TALLAHASSEE, Fla.-What will it take to get credit unions to better tell their story? Bill Birdwell, president of Southeast Corporate FCU in Tallahassee, Fla., offers his views.
CUJ: Do CUs deserve the tax exemption, and what could be done better?
Birdwell: I do think credit unions continue to deserve the tax exemption, but we haven't done a very good of telling why. Documentation is going to be the key. Credit unions are doing a lot of things to serve their communities and live up to the tax exemption, but they haven't tracked it in a manner that is very useful. A lot of credit unions do a lot for their members every single day, but they don't document it.
CUJ: What will it take to make that documentation happen?
Birdwell: If it's something the regulator is looking for, it gets done, but it hasn't been a regulatory issue, so that's going to be a lot of it. The documentation will allow us to tell our story, to explain that credit unions have a different motive for doing business than making money for stockholders. Credit unions are helping members have better lives. They don't have the dichotomy of interests that other businesses do, where on the one hand they need to please their shareholders by maximizing shareholder value and on the other hand, pleasing their customer base. For credit union, the owners and the customers are the same. That's how credit unions are in business for a different reason.
CUJ: Beyond a regulatory push for this documentation, what else needs to happen?
Birdwell: We need to find a way to tell our story. We need to have a system in place that we just don't have today. Maybe some credit unions can do it on their own, but some may need a regulatory push. The problem is, this is not a safety and soundness issue, so it's not really a regulatory issue. It's going to be difficult to get the right kind of documentation in place. Credit union leadership is going to have to step up to the plate, be it the trade groups, the corporates or whatever. We need to work together in coordinated ways to start gathering the data and look for opportunities.
- Lisa Freeman
CLIFTON, Va.-For credit unions, notes one consultant, Paul J. Lucas, the real challenge lies in the nature of Congress itself.
CUJ: Do you believe credit unions still deserve the tax exemption-why or why not?
Lucas: Yes, and here's why: credit union boards-and I would know better from having worked with many credit unions rather than just one credit union looking inward-are still focused on providing the best deal for their members. That's what credit unions say they are all about, and that's exactly what they are all about.
CUJ:Why do you think some members of Congress have taken an interest in this topic, in particular calling on NCUA to begin documenting credit union service to the underserved?
Lucas: A friend of mine was a member of Congress for three terms, and this is what he told me, back during HR 1151: all congressmen are interested in only three things, and this is in no particular order: 1) getting reelected, 2) spending as much money as they can on their constituency so they will see the value you bring to them as their congressman and 3) to do that you have to tax everything you can. When I talked with him during HR 1151 he told me that Congress will eventually tax credit unions, but the one thing credit unions have going for them-and they must never forget this-is they can bring votes to the table. Banks have more money, but credit unions have more votes. Members of Congress want both money and votes, and usually they come together, but if they have to choose between money and votes, votes will win every time. Congress keeps coming back to this issue because they have money coming in from the banks pressuring them on this issue, so if credit unions ever back off on their efforts, their ability to marshal voters, they will be taxed.
I know some people think that CUNA has lost its way by trying to do too much and trying to make more money. I say maybe CUNA should just concentrate on what they're supposed to be doing: lobbying and looking out for the best interests of credit unions.
CUJ: What do credit unions need to do to "prove" they are worthy of the tax exemption?
Lucas: Credit unions are bad at marketing and they're bad at branding, and they're even worse at public relations and PR. So many credit unions do such great things for their communities, but they don't know how to spin it. I tell them 'don't spend a penny on goodwill unless you get something from it. Just because it's a nice thing to do doesn't mean you should do it.' This is not always popular. I'm not saying credit unions shouldn't do good things, I'm saying they need to make sure that whey they do good things they get something out of it.
- Lisa Freeman