- the member pays back the loan over the agreed period.
Secure variation: some groups may choose to create an additional savings pot to "secure" the loans. Usually this would involve contributing regular smaller amounts on the basis that they should equally carry the burden if a group member fails to pay back money they owe. In this way the security fund is not interest attached to the loan itself and the fund remains halal.
Got ideas?
There are thousands of reasons to engage in financial mutual aid. You can also use a kin group for more than one thing at the same time because kin allows you to track how much everyone in your group has contributed and received.
If you want to discuss an idea with us, WhatsApp Kin (faster) or contact Kin. We're always excited to work with you!