Saying that credit unions are obligated to help their members is to state the self-evident. Credit unions were organized for the specific purpose of providing cooperative, not-for-profit financial services for people who needed a fair place to borrow and a safe place to save.
What, on the other hand, do credit unions owe their neighborhoods and communities? The essentials of good citizenship, certainly — obeying the laws, paying property tax levies, maintaining a safe and attractive facility and environment. Is that all? Or, do credit unions need to do more?
Whether it goes by names such as “community involvement” or “social responsibility,” or is just regarded as a routine part of doing business, most credit unions recognize the need to reach out beyond the confines of their memberships and practice a goodneighbor policy in the broader community. And in today’s climate of growing banker attacks and rising expectations for corporate social responsibility, making a strategic commitment to one’s community and neighborhood has never been more important.
In February 2004, the MCUL Board of Directors approved the creation of a special task force to specifically explore development and implementation of partnerbased initiatives for strengthening Michigan communities. Participants in this “Community Reinvestment Initiative (CRI) Task Force” are credit union officials, state and federal regulators and other partner organizations helpful in fulfilling the group’s charge.
The MCUL Board envisioned several possible Task Force efforts, including expanding credit union financial literacy programs; developing lending consortiums for affordable home financing and consumer-friendly credit options for financially challenged households and small businesses; and promoting creative incentives for affordable financial services in underserved communities.
“I think credit union people know intuitively that the credit union mission isn’t limited to an immediate common bond or field of membership,” said CRI Task Force Chairman JoAnne Fillwock, president/CEO at Financial Health CU (LN). “Certainly, our first and foremost responsibility is to serve our members, but being a good citizen and a good neighbor should involve something more.
“When our pioneers spoke about a ‘credit union movement,’ that choice of language suggests they had something big in mind, something that would impact society at large — not just a narrowly defined group of members.”
One of the first agenda items when the Task Force held its initial meeting last September was to identify its priorities and formulate a mission statement. Based on six priorities it identified, the Task Force established six working groups— Shared Branching, Financial Literacy, Student Loan, Community Involvement, Affordable Insurance and “Cool Cities,” the latter focused on efforts to assist in the renewal and development for Michigan’s urban areas.
The Task Force also successfully sought initiation of a research project funded by the Michigan Credit Union Foundation to better define and categorize CRI-related activities.“The scope of the research project will include documentation of credit union commitment to provide essential financial services to local communities, as well as other community involvement efforts,” said MCUL Government Affairs Vice President Patrick La Pine, chief staff liaison to the CRI Task Force. “We also hope to establish a methodology for ongoing data gathering.
“The fact is that many if not most credit unions are already social and economically embedded in their communities. But very few record what they are doing, and there would be a lot of value in doing this, so that credit unions and the League can communicate to lawmakers, regulators and the media how many positive things credit unions are voluntarily doing to enhance their communities.”
Credit unions today are much larger and far more sophisticated than they were a generation ago— but with size and success come greater responsibilities. A credit union with a large office and driveup service in the center of the community obviously creates a very different set of perceived community obligations than a credit union operating on a factory floor or a church basement.
“As credit unions grow, prosper and expand into new products and services, it’s increasingly important for credit unions to stay true to their social mission,” La Pine said. “CRI will not only help credit unions recommit to their social mission, but allow them to self-examine what we’re doing and should be doing in our communities.
“As the process unfolds, we might find out there are legal and regulatory hurdles which are inhibiting credit unions from reaching their full potential in underserved areas. Ultimately, this process may lead to another round of statutory and regulatory improvements for Michigan credit unions.”
Fillwock noted that the use of the term “CRI” inevitably invites comparisons with the Community Reinvestment Act (CRA) legislation which legally requires banks to reinvest in economically disadvantaged communities neglected by forprofit financial service providers. But the difference between the two is palpable.
“CRI is voluntary; CRA is legislated,” she said, “Volunteerism is a core value of the credit union movement, and it’s significant that while community involvement is something that credit unions do freely, it took an act of Congress to get banks to show the same kind of social responsibility.”
Fillwock said that she would like to see more credit unions make the social mission part of their strategic planning. “We’re all in agreement that credit unions should be socially involved, so there’s no reason we shouldn’t elevate that social involvement to the strategic level,” she said. “Doing that would help us record all the things we’re currently doing as well as identify new and creative ways of serving the underserved and lending a hand to small entrepreneurs.”
Adopting a formal community involvement strategy will not only yield significant benefits for members and consumers, it is basic “good business” for the credit union, building consumer awareness, community goodwill and fostering future credit union growth. And, not least, it can play a major roll in protecting the unique status of credit unions as not-for-profit financial cooperatives.
In the wake of the American Bankers Association’s aggressive“Operation Credit Union” and other burgeoning attacks on credit unions by banking lobbyists and trade groups, the significance of that aspect of social involvement is especially acute.
“When banks clamor for credit union taxation and insist that credit unions are really no different from banks, maintaining a record of credit union social responsibility will mean we’ll have more than anecdotal stories to refute their claims — we’ll have proof,” Fillwock said. “When legislators ask us how we’re different than banks, we’d be able to demonstrate how credit unions are not only improving the lives of their members, but also benefiting the social and economic well being of our communities.”
Serving the community should not be viewed as a distraction from serving members, La Pine said, noting that the two “go hand in hand.”
“Members are and should be a credit union’s first priority,” he said. “But if we don’t have stable and thriving communities to operate in, credit unions and their members will suffer as much as anyone. If there’s a payday lender or check cashing outlet in every strip mall, is that good for the community, credit unions or their members? Aren’t urban decay and financial illiteracy problems for everyone, credit union members and nonmembers alike?”
Said MCUL President/CEO David Adams: “All Michiganians have a stake in the health and vitality of our local neighborhoods and communities, particularly in our state’s urban areas. Community involvement is nothing new to credit unions, and is a perfect fit with the credit union philosophy of ‘People Helping People.’”
“The work of the CRI Task Force will augment the work that credit unions are already doing by tracking our efforts and identifying additional areas where credit unions can make a difference.”