Establishing the social fund is one of the main objectives of the CAR. The maximum permitted balance of the social fund for a sole member is about 10% of the total assets of the CAR.
The final goal of a CAR is to help its members to use financial instruments so as to improve their social and economic positions. This process implies to collect cash from a large number of members, cash that will be used in a common fund, named social fund. This fund is thereafter used for granting loans to the members of the CAR.
The savings may as well reduce the members need to take loans, as the costs of these loans as such, where usually the interest rate proves lower for the loans secured by own social funds, the risks for CAR being this way reduced.
The contributions to the social fund are to be kept in cash that is the entire sum is available whenever a member wishes to get out the CAR.
The social fund produces also an income, if the interest rate is above the inflation. When it comes to the Federation's CARs the interest paid to the social fund is the same for all members. All Federation CARs are this way coming up with interest rates to the social fund above the inflation rate.