Do-It-Yourself Finance! a Participatory Action Research on Community-Based Finance Systems in the Netherlands

The contemporary global financial and economic crisis has led to a shrinking Dutch welfare state, which encourages citizens  to help and support each other on the grassroots level.  This paper provides insights in a community-based savings and credit mechanism, called CAF-group. The rationale of CAF-groups derives from informal savings and credit associations in  developing countries and migrants in the west. Since the early 1990s, international and local development organisations have learned from this phenomenon and have developed a methodology for self-funded financial groups to improve the well-being of vulnerable people.

Lately, CAF-groups have been successfully implemented in Spain, Italy, Portugal, Hungary, Belgium and the Netherlands. Based on practical evidence in Europe, one can assume that participation  has a positive impact on human needs such as the generation of significant economic benefits and the improvement of financial management skills. Participation creates self-confidence among CAF-members which in turn leads to feelings of ownership and responsibility for the management and maintenance of their group.

The implementation of self-funded financial groups in the Netherlands is supported by a participatory action research program. This paper discusses the results of this program by exploring whether and how participation of members can improve their well-being based on the capability approach of Sen (1993). Therefore, the capability approach is operationalized and applied to three CAF-groups in The Hague, the Netherlands: (1) men, 40 plus, ethnically-mixed; (2) women, 40 plus, ethnically-mixed; (3) mixed sex, below 30, Aruban ethnicity. Data is collected through qualitative interviews with members, participatory observations of group meetings and evaluation workshops.

This research provides insights into the operational features of community-based financing mechanisms, here three CAF-group in comparative perspective,  and demonstrates how grassroots solidarity economy processes can contribute to the general well-being of vulnerable people in a time of global crisis.