How we reduce debts and break through taboos
Almost one in five Dutch households wrestles with excessive debt, and with the current crisis that number is only expected to increase over the next few years. This makes debts one of the most important social challenges our country faces at the moment. For almost 10 years, Rabo Foundation has worked to help vulnerable people get a grip on their finances.
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Debts have a major impact on people’s lives. Being in debt keeps people awake at night, gives them feeling of being in a hopeless situation, and increases social isolation. Eventually, debts can move people to the sidelines of society.
A growing problem
Poverty and debt have been major problems in the Netherlands for years. In 2012, the growing group of people with serious financial problems gained national attention. At the time, 8% of Dutch households had to get by on an income that the CBS considered ‘low’. Many of these households also suffered from debt-related problems.
At the time, the affluent country of the Netherlands paid insufficient attention to the problem. As an initiator of social innovation, we saw it as our role to contribute to finding a solution with our knowledge, network and financial resources. Moreover, as the Rabobank corporate foundation, we have a strong affinity with the issue.
Through our efforts and collaboration, we have made a valuable impact on society over the past few years. But just as valuable have been the insights, knowledge and interesting contacts we have gained through impact measurements and interviews. Those insights will now guide our path over the coming years. In a time when many Dutch citizens’ financial future is uncertain, it is more important than ever for everyone to be able to get a grip on their finances.
From identification to preventing debt
In the beginning, our focus was mainly on financing solutions that address serious financial problems. We supported projects such as Thuisadministratie by Humanitas, in which thousands of volunteers worked to help families in financial difficulties to get a grip on their finances. It was then that we came into contact with the Lezen & Schrijven (Reading & Writing) foundation; an organization that develops solutions for semi-literate people and those with insufficient computer skills. They provided us with the valuable insight that these are often one of the invisible causes of the problem of debt in the Netherlands.
That insight, together with other knowledge we had acquired over time, brought us to an important realization. If we want to address the problem of debt, then we not only need to help people get out of their financial problems; we also need to find solutions to identify and prevent financial problems before they get worse. In the process, we’ve learned some lessons on how to achieve these goals.
Lesson learned 1: Break through the taboo
People with debt problems wait too long to ask for help. On average, it takes up to five years and the debt has risen to around € 43,000. Impact measurements and conversations with our project partners, such as Lezen & Schrijven and Nibud, have given us insight into the underlying causes of financial problems, such as semi-literacy and underdeveloped computer skills. But shame also plays a role in financial problems.
In our society, people are hesitant to talk about financial issues. Around 39% of the Dutch population don’t even talk about money or financial problems with their family or friends. Yet talking about financial issues is often the first step to finding a solution. We have to break through the taboo and shame in order to lower the threshold to ask for help.
That is why we support initiatives that address the underlying causes of debt problems. Initiatives like fiKks, which connects users to an online buddy and shares stories of people who have money problems. Or initiatives like oefenen.nl, which helps people improve their computer skills. In so doing, we aim to prevent people from falling into truly serious problems, while breaking through the taboo on talking about money.
Lesson learned 2: Accelerate using smart solutions by social fintechs
Digital technology presents opportunities to tackle problems differently and to reach more people in less time. We have learned that from the social fintechs we have been financing since 2019. These companies are presenting technological initiatives to offer the right digital support to citizens with money problems.
One excellent example is Buddy Payment. The eponymous app automates budget management and makes debt relief assistance easily accessible and affordable. The app sets aside money for the user’s fixed expenses, makes money transfers, and in the process provides insight into what the user has left to spend. That helps people avoid getting into debt and offers relief, for example by calculating government benefits and compensation. Buddy Payment maps out their finances and generates handy overviews and analyses that provides users insight into their financial issues.
Social fintechs often do not qualify for standard bank loans, as they cannot offer collateral. As an impact lender, we can provide these pioneers the support they need to make a flying start. Our role is to accelerate innovation by providing funding from the very earliest phases. Through the social fintechs’ pilot projects, we learn how technology can contribute to improving financial self-reliance.
Lesson learned 3: Combine efforts for the right solution
At Rabo Foundation, we’ve known for years that we can make a bigger impact through collaboration. It’s one of the foundations of our work. And since there are several different initiatives in the field of debt relief, it pays to combine our efforts to help them achieve even more.
We saw the effects of that in 2015, when we joined forces with SchuldHulpMaatje, Nibud, Humanitas, the City of Zwolle, T-Mobile, Zilveren Kruis and Rabobank to lay the foundations for Geldfit.nl. Banks, health insurers and housing corporations all referred people with emerging debt problems to the platform geldfit.nl, where they could find which ‘window’ could help them best. By bringing together their knowledge and networks, they could identify people who were at risk of falling behind on their payments in order to prevent more serious problems from occurring. Geldfit.nl has since formed the core of the Nederlandse Schuldhulproute (Netherlands Debt Relief Route, NSR). This is a joint approach by a wide range of institutions to identify and reach people with money problems earlier and guide them to find the help they need.
When we support new initiatives, we consider whether the partners can join the Nederlandse Schuldhulproute. That is because collaboration is the key to faster solutions for people who need help with their finances. Over the years, many initiatives have been created for people with money problems. If we want to reach them earlier and guide them to find the help they need, then we will have to create an easy-to-navigate debt relief landscape. The Nederlandse Schuldhulproute is the solution to that problem, and financing by Rabo Foundation helped make it happen.
But our role goes beyond providing support in the form of loans and grants; we also invest our knowledge and contacts. The knowledge and expertise contributed by Rabobank were extremely helpful in the development of Buddy Payment and HackShield, for example. We also organize knowledge sessions and bring social partners into contact with one another.
How we make an impact
Over the next few years, Rabo Foundation will focus its support efforts on three priorities:
- Financing innovative initiatives that can help prevent financial problems from occurring (through education and computer skills, for example), and solutions that break down the taboo on money problems.
- Accelerating technological innovation by supporting social fintechs.
- Actively investing in combining efforts by partnering with the Nederlandse Schuldhulproute and Rabobank.
Rabobank & Rabo Foundation
Financial vulnerability is a challenge Rabobank also actively works to address. So it is an obvious choice for us to join forces. We finance pilot projects in an early phase, and support from Rabobank can help them continue to grow after a successful start. In the process, we can build on a more inclusive society together.
Start making an impact. Are you a social organization or fintech with an innovative initiative that addresses the roots of financial problems? An initiative with which we can offer a large group of people in the Netherlands a fair chance at a healthy financial life together? Then find out if we can help one another.