DUBLIN, Ohio -
"Every league is being affected by forces that favor consolidation," said Ohio CU League President Paul Mercer, who is also chairing a task force on this very topic for the American Association of Credit Union Leagues. "The beauty of the League-CUNA system is the cooperation and the broad, deep swath of credit unions and members represented by that system. Our ability to fight for the future of credit unions is dependent on credit unions all binding together."
But as credit unions face more and more pressure on their bottom lines, they are sometimes deciding not to pay dues to affiliate. "There are at least three significant forces driving our ongoing attention to the affiliation rate in Ohio. Margin and earnings pressure is an intense force of change, particularly for many of our smaller credit unions. Second, is the consolidation through mergers that creates different needs for development and retention strategy and long-term financial solutions."
A third, he said, is the fact that the Ohio league-like many other trade associations-has been emphasizing advocacy efforts over some of the traditional services, such as compliance services, that have a more tangible, more easily measured value.
The shift to advocacy-which Mercer said his member credit unions have said is their primary reason for joining-has created a "free-rider" problem for trade associations.
"Political action is very important, but there is the sense of some credit unions that they get all of those benefits of our advocacy efforts without joining," said NAFCU CEO Fred Becker.
Still, the affiliation rates, when looked at as a percentage, continue to be healthy. CUNA reports that 90% of all credit union members are represented by CUNA via their credit unions' affiliation with the trade group. The Virginia CU League boasts an affiliation rate of 98% of all credit unions in the state. The Ohio league is at about 83%.
The problem, however, goes beyond those percentages. "When I started with the league in 1978, Virginia had 400 credit unions. Today we have 206," Virginia CUL CEO and AACUL Chairman Rick Pillow said. "that has put some revenue pressure on us that we have to look at very closely."
To that end, the Virginia league, revamped its dues structure in 2006, as have many other state leagues. But it's not just the issue of dues-it's also an issue of strength in numbers. "It weakens our position if we don't have every credit union affiliated," Mercer said. "Eighty-three percent in Ohio isn't good enough. Ninety-eight percent in Virginia isn't good enough. Our ability to fight for the future of credit unions depends on our ability to show a united front."
These very issues recently motivated New York State League CUL CEO Bill Mellin to write to his member credit unions to ask how the league can try to reach out to those CUs in the state that have chosen not to affiliate (CU Journal, 06/18/07). He also asked about that most touchy of issues, how to handle the "free riders." Mellin asked if the league should continue to include and involve non-affiliates, or if they should be "shunned."
The problem with shunning, he observed in his letter to member credit unions, is that it works against building the unity the movement needs to be successful. Mellin told CU Journal that response to his letter has been mixed, with nearly as many CUs in favor of "shunning" as those in favor of inclusion.
"We have to think of them as potential members," Mercer said. "This came up as a policy question about access to league services in Ohio, as well."
While Mercer wouldn't call it "shunning," the league did change its policy to be more restrictive in terms of what sorts of services can be accessed by non-members. There's no way to restrict the value of political advocacy, but some of the other traditional services can be.
But Mellin agrees that the real answer isn't in shutting non-members out-it's in convincing them that there is a value to joining, which is why he has called upon his member credit unions to reach out to non-members. "When the league tries to get non-members to join, it feels self serving," he said. "It is much more powerful when one of your peers asks, 'why haven't you joined? Why aren't you paying your fair share?'"
