The Value In The Slow, The Small, And The Local

The community-conscious investment book Slow Money represents the local, holistic approach to finance that credit unions have lived since the birth of the modern credit union in 1852.

 
 

On its face, the Slow Money concept is counter-intuitive to everything about life today. With the ever-growing list of disruptive technologies that bring immediacy to every task, process, and desire man could possibly want — who has time for slow anything? But according to author Woody Tasch in his 2008 book Inquiries Into the Nature of Slow Money — Investing as if Food, Farms, and Fertility Mattered, society’s value on speed has led to world crises ranging from the housing market collapse to poor food quality. In the book, Tasch champions a slower, holistic, intentional approach to life and finance. Although he doesn’t say it, Tasch is speaking the credit union language.

Many credit unions uplift their communities in myriad ways, and here are three examples of institutions that live their values through local investments.

Veridian Funds Iowa Small Businesses

In 2011, Veridian Credit Union ($2.4B, Waterloo, IA) was the subject of an in-depth profile that ran in the fourth quarter 2011 issue of Credit Union Strategy & Performance (CUSP). The institution had managed to expertly avoid the pitfalls of the financial crisis and thrive during a times when others struggled. And in sharing its success, the credit union had established a tradition of investing in its community.

CU QUICK FACTS

  • Veridian Credit Union
  • HQ: Waterloo, IA
  • ASSETS: $2.4B
  • MEMBERS: 178,888
  • BRANCHES: 26
  • 12-MO SHARE GROWTH: 3.39%
  • 12-MO LOAN GROWTH: 11.81%
  • ROA: 0.93%

“We have a responsibility as a financial organization and as a business to play a role in and support our communities,” said DyAnne Longseth, Veridian’s senior vice president of communications, in CUSP.

That responsibility is one Veridian and many credit unions take seriously. The state of Iowa credit union code contains a provision that allows credit unions to invest up to 5% of their assets in small business or venture capital funds headquartered in Iowa. The code encourages economic development and new business investment in the state. This is Tasch’s Slow Money philosophy in practice. The strategy is helpful to area entrepreneurs, and because credit union executives live in the communities in which they invest, they are more familiar with the landscape and the players, which can make for safer investments. For example, Veridian’s investments include a West Des Moines-based private equity firm as well as a Cedar Rapids/Iowa City-area seed fund that invests in several early-stage startups.

“These companies are within our field of membership,” Monte Berg, senior vice president of finance at Veridian, told CUSP. “They provide jobs to people within our field of membership and they provide economic growth for Iowa.”

Not The Biggest, Just The Best

“We want to become the best financial institution in Minnesota, not necessarily the biggest,” said SPIRE Federal Credit Union CEO Dan Stoltz in a second quarter 2013 CUSP profile.

CU QUICK FACTS

  • SPIRE Federal Credit Union
  • HQ: Falcon Heights, MN
  • ASSETS: $606.8M
  • MEMBERS: 64,859
  • BRANCHES: 11
  • 12-MO SHARE GROWTH: 4.11%
  • 12-MO LOAN GROWTH: 4.22%
  • ROA: 0.81%

To achieve this, SPIRE ($606.8M, Falcon Heights, MN) focuses on its local community and gives back to cooperative organizations that represent the credit union’s own outlook on business. In addition to his role as CEO at SPIRE, Stoltz serves on the board of The Cooperative Foundation, a national organization geared toward the enhancement of cooperatives through research, teaching, extension, innovation, and development.

“The value of being a cooperative resonates with me,” Stoltz said in CUSP. “We’ve had some chances to do great things with others as a result of this model.”

One of those great things is SPIRE’s partnership with a Minneapolis grocery cooperative called The Wedge. The credit union offers a cobranded credit card with The Wedge that returns a portion of interchange income to the grocer. The Wedge aims to provide a diverse selection of high-quality, fairly priced products. That focus on local, high-quality food resonates with the Slow Money strategy.

Building Business

Across the country in Oregon, Northwest Community Credit Union ($831.0M, Eugene, OR) is opening a new support center in the up-and-coming downtown district of Eugene. According to CEO John Iglesias, construction of the four-story building is enough to provide a spark for the downtown rehabilitation, but in addition to that, the plan for the new building includes a community room that will be available to local nonprofits and other initiatives.

CU QUICK FACTS

  • Northwest Community Credit Union
  • HQ: Eugene, OR
  • ASSETS: $831M
  • MEMBERS: 87,505
  • BRANCHES: 20
  • 12-MO SHARE GROWTH: 8.34%
  • 12-MO LOAN GROWTH: 10.45%
  • ROA: 0.81%

With the tight margins inherent in nonprofit work, sometimes these organizations can’t afford to rent a large space for meetings or to support large groups of people. The community space the credit union will provide will take away that barrier.

“We see ourselves as an integral part of the community and not just a participant,” Iglesias said in an interview in the credit union’s old headquarters. “We believe local is critical to credit unions. We only do business in areas we understand.”

When it comes to investing, Northwest Community follows a simple rule: only invest in communities within driving distance. That kind of rule would bring a smile to Woody Tasch’s face.

 

 

 

April 21, 2014


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