Credit unions are stronger than ever. The industry crossed the 100-million-member milestone in 2014, and membership growth is still accelerating. Also this year, credit unions surpassed thrifts as the second largest depository system in the United States. And as of June 30, credit unions were originating consumer loans at the highest level ever while capturing a record 8.4% of first mortgage activity nationally.
As credit unions gain prominence, their role in the community grows.
Whether a credit union defines “community” by geographical boundaries or by employer groups, the institution’s health is tied to the success of its field of membership. The future of the credit union hinges on the success of the community it serves. This, after all, is the last of the seven cooperative principles: Concern for Community.
On its website, the National Cooperative Business Association lists the seven principles as adopted in 1995 by the International Co-operative Alliance and can be traced back to the first modern cooperative founded in Rochdale, England, in 1844. According to the Concern for Community principle, cooperatives should be as concerned about the sustainability of their communities as they are about their members, the two are inextricably linked: “While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.”
Next: 3 Ways To Get Engaged »
Step Up The Commitment
Community involvement goes beyond cash contributions to also include charitable organizations, although monetary donations do play a role. Credit unions that include community involvement in their strategic view tend to have a clearly defined focus for what community involvement at the institution looks like. For example, many credit unions make financial literacy a priority. It’s a natural role for credit unions and ties to the fifth element of the seven cooperative principles: Education, Training and Information. Affordable housing also receives attention, particularly with credit unions that target mortgage lending opportunities.
However a credit union defines “community,” the institution’s health is tied to the success of its field of membership.
So how can a credit union move beyond surface-level involvement to truly ingrain community involvement into the organization? It starts at the top. The board and executive team must emphasize it as a priority. The credit union’s leadership team must be out in the community. At Security Service Federal Credit Union ($8.1B, San Antonio, TX), senior executives are required to participate in leadership roles at local nonprofit organizations in all the markets in which it operates, which includes cities in Texas, Colorado, and Utah. The credit union views this as an important step in assimilating into its communities.
Participation can range from membership in a business group or realtor group to sitting on the board of a college or chamber of commerce. These positions elevate the credit union to a role where it is helping to shape the future of the community.
Thousands of credit union employees across the country are active volunteers, and some credit unions offer reward hours for volunteering or allow employees to volunteer during work hours. Recognition programs reinforce the credit union’s support of volunteerism. Through its Employee Volunteer Recognition Program, BECU ($12.5B, Seattle, WA) makes a $100 donation on the employee’s behalf when they volunteer at least 30 hours during the year.
Respond To Community Needs
Volunteering helps strengthen the community, but it also provides the credit union with insight into the needs of the local member groups. Such insider knowledge can lead to product ideas for the credit union that support the community and the credit union’s success. Many credit unions develop custom loan programs to support specific membership segments. SchoolsFirst Federal Credit Union ($10.4B, Santa Ana, CA) provides 0% interest loans for teachers to help fund classroom supplies that aren’t covered in the school’s budget. Hospital and university credit unions offer mortgage loans with flexibility for the distinct financial profile of their members — doctors who come out of medical school with a lot of debt or professors who receive research grants for a specific time period.
Credit unions quickly respond to their members’ needs in times of disruption. When a state or federal budget impasse causes a government to shut down, credit unions with those fields of membership respond with low interest rate emergency loans or skip-a-payment programs with no penalties. When natural disaster strikes, credit unions in affected areas offer flood or fire restoration loans with interest rate waivers. Understanding the needs of members is key to creating an effective response and is a credit union advantage over larger competitors.
Corporate giving programs provide employees opportunities to get involved with the credit union’s charitable donations. For example, employee committees allow more of the organization to participate in the review of donation requests and allocation of funds.
The “One for All Alaska Fund,” started by Credit Union 1 ($888.4M, Anchorage, AK), distributes thousands of dollars each year to organizations that help improve lives in Alaska. With an emphasis on youth programs, employees select charities in each community the credit union serves. The money stays in the community in which it was donated, which reinforces local ties.
Next: It's In Your DNA »
Tell The Story
Credit unions must communicate their community goals to all of their stakeholders. That communication starts with employees. Share information about the credit union’s activities and tell employees how they can participate. Members need to understand as well; plus, explaining community initiatives reinforces the value of membership beyond the individual perks.
When Suncoast Credit Union ($5.8B, Tampa, FL) re-launched its website earlier this year, it wanted visitors to understand the credit union’s community focus. To this end, the home page features a “We’re Truly Local” section that includes a calendar of community events. Its “We Give Generously” section includes an interactive graph that details how much the Suncoast Credit Union Foundation has donated to endeavors such as scholarships, education initiatives, financial literacy, and health and wellness programs. This focus on charitable donation is a nod to the institution’s roots as a teachers credit union. The credit union donates a portion of interchange revenue every time a member uses the Suncoast debit or credit card, and the graph helps members see how they support the credit union’s efforts with every card transaction.
Beyond employees and members, credit unions need to tell their stories to the community at large. Some credit unions incorporate their story into their annual report; others publish independent impact reports that outline their community activities — such as monetary donations and volunteer hours — as well as other programs and policies that encourage community engagement.
The DNA Of Cooperatives
Credit unions have been active in their communities from the beginning. The growing prominence of the industry coincides with the growing needs of many communities. Although it has been an organic, sometimes subtle activity at credit unions for years, community involvement now requires a formal, deliberate approach. Credit unions must document, track, and report on their activities to underscore and make visible for stakeholders and the community the institution’s concern for community.