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Ottawa asked to grant fairness for community investments
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With an economic downturn looming, the Social Investment Organization is proposing that Canadians be given the right to invest their RRSPs in loan funds for low-income communities. The SIO is asking its members and supporters to back the proposal by writing to Finance Minister Paul Martin. On Oct. 22, SIO sent a proposal to the Finance Minister asking that the RRSP rules be changed to grant RRSP eligibility to independent, community loan funds. Currently, federal policy is to permit RRSP eligibility only to funds that are guaranteed by governments. Most community loan funds in Canada are not guaranteed. SIO was asked by one of its members, Assiniboine Credit Union in Winnipeg, to support this proposal. Assiniboine administers loans for Jubilee Loan Fund, which provides loans to businesses in low-income inner-city areas in Winnipeg. Jubilee is facing a shortage of capital due to the fact that it cannot raise RRSP money from investors. The fund asked the federal government last year to grant RRSP eligibility for loan funds but was declined in March. The federal government cited technical considerations, such as non arms length dealing, in rejecting the proposal. "We believe it's an issue of fairness that community loan funds should have the same right of access to RRSP funds as other investments," said SIO Executive Director Eugene Ellmen. In its letter to the Finance Minister, SIO said that the timing is right for the government to consider this. "Given the current economic downturn, it is more important than ever to provide creative, sustainable financing mechanisms for small business," Ellmen wrote. "At proper levels of capitalization, these funds could meet a large need for credit that would create economic opporunity in low-income neighbourhoods and provide meaningful employment, housing opportunities and a higher standard of life for hundreds, if not thousands, of disadvantaged Canadians." The SIO also noted that the government has recently raised RRSP foreign content limits from 20 per cent to 30 per cent, permitting Canadians to invest more of their RRSP savings in foreign capital markets. "At a time when the federal government has granted Canadians the right to invest more of their RRSP savings worldwide, it is appropriate that Canadians also be given the right to invest their registered retirement savings in their own neighbourhoods and communities." The SIO is asking its members and supporters to write to the Finance Minister expressing their support for the proposal. For more information and a sample letter, visit RRSP Fairness.
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