I’ve been thinking recently about what goes on when people lend to each other.
This has been inspired by two things really:
- My (frustrating) attempts to start an online book-share scheme in my local village
- My participation in The Camden Challenge and the selection of my “crowd-lending” idea to be taken on over the summer.
Both have been a real learning experience for me. In the first instance, I found that most people I spoke to thought a local book-share scheme was an awesome idea and encouraged me to make it happen, but when it came to using it… well let’s just say I definitely have one person engaged with the site, and his name begins with A.
In the second case, I had an idea about trying to get local people in an area to lend money to each other as an alternative to payday loan sites like Wonga (I’d pitched it as a sort of localised Zopa). Again an idea people said sounded fantastic, but after I asked some residents whether they would use something like this, they all said no!
The consistency in both of the above has been, weirdly, that people are much more willing to give away books or even money, than they are to lend it. The words people would use around lending would be “trust” and “relationship” and that these would need to be in place in order for someone to lend to/borrow from a stranger. I’m not sure why this is exactly, but I think it might be something to do with feeling exposed – that lending is a very personal investment and if it goes wrong it has a very personal impact on the individuals involved. In fact in my own experience I’ve only really seen that sort of peer to peer lending within my own family, and that usually on the assumption that payback would be nice, but isn’t always necessary. People need to feel in a safe space to lend/borrow, but it usually takes ages to develop that level of trust between people. Tricky.
At the same time it is encouraging though! The reason I’ve been exploring these ideas is that I believe lending/sharing/borrowing is more powerful than arms-length giving precisely because it requires and encourages a relationship and that if done right this can foster stronger and more cohesive communities. But that doesn’t get me past my quandary – the thing that I most want to encourage through these “lending mechanisms” is the same thing that is stopping them from working.
This got me thinking about crowd-lending, which really to me just feels like a natural variation of crowd-funding. In essence I might not trust you enough to lend you money, but if I know a “crowd” of other people are willing to, I gain trust from being one of many. So during our Camden Challenge day, my team came up with an idea that allowed people to ask for money/resources as a collective, take collective ownership for paying it back, but also allow anyone wishing to invest as a collective as well.
Why I think this might be better than crowdfunding, is that while every one involved can enter into the arrangement as an anonymous individual, by being part of it and having a lending financial stake in it, the likelihood of cross community connections is much greater.
I’m going to blog on this a bit more as I develop my idea and find out more about what does and doesn’t work (who knows a lot might fit into the latter camp!), but I really see this as a mature way of getting wealth to redistribute and recycle within communities and through this create connections that wouldn’t normally happen.
I’m learning a lot from other people in this process, so I’d welcome any thoughts/challenges/questions on this as I work it through.
Until next time!