Having adequate funding for a foundation is so pivotal that it’s easy to overlook another requirement—structure. Credit union foundations exist to advance charitable goals that the cooperative can’t do justice to while serving in its primary role of community lender and savings institution.
Those charitable goals become the foundation’s mission, but the credit union must construct a framework to achieve them. That calls for asking some pointed questions: Should the foundation be private or public, and what can credit unions do to ensure their members’ money only gets used for the intended purpose? How does a cooperative get credit for the foundation’s good deeds? Above all, what kind of oversight should the credit union provide? The answers to those questions become the four cornerstones of the foundation’s structure.
Public Or Private
CU QUICK FACTS
Chartway Federal Credit Union
Data as of 06.30.15
HQ: Virginia Beach, VA
12-MO Share Growth: 6.93%
12-MO Loan Growth: 32.79%
Foundations can be public or private based on their funding. Public foundations rely on the general public for funding and are required to dispense much of the money they raise for charity. For instance, Chartway Federal Credit Union ($2.04B, Virginia Beach, VA) raises money from the community by hosting public fundraisers for its $1 million We Promise Foundation. To support its mission of helping sick children and their families, We Promise partners with the Make-A-Wish Foundation.
Private foundations, though, depend entirely on a single source for their money, usually the credit union. SECU Foundation, which State Employees Credit Union ($29.47B, Raleigh, NC) fully funds through a $1 monthly checking account fee, with any additional donations coming only from members, is a private foundation. Although they face stricter tax rules, private foundations exercise more control over how the money is spent.
CU QUICK FACTS
State Employees’ Credit Union
Data as of 06.30.15
HQ: Raleigh, NC
12-MO Share Growth: 7.30%
12-MO Loan Growth: 10.38%
“We wanted to take contributions only from our members and have the latitude to do other types of programs,” says Mark Twisdale, executive director of the SECU Foundation and the credit union’s executive vice president.
The foundation acts as a developer, funding projects related to healthcare, housing, or education across the state. Past projects include a cancer medical facility, a history museum’s education center, and apartments for schoolteachers. In addition, the $13 million foundation offers scholarships to students attending one of North Carolina’s 16 state universities.
We felt if we could get the staff emotionally connected to the foundation, they would be more involved.
An executive director and a governing board guide the foundation together. The executive director can split job functions with the foundation and credit union as Twisdale does, but the foundation’s board can’t duplicate the credit union’s board, although some overlapping directors are allowed.
Chartway CEO Ron Burniske believes credit union employees need to be invested in the foundation for it to succeed. He saw an opportunity to forge that connection through We Promise’s board, where credit union executives and staff members serve alongside directors from the cooperative’s board.
“We felt if we could get the staff emotionally connected to the foundation, they would be more involved,” Burniske says. The tactic certainly seems to have worked. Chartway staff devoted more than 2,000 hours to the foundation last year.
Other strategies for staffing boards include recruiting directors from the community and the credit union’s membership, preferably individuals with experience relevant to the foundation’s mission. At SECU Foundation, three credit union members sit on the 11-member board because of the expertise they bring. One has grant-making experience; another is a doctor, which helpful for all the medical facilities the foundation funds; and a third is a former provost from a state university.
To ensure board members don’t have a vested interest in pushing a particular project or grant recipient, Twisdale acts as the gatekeeper, vetting all suggestions before presenting them to the entire board. Twisdale, however, lacks grant-making authority and defers to the board for those decisions. Meanwhile, local high school committees determine which students should receive one of the 370 $10,000 scholarships the foundation bestows annually because “they know the students better than we do,” he says.
Follow The Money
Ultimately, foundations answer to their credit union’s members, and they’ll want proof it spent their money wisely.
Chartway’s foundation doesn’t fund anything administrative for itself or the Make-A-Wish Foundation, says Heidi Worker, the credit union’s corporate communications director. And Make-A-Wish must provide evidence that it did not use any of the funds it received for administrative purposes. In addition, Worker says, “We look at the average cost of the wish and how many wishes were made to see how far our money went.”
SECU also ensures students use scholarship funds for books and school fees rather than a spending spree.
“We don’t give the student the money,” Twisdale says. “We send it to the financial aid office at the school.”
If the student doesn’t show up, the university sends the money back, and the foundation hasn’t lost a dime.
The foundation wouldn’t exist if not for the credit union, so everything the foundation does needs to be branded that way. By naming its foundation after the credit union, SECU leaves zero doubt about who is really behind those charitable efforts. Plus, its development projects act as a kind of billboard, reinforcing the connection between the foundation and the credit union.
We put our credit union’s name on every project we fund.
“We put our credit union’s name — SECU, which is a fairly strong brand — on every project we fund,” Twisdale says.
The foundation’s first project, a $6 million housing facility for people coming from afar to tend to a relative at a community hospital, still bears the credit union’s name a decade after it was built. The credit union typically gets naming rights for the projects it funds, but some of the gifts the foundation makes come in the form of an interest-free loan. That’s how a school district financed an apartment complex for local schoolteachers. After paying off the loan principal in 15 years, the school district will own the building and use the rental income to pay for educational resources.
Although those projects don’t come with naming rights, the credit union makes it clear where the money came from. For every grant, interest-free loan, or scholarship, Twisdale says, “We have a footnote that says ‘from the members of State Employees Credit Union.’”