Direct corporate philanthropy generally falls into three categories: direct cash from the corporate treasury, foundation cash from corporate foundation grants, and non-cash product donations, employee services, and other in-kind contributions. This third category, non-cash or in-kind contributions, represents the largest segment of corporate philanthropy. According to a recent survey of Fortune 500 companies by the Committee Encouraging Corporate Philanthropy, 59% of companies increased their philanthropy between 2007 and 2012. As a percentage of total corporate giving, non-cash contributions grew in aggregate from 57% in 2007 to 69% in 2012. Giving USA, which measures all forms of philanthropy, reported a similar trend in corporate giving.
The Value of Non-Cash Contributions
Forward-thinking companies understand that corporate social responsibility (CSR) and community investment efforts are not solely about doing good, they are critical factors in driving business improvement, customer loyalty, and employee retention. The measure of a successful community-focused CSR plan is, therefore, both the number of individuals it has helped as well as how well it created new markets, engaged employees, and enhanced the brand.
Business leaders should use every tool in their CSR portfolio to create economic value that also addresses societal issues. Rather than relying primarily on cash contributions to worthy organizations, a company can achieve a high return on its philanthropic investment to both the community and the company by leveraging its own products and employee expertise. The more a company leverages its on-hand resources to deliver social value to its community, the more engaged its employees become and the better the company performs in the marketplace, resulting in societal as well as business progress. Investing in the local community with in-kind resources creates a cycle of positive business, social, and economic impacts and illustrates the credit union way of people helping people.
Leverage Your Expertise: Credit Score Education
On-hand resources provide a benefit to the community and emphasize the company’s brand, product, service, and expertise. Employee expertise, one kind of on-hand resource, offers nonprofits and community groups access to needed expertise while increasing that employee’s skills and understanding of the community. Likewise, an optimal in-kind contribution for a credit union is to use the knowledge and experience of its employees to teach valuable lessons — whether through classes, workshops, contests, or events — in financial education. This aligns the institution’s CSR effort with the business goal of providing affordable financial solutions. It also builds the credit union’s brand, creates good will in the community, and increases the number of financially educated potential members who are now more likely to make use of the credit union’s services.
The community benefits when young adults learn about common financial concepts such as what a credit rating is, what areas of their lives it effects, what factors affect it, and how to improve it. A higher credit score means a consumer is more likely to get credit, insurance, or a service — and pay less for it. Understanding how credit scores function benefits the individual, the community, and the credit union. This is especially true for young, newly financially independent adults.
Uses Of Credit Scores
Most young adults have a vague understanding that lenders use a credit score to determine whether and under what terms they grant credit cards, loans, and mortgages. Many, however, do not realize that credit scores affect other facets of their life. For example, auto and home insurance companies use credit scores to decide whether to issue a policy, phone companies can use them to decide whether to provide a service and on what terms, and even some employers use credit history reports to make employment decisions.
Understanding How A Score Is Determined
Many young adults possess only an ambiguous understanding of what factors affect a credit score. Some factors are obvious, such as paying bills on time, filing for bankruptcy, and the amount of debt compared to credit limits. Other factors are not so apparent, such as insufficient credit history. The optimal number of credit accounts can also be confusing — too few or too many can both have a negative effects. Other unknown factors are the effects of recent applications for new credit or inquiries on a credit report.
How to Improve A Credit Score
Once they understand the importance of a credit score, most young adults will genuinely want to take steps to improve it. This is not an abstract theory, but instead a set of concrete action steps. It is obvious that paying down debt improves a credit score. But young adults need targets for credit usage, whether to prioritize paying off installment or revolving debt, and advice on the benefits of not allowing credit accounts to go unused. In other words, a little activity is better than no activity. Options on how to remove credit card debt are also useful.
The Credit Union Benefit
Using your in-house expertise to educate on financial matters such as credit scores creates an auto-catalytic reaction. Educating the public creates people better able to make informed decisions and thus more likely to become credit unioncustomers. It also provides good will in the community, improves the brand image, and engages employees whose own skills and knowledge of the community will grow as a result.
The financial services marketplace remains challenging. Credit unions, however, have an opportunity to deliver value to consumers that elevates the credit union brand through integrating CSR into business strategy.
About The Author
Brandon Michaels leads the awesome group of Mazumans at $490 million Mazuma Credit Union in Kansas City. He took the reins at the ripe-old age of 31 and looks forward to changing the credit union industry. Prior to serving as the President & CEO, he served as the chief financial officer for two years. Brandon moved to Kansas City from the California Bay Area, where he was the vice president of finance/chief financial officer at San Francisco Fire Credit Union.
Brandon is a third generation credit union CEO. Although Brandon grew up in the credit union movement, he worked three years for the Federal Deposit Insurance Corporation as a bank examiner before making his formal entrance into the industry ... an industry he thought as a child, “you couldn’t pay me enough to work in this place!”
Brandon was recently recognized by the Credit Union Times as a Trailblazer 40-Below, a recognition awarded to credit union executives who are working at warp-speed to better the future of the credit union industry. Brandon is also a private pilot, an awesome dad to Charlotte and Kason, and a loving husband to his beautiful wife Kathi.