"Credit unions can't just be a Salvation Army with a lending program. They have to be good businesses as well as having a social mission."
-Dennis Dollar, speaking at CUES' School of Public Policy
You can't listen to a presentation by Dennis Dollar, former NCUA chair and now principal in Dollar Associates, Birmingham, Ala., without jotting down at least one quote to save for future reference. But I have to say this is one of my favorites. It puts the controversy surrounding service to the underserved into exact focus: yes, credit unions should be doing it; no, it shouldn't be their sole purpose.
The real issue then becomes how much service to the underserved is enough-a question each credit union must answer for itself, taking into account its membership field, its financial condition and its vision for the future. Generally, though, I believe credit unions can-and should-do more.
Over the years the core members who credit unions helped with loans for their first washer/dryer or a used car moved on to new cars, homes, maybe even vacation property, and their credit unions moved on with them. Nothing wrong with that. Yet, the growing age of the average U.S. member shows that credit unions need to once again become relevant to consumers just starting out in their financial lives, whether it be young people new to the job market or immigrants new to this country.
It's Not Easy
This is easier said than done because, quite frankly, many credit unions are out of practice. On top of that, even community development credit union leaders, people who work every day to serve the underbanked, will tell you this is not an easy market to reach.
CUES learned this first hand when we tracked the progress of five mainstream CU/CDCU teams offering service to the underserved via Ford Foundation grants. Even though there was help with the money side and even though the CDCU was often able to offer advice and an entrée to the market, each project experienced many ups and downs and almost always took longer to get going than participants expected.
The foundation's ultimate goal for the grants was replicable programs-for other credit unions to take what these partners did (and learned in the process) to help establish their own outreach efforts.
Thanks to Ford Foundation funding, CUES has documented these experiences in "Reaching the Unbanked: CUs Partner to Improve Members' Financial Futures" available for download at cues/org/outreach.
And needless to say, this is only the beginning of the resources out there to help. The National Credit Union Foundation's REAL Solutions program is another example of replicable offerings you can adapt to your own situation.
An interesting side note to all this is that credit unions emerged as a social movement at a time when corporations were generally known for their anti-consumerism. Fast forward to today when many large companies distinguish themselves in the marketplace via their good corporate citizenry. There's even a new term that could retroactively be applied to Edward Filene: social entrepreneur, or someone who helps solve social problems with business skills and entrepreneurial spirit.
At heart, many credit union leaders are already social entrepreneurs; they like the idea of people helping people and they have the financial, marketing and leadership acumen to make a difference. They just need to refocus their efforts-and now is the time.
H&R Block Sees Opportunity
Peter Tufano, a professor at the Harvard Business School, has been studying the delivery of financial services to the poor. His research focuses on ways to use financial innovation-developed to serve the rich-to meet the needs of the poor, especially their need to build assets. A resulting case study, "H&R Block and 'Everyday Financial Services,'" is used during Advanced Leadership Institute, a Harvard program offered by CUES and the California/Nevada Credit Union Leagues, to show not only how services might be offered, but how a large corporation like H&R Block is turning its attention and marketing strength to the same underserved population credit unions are beginning to seek. Talk about competition!
One thing many credit unions don't talk about enough, is their outreach efforts. Whether it be financial literacy success stories, loans to first-time buyers or community partnerships, make sure your members-and potential members-see what you are doing.
When we asked Rose Bartolomucci what she wished to accomplish during her year as CUES chairman in 2006, she challenged CUES to help credit unions do better at "telling their stories." In answer, we launched Operation Outreach: Promote Your Good Works to Policymakers & the Press (cues.org/operationoutreach). It contains countless ideas for getting more press and political exposure, including a free download of the 100-plus page manual, "PR for Credit Unions."
This year, when we asked current CUES Chairman Carol Humenick what she wished to accomplish, she urged us to continue what we had only begun in 2006 with Operation Outreach. Needless to say, much work yet remains.
Fred Johnson is president/CEO of the Credit Union Executives Society.
