The California/Nevada Credit Union League is planning an ambitious public advocacy plan for 2005 aimed at significantly boosting awareness on the differences between credit unions and banks.
The decision follows approval by affiliated credit unions of a special dues assessment that in the case of the largest credit unions runs well into six figures and in some cases is in excess of their actual league dues. Members voted on the proposal during the leagues' annual meeting here last week.
The plan now is to launch a campaign that is primarily radio based with some newspaper support. The special assessment will raise $6 million, much of which will go toward buying radio time in the 16 expensive California markets, along with Nevada. Most small CUs will be assessed less than $1,000.
A Significant Risk
The California/Nevada league, which acknowledged in interviews it is taking a significant risk in backing the public advocacy campaign should it not resonate with consumers, said it is launching the effort for two primary reasons: it increasingly hears from legislators with questions that mimic the banks' anti-CU rhetoric, and research has found that by a two-to-one margin, non-members over members support revocation of the credit union tax exemption. "We were alarmed by that," said CCUL Chairman Frank Michel.
Prior to the vote at the annual meeting, the league held a dozen town hall meetings and one webinar explaining the rationale behind such an advocacy campaign. It also sent a certified letter to each of its 500-plus affiliated credit unions outlining their CU's specific tax liability should the tax exemption be lost.
Plans now call for the first advertising to begin airing in January. Representatives of the advocacy campaign working group handling the campaign's creative, which is led by Teresa Freeborn of Kinecta FCU, are meeting this week with representatives of the advertising agency that will lead the effort, Foote, Cone & Belding, in Los Angeles. Task force members stressed the campaign is not aimed at boosting membership, but will be tracked carefully to see if awareness levels are indeed rising.
"It has become very clear that there is not only a focused attack on credit unions, but a successful attack," said task force member Rudy Hanely, CEO of Orange County CU, whose special assessment will be 110% of its annual CCUL dues. "When your supporters start asking the tough questions you know there's something going on, especially when the questions sound just like the soundbites that the bankers have been feeding them."
Hanley said his credit union's assessment of more than $300,000 is indeed significant, but it pales compared to what loss of the tax exemption would be-$34 million had OCCU been taxed in 2003. "It would take 100 years of paying (the assessment) what one year of taxation would cost our members."
Hanley said the new campaign is at least 30 years in the marking. He recalled that in 1979 after the Carter Administration proposed taxing credit unions, he worked on a white paper in response. "The fact we're still not being taxed is a positive, but it also can create this false sense of security, and I think it has for many of us. Like the Titanic, we may think we're unsinkable. Success can be your friend, and also your worst enemy."
Hanley added, "I feel it's critical to go out there full force and get the message out. If you think we have gotten the message out, think again-how many members call you the bank?"
In remarks prior to the vote by league members, California league CEO Dave Chatfield called the discussion of the issue the "most important discussion we've had in a very long time. These are very serious threats to the very future of credit unions. We want to be in a position where we never see a (legislative) bill, because once you see a bill you've lost part of the battle. I've been involved in credit unions for 40 years and have never seen bankers be more vicious, more coordinated or better funded than they are now."
Chatfield said that both friends in "high places" (chairman of the House Ways & Means Committee) and "low places" (former NCUA chairman Norm D'Amours) have conspired to attack credit unions. The Ways & Means chairman intends to hold hearings in 2005 on the tax exemption, while D'Amours recently met with Iowa's bankers to talk with them about CUs.
Chatfield said the new campaign will not draw any funds away from the advocacy efforts the league already has in place. In fact, he said the percentage of the league budget spent on advocacy will increase to 63% in 2005, up from 45% this year.
"We need that public advocacy, and the task force has been working to figure out how to get it," he said.
Kinecta's Freeborn, who has been involved in a group of Los Angeles credit unions that have been running a separate cooperative advertising campaign, reiterated research showing consumer ignorance of credit union uniqueness. "We want to educate on the differences and on the direct public benefits of credit unions, and on the indirect benefits of credit unions in the marketplace," she said, adding, "If done right, we will build support for credit unions and help us to build new business."
The three audiences for the advocacy campaign will be policy makers, non-members, and members, whom Freeborn said "can be mobilized to help us build support."
While the special assessment being levied on California's credit unions is for 2005, the strategy is to run at least two years, if not longer. Each year credit unions will vote on whether to approve the assessment and will be provided with updated numbers on how it's performing.
"There is no quick fix on this," said Freeborn. "It's going to require a continued presence over a number of years. It's going to have to be broad in scope, and we are going to need a number of communications components to reach those audiences. We believe this is best achieved through a radio campaign, and this has proven to be most cost effective in reaching a broad audience in number of markets."
The Funding Challenge
The other challenging component of the public advocacy campaign, work on which began in January, has been how to fund it. That job fell to a task force led by Henry Wirz, president of SAFE Credit Union, North Highlands, Calif.
Wirz said his task force decided early on that the entire $6 million had to be raised from credit unions, because they have the greatest stake in the outcome, and that it had to be mandatory. "The mandatory assessment is important because all credit unions would benefit from a public advocacy campaign," he said, adding that league affiliates, vendors and non-affiliated credit unions are also being asked for support.
The assessment is structured as follows, according to assets: $0-$5 million, $50; $5-$15 million, $500; $15-50 million, $1,000; $40 million and above, .36 per member plus .000036 x total assets ($36 per million).
"The larger credit unions have been willing to take on the substantial burden of this," said CCUL Chairman Frank Michel.
