MIT Federal Credit Union ($382.3M, Cambridge, MA) was founded 73 years ago to serve the employees of the Massachusetts Institute of Technology. The credit union still operates under a closed-charter standard and serves nearly 30,000 members across dozens of MIT-related groups. It posted double-digit loan and share growth in second quarter 2013 and its average member relationship more than doubled that of its asset and state peers.
Here, Brian W. Ducharme, CEO of MIT FCU, discusses the role of the credit union’s board of directors.
What is the structure of MIT FCU’s board of directors?
Our board consists of seven elected officials. We have a rolling election calendar; one year three directors are elected, the next year two are elected, and so on. We have a chair, a vice chair, a secretary, and a treasurer. No one is compensated on our board. The chair serves two years, moves off of the executive committee, and remains as a director. The vice chair than takes over as chair, so we have a lot of former chairs on our board, which I think is important. Until you sit in that seat, it’s difficult to have a true appreciation of the chair’s responsibilities and what occurs at a strategic level with senior management. It provides a nice depth and breadth of knowledge for each individual.
Are there any MIT students on your board?
We recently created a new associate board member role. We have MIT students in our field of membership and they make up approximately 32% of the membership base. However, they are extremely busy and might not be here at MIT to serve the full three-year term of an elected official, so we wanted to create an opportunity to get their input and insights. We created two appointed positions — one for an undergraduate and one for a graduate [master’s or PhD] student.
Do you have term limits?
No, there’s no limit for general board members. In fact, the board members can elect to re-appoint the chair, it’s just understood that the chair rotates every two years and they don’t do that. At one time there was a longer progression to become chair — starting as treasurer to vice chair and then chairman, but it is a bit more streamlined now.
Has there been a redefinition of roles over time?
Not at all, MIT FCU’s board members are good at governing themselves. They don’t have a specific governance model they follow but have always remained self-regulated. Recently, the board decided to reduce its number from nine to seven. This was done through attrition.
One area that has changed is the number of committees we have. When I arrived here, I received a full-page, two-column list of committees, but that has been reduced over time to only a handful. Today, we have ALCO, governance, and executive committees.
How do you recruit or identify new board members?
For the student associate board members we found that advertising on campus and having the chair and vice chair interview the candidates was the most effective process. For our general board candidates, we advertise upcoming elections in our affiliates’ newsletters. Our key SEGs — such as Lincoln Labs, Draper Labs, the Broad Institute, Whitehead labs, etc. — all have their own internal newsletters and intranets where we post information and solicit board and supervisor committee candidates.
What type of response do you get from your advertisements?
It depends on the year, but we generally have double-digits in terms of initial responses and interest. The nominating committee does a good job of sitting down with those who inquire and sharing documents with them so they understand the commitment. It’s not just a once-a-month meeting, there is also ongoing education and other requirements of board members. This typically narrows down the field.
What have you learned from the associate board members?
They’ve attended three board meetings so far and they ask simple and fundamental yet insightful questions. Whether they’re a student or faculty member at MIT, they always pride themselves in asking “the” question. They are astute at listening to a presentation or a topic and providing the rest of the group with insight or revisiting something that might have been discussed initially but has changed. Even without having prior board or governance experience for a financial institution, the intuitiveness is apparent in the associate board members.
What type of ongoing educational activities do the board members participate in?
Most of the board members are self-driven. Depending on their roles — whether they are part of ALCO, the supervisory committee, etc. — they are required to complete specific training modules through CUNA. We also require each board member to attend either a local or national conference. This might be through the Massachusetts Credit Union League or one of the legislative conferences through CUNA or NAFCU. We also have three emeritus board members, which are individuals appointed each year who have been on the board for at least 10 years, who are also able to take advantage of the educational opportunities.
What lessons or advice would you share to help other credit unions get the best from their board members?
I believe the cornerstone to a valuable and fulfilling relationship with your board starts with developing excellent individual relationships with each member of your board. It's through these individual relationships that I have a greater sense and appreciation of individual points of view when discussing issues with the entire board. At least once a quarter, I have lunch or coffee with each of them. This has been beneficial for me in recognizing what's important to them and what they look to accomplish as well as where their expertise lies and to whom I can turn for sound advice.
The only other advice is to recognize and value the work they do. Our industry, more times than not, refers to them as "volunteers." They are not directing runners at a road race. They vet and direct strategy for a forward-thinking $400 million financial service organization. I believe the title of "director" is more fitting and recognizes the responsibility they willfully accept. By recognizing and appreciating their commitment and the amount of work they put forward in representing the membership and by being diligent in creating a progressive, dynamic organization, you will attract the type of directors that will add value and be important to you as you evolve your organization.