"Credit unions do help their members but I'm not sure they really help the people who need the most help in the community."
A 25-year-old recently made this statement during a conversation about finances. Trying to explain why he had decided to leave his hometown credit union, he said he felt that a community development bank in his neighborhood was able to make more of a difference in the community than credit unions could. He wanted to feel his dollars were helping those around him.
My friend’s interest in helping his community was not as surprising as it would have been 10 years ago. Recent studies have shown an increasing level of social awareness and responsibility among young people. One 2005 study by UCLA’s Higher Education Research Institute found that two-thirds of college freshman felt it was essential to help others in need and measured the sense of social responsibility among this group as at its highest level in 25 years.
This socially conscious member of Generation Y thought that he could better help his community by joining a bank. This came as a surprise to me. As a fellow Gen Y-er, I understand the need to feel that your money, however little you have, makes a difference. As someone who works with credit unions on a daily basis, I’ve become familiar with the wonderful things they do to serve their members and communities. I wondered why credit unions were not the immediate choice for those who want to make a difference.
Banks Capitalize on Increasing Social Consciousness
In the past few years banks have capitalized on the trend of increased social responsibility. Perhaps the most widely recognized example is ShoreBank, headquartered in the South Side of Chicago. Their "triple bottom line" mission statement emphasizes "people, planet, and profit" through community redevelopment. For example, since their founding in 1973 they have financed the building of 45,000 affordable housing units.
Here in Washington, DC, socially conscious citizens like my former credit union member can invest funds in City First Bank, one of several community development banks across the country. City First’s website, the first point of contact for many Gen Y-ers when making financial decisions, emphasizes their position as a bank invested in the underserved communities by funding affordable housing initiatives and small businesses. Thanks to their involvement in the Certificate of Deposit Account Registry Service, select banks can offer their customers up to $30 million in FDIC insured deposits. The deposits are then loaned out to other member banks that use the funds for redevelopment projects.
Credit Unions: The Original Community Developers
What my former credit union friend didn’t realize when he made the move to a bank was that credit unions are heavily involved in their communities. From the beginning, the credit union story has been one of helping the underserved, and this remains the case today. Recently in DC, three credit unions partnered to serve the underprivileged minority population in Adam’s Morgan, one of the neighborhoods also targeted by City First bank. Today many members have savings and checking accounts for the first time in their lives and have escaped the cycle of payday lending with affordable alternatives. The story of Accesso credit union is one that could inspire many Generation Y youth to join credit unions.
As members of Generation Y mature, the way we envision finances may change. Some of us are not at the stage where we have money to invest. However, my friend who now belongs to a bank points to an increasing segment of the population that credit unions have an opportunity to build relationships with. Generation Y has been accused of lacking focus, having short attention spans and being spoiled by MTV and 24/7 access to technology on demand. These accusations may or may not be true. However, we are passionate-eager to take our place in the world as a new generation of leaders. Many want to invest in something that will make a difference and is bigger than us. How will you respond?