Credit unions must begin to measure and grade themselves - and the movement as a whole - on their ability to reach out to low-wealth households, minorities, immigrants and Hispanics, according to one credit union advocate.
During his remarks at CUNA's Future Forum here, Jim Drogue, VP of Operations for the Wisconsin Credit Union League, challenged credit union directors and staff to evaluate their efforts to serve the underserved and asked, "how do you rate the credit union movement?"
If credit unions don't do it, they may find others only too willing to do so. NCUA is engaged in an effort to measure these efforts after some members of Congress called into question whether the not-for-profit cooperatives are still worthy of the federal tax exemption.
Drogue said credit unions are getting the message and pointed to a number of programs as proof that boards, once educated to both the challenges and opportunities for growth afforded by those groups have made real progress.
"Wright-Patt Credit Union in Fairborn, Ohio, started a 'Stretch Pay' program that requires a $35 annual fee and allows members to get a $250 loan 12 times per year at 18% APR," Drogue related. "The fee goes into a pool used to pay off defaulted loans. They're now starting up a CUSO so that other credit unions can participate."
He also cited Prospera CU, Appleton, Wis., for teaming up with Goodwill Industries to open a limited service branch inside a Goodwill Store that has extended hours and provides alternatives to local payday lenders. Opened one year ago, it has already had an impact in the area, he said. There are lots of other stories to tell, too, said Drogue.
The Wisconsin League has a program to finance car loans for single mothers so that they may drive to a job. Working with the West Central Wisconsin Community Action Agency, they have made more than $1 million in loans, while keeping losses to a bare minimum.
Credit unions can benefit from such programs because such groups are in dire need of financial services and once recruited, are loyal members, he suggested, adding that the value is only enhanced by creating a path to wealth building that educates the unbanked so they have access to low-cost loans, develop a credit history and have a safe place for savings.
This is particularly important, Drogue observed, at a time when CUs are under fire from bankers and members of Congress for not fulfilling their responsibilities as tax-exempt institutions.
Such programs are tangible proof that credit unions recognize the role they play in this arena.
