The American economy’s evolution is well known. We transformed the country from a nation of farmers to the world’s leading manufacturer during and following WWII. Then American ingenuity pioneered the Information Age, which is now merging into a service-dominated economy led by firms in health care, education, and leisure. This ever-changing dynamic is what stimulates economic and job growth and sustains America’s leadership in the global economy.
The changes affected communities and towns across America. The knitting and shoe factories of New England were converted to new business incubators or multi-story retail outlet shops. Decommissioned military bases have become industrial parks or extensions for state university systems. Farmlands evolved into suburbs.
Today, throughout America, communities are increasingly competing for outside investment to stimulate their livelihoods and quality of life. Everywhere firms, organizations, and public bodies are trying to create the “next economy” for their area.
Credit: An Essential Role
At the center of these changes is financing, access to credit. Sometimes tax incentives or grants in the form of land, infrastructure development, or transportation investment are needed to attract a business to one location versus another. Sometimes it is support for workforce skills training and education. Even the quality and price of housing will influence corporate decisions.
America is unique in its financial system. No other country today has the diversity of national and local financial providers. Credit unions will soon be the second largest depository system in America, boasting more than $1 trillion in assets, 91 million members, and 20,000 or more branches. Credit unions are especially strong, even occasionally dominant, in midsize and smaller communities of America.
Their growing capabilities and open fields of membership have made cooperatives increasingly visible and vital to their communities. Often, the original business sponsor may have gone, but the members remain. Today the growing opportunity for credit unions is even more consequential than serving the needs of members and competing for a share of auto and housing loans. Now credit unions can participate in designing the future economic landscape of their communities.
This role in shaping communities’ economic future is part of the genius and strength of the cooperative credit union model. Credit unions create a legacy of financial and business resources based economy on local funding, governance, and use that is passed on to future generations. A cooperative cannot be bought and sold to be moved to a better location. Cooperatives are one of the vital fixed resources necessary for the sustainability of a community’s economy.
Credit unions do this primarily through their credit granting activities. Providing credit allows farmers to buy land and seed. Credit is the mainspring that launches an entrepreneur to move beyond the garage or kitchen table to set up a business with employees and offices. Financing lets consumers acquire vital skills and enjoy leisure opportunities previously available only to the wealthy.
Today with interest rates at or near zero, more not-for-profit organizations and public agencies are looking to deposit their funds with institutions, especially credit unions, that are committed to using these resources locally. The magic of credit is that each dollar of financing leverages, via the multiplier effect, local spending and economic activity.
The Emerging Awareness And Commitment
Today credit unions are becoming more and more active in community involvement. From working with local Chambers of Commerce and leading local United Way campaigns to very broad support of community groups, credit unions are stepping up their public commitments.
Credit unions are helping members and the public with job fairs, tax returns (the VITA program), financial education, and practical work experience for students in high school branches. One of the most successful examples of combining education and work in a cooperative is Georgetown University Alumni and Student FCU ($15.4M, Washington, DC). Chartered in 1983 it is one of the oldest, entirely volunteer student-run credit unions in the country.
But involvement by leading credit unions is going even deeper in planning the future of their civic “marketplace.” Ten years ago Wright-Patt Credit Union ($2.3B, Fairborn, OH) conducted a strategic assessment and decided to refocus efforts on its traditional home in Montgomery and Greene counties — the greater Dayton, Ohio, area. This meant closing branches in other parts of Ohio, including the state capital, Columbus. Wright-Patt’s decision was to become more involved in the future of its Dayton community, which at the time was struggling with numerous economic changes: auto-related businesses cutting back, NCR moving its headquarters out of state, and the military’s presence, though beneficial, being subject to national priorities and growth decisions far beyond local ones.
Wright-Patt’s redirection meant supporting local affordable housing programs such as the Dayton Home Ownership Center and becoming a leader investing in underserved communities. In 2011 WPCU added a Member Center (its term for “branch”) in West Dayton, an underserved area which was once home to Orville and Wilbur Wright’s first bicycle shop. It entailed working with auto dealers during the credit crunch of 2008-09 when the major auto manufacturers’ survival was suspect and financing unavailable.
Today Wright-Patt participates in several community organizations to enhance greater Dayton’s attractiveness as an economic base and vibrant community. One of Dayton’s primary resources is water. Yes, fans of Texas, water! This natural resource was the reason paper companies — Meade, for example — originally made Dayton their headquarters and today is at the center of several new venture efforts. WPCU’s President, Doug Fecher, sits on the Board of the Dayton Development Coalition, an economic development group aiming to capitalize on “wet-Dayton,” which holds an annual Water Conference to show companies from around the world how they can meet all their water needs in Dayton at a fraction of the cost they could at other metropolitan areas.
Wright-Patt’s efforts don’t stop with water. The credit union has formed relationships throughout the region, with Sinclair University and Wright-State University, with leaders at Wright Patterson Air Force Base, and with the local business community to support common goals of workforce development, business recruitment, technological innovation, and affordable homes. Today, WPCU executives sit on the boards of Habitat for Humanity, local chambers of commerce, and the Ronald McDonald House.
This involvement of credit union talent in local community organizations has helped Wright-Patt become well known as an indispensable community resource, a fact not unrelated to WPCU’s status as the region’s fastest growing financial institution and the largest locally-owned financial depository.
“The way we see it, supporting the Dayton Community is not something we like to do, but something we must do. So goes the future of Dayton, so goes the future of Wright-Patt,” says Fecher. “It’s kind of like the difference between the chicken and the pig supporting a ham and eggs breakfast — the chicken is involved, but the pig is committed.”
Investing In The Nation’s Future
Credit unions are a vital part of America’s unique financial fabric. Credit underwrites opportunity for individuals, firms, and communities. It is this myriad of local financial and economic activities that add up to our national GDP and drive the macro indicators used to track the health of America’s economy. But that health begins at the grass roots. That is where credit union cooperatives were started and still serve with their common bond heritage.
As credit unions step into their new roles as partners in their communities’ futures, it is both possible and maybe inevitable that America will become a nation of credit unions. After all, we are just about to become number two nationally — why not become the number one choice for every community!