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SIO supports campaign to make community loan funds RRSP eligible
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A Winnipeg community development loan fund is calling on the social investment community for help in lobbying the federal government to make community investments RRSP eligible. Jubilee Fund, which mobilizes capital for businesses, housing projects and social services in low-income Winnipeg neighbourhoods, has asked the federal government for approval to sell its term-deposit certificates as RRSP-eligible investments. The certificates are sold to individuals and organizations with fixed rates of interest. They provide capital to finance its lending to secure unconventional lending by Assiniboine Credit Union. In addition, on average, every dollar secured by the Jubilee Fund generates an additional three dollars in conventional Credit Union lending to projects that are supported by the Fund. Last year, Jubilee Fund asked that the Income Tax Act and/or Regulations be amended to allow RRSP investments in independent, community development loan funds. Currently, Canada Customs and Revenue Agency (CCRA) takes the position that only loan funds that are guaranteed by a governement agency or that are offered by financial institutions with insured deposits have RRSP eligibility. Without RRSP eligibility, the fund is severely restricted in its ability to raise investor money. Jubilee's request would open RRSP eligibility for qualifying community loan funds across Canada. But the request was turned down earlier this year. Now the fund is appealing to Finance Minister Paul Martin to amend the act or the regulations. In a letter to Martin and Ron Duhamel, Secretary of State for Western Economic Diversity, Jubilee President, Jim Hercus, and Director, Russ Rothney, say that providing RRSP eligibility to loan funds is "particularly appropriate" now that the federal government has raised foreign content limits for RRSPs. "What we are asking is that investors in locally-oriented, socially responsible, community loan funds be permitted to receive the same RRSP tax incentives as they do when they invest in the stock market, mutual funds, GICs or other RRSP-qualified vehicles," say Hercus and Rothney. "The timing for this appears to be particularly appropriate given the recent expansion of the foreign content allowance for RRSP investments." To date, Jubilee has raised about $360,000, but has rising loan commitments of $220,000. The fear is that, without RRSP eligibility, the fund will run out of capital to continue securing new loans. "By far our biggest obstacle to raising funds from the general public is our lack of RRSP eligibility." Jubilee is asking other loan funds to support its action with the federal government. The Social Investment Organization also supports Jubilee's campaign. "It is ironic that, at a time when the federal government is permitting Canadians to invest more of their RRSP dollars in world financial markets, it is also prohibiting Canadians from using these same dollars to invest in their own communities" said SIO Executive Director, Eugene Ellmen. For more information on how to participate in this campaign, contact the Social Investment Organization at info@socialinvestment.ca, or Russ Rothney at rothneyr@assiniboine.mb.ca
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