He asked me what I do for a living. I told him.
“When are credit unions going to start paying taxes?” he asked.
“I suppose when they change their mission and work for profits and shareholders instead of for members,” I said in my most cordial and diplomatic voice.
He wasn’t having it.
“Banks and credit unions are just the same,” he fired back. “They need to pay their fair share of taxes.”
I explained that in my meetings with credit union boards and executives, including at some of the largest and most progressive in the country, the discussions are often about community impact, financial wellness and education, and responses to natural disasters of every kind. Oh, and meeting the needs of the unbanked and underbanked.
“I can’t imagine there are many bank board meetings that are focused on those topics,” I told him.
I was also thinking about how the only reason such topics would even come up in an executive meeting at a bank would be because, per the CRA, banks are required to give back to their communities, not because it’s in their DNA to do so.
But I didn’t go there.
I did, however, point out that impactful activities credit unions perform cost money, and the tax break ensures they can do that work. That’s the whole reason credit unions exist — for members’ well-being.
It’s Time For Tough Questions
Asking tough questions helps the credit union movement flourish. Make Callahan’s Tough Questions commentary on CreditUnions.com a regular stop for insight on thinking differently about the movement and framing strategies for success.
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My aunt’s friend wanted to keep going. I changed the topic to something less charged.
But the exchange got me thinking: How well are credit union leaders equipping their teams and members to confidently reply to misconceptions about what credit unions are and what they do?
I talk this talk every day and have for many years in many different roles in credit unions and organizations that serve them. And I worked at banks before that, where the discussions were always focused on matters like compliance and profit margins.
I was as ready for combat as one can be at a summer family reunion.
But what about tellers? Member service reps? Back-office staff? Do they understand the difference between being a member-owned, not-for-profit credit union versus being a profit-driven bank?
Misconceptions aren’t limited to the idea that one isn’t taxed and the other is. Credit unions are taxed, after all. They pay property, sales, and employment taxes. It’s also true that they are exempt from paying federal income taxes. But that’s the minutiae.
The essential fact is that credit unions are driven by values, not profits. They have to be profitable, of course, but it’s what credit unions do with those profits that matter, including limiting them sometimes.
Credit unions offer better rates because that’s their mission, and they can fulfill their mission because they don’t have to return maximum profit to shareholders and executives. Credit unions can serve the underserved without wringing their last penny out of them. Credit unions can lend to people that banks won’t lend to because they are there to empower not to enrich. Credit unions can help neighborhoods rebuild and stick around to provide basic services while the big banks flee for greener pastures.
How prepared are your people to share that message about shared purpose and tell the movement’s story at a moment’s notice?
There are lots of tools to reinforce that message. CUNA’s CU Difference campaign is one place to start. Another one to check out is Cornerstone Credit Union League’s Communicating the Credit Union Difference page. Or, craft your own message. However you do it, put the message about the credit union’s purpose and mission on your website so members see it every time they log in. Put it on your office walls and computer desktops.
Make sure your people know what their credit union is about. Make sure they can confidently explain that to whoever asks. This is a great way to help the movement continue to thrive, grow, and serve.
As they say in scouting, be prepared!
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