More CUs Create Foundations To Show Community Support
The increasing prominence of credit unions in communities across America and the attendant spotlight are prompting credit unions to wade deeper into civic projects.
To facilitate these efforts, Pentagon Federal Credit Union and several other larger credit unions have recently created non-profit foundations that will serve as conduits for raising tax-deductible donations that will be used to fund community and charitable projects.
The main goals of the new Pentagon FCU Foundation, for instance, are to fund financial literacy programs for enlisted military personnel; provide matching $5,000 grants for first-time military homebuyers, and to help finance relief programs for soldiers injured in Iraq fighting.
Among the other credit unions forming their own non-profit foundations, registered with the Internal Revenue Service as 501(C) 3s, are GTE FCU, Alternatives FCU, Navy FCU, and Community CU.
The new Pentagon foundation, which received IRS approval last year, is modeled after the one used by Alternatives FCU, which the Ithaca, N.Y.-based credit union has used to finance various community programs, according to Rocky Mitchell, director of the Pentagon project.
As credit unions increase their community profiles and replace community banks in many markets as the local financial institution, they will need to step forward to provide some of the same civic functions formerly performed by banks, according to Bucky Sebastian, president of GTE FCU, which recently formed its own foundation, the formed GTE Federal Charitable Trust.
"This has nothing to do with credit unions. It's part of being a good corporate citizen," said Sebastian, recounting how all of the local banks that once formed the pillars of the Tampa, Fla., business community, have either pulled out or been bought out in recent years.
While many of the activities being planned for the foundations have been a regular part of credit union philanthropy in the past, the creation of a separate non-profit organization will enhance a credit union's fundraising abilities by providing a tax deduction for individual, corporate and foundation donors, explained Mitchell.
The charitable foundation will also help Pentagon FCU to initiate certain community projects outside its field of membership. So the various projects planned for the new foundation can be offered to enlisted personnel on several military bases outside the credit union's membership, which the credit union, itself, is prohibited from doing by the Department of Defense's "one base, one bank (financial institution) policy" noted Mitchell.
"Those are two compelling reasons for the foundation," he said.
"This is truly philanthropical work. We don't want to give you the idea that the foundation is carrying water for the credit union," said Mitchell.
"As a credit union, you are a custodian of the members' money, so you can't just go out and do anything you want to, even if it's the right thing to do. This allows you to do the right thing and maintain your fiduciary responsibility to the members."
"And let's face it, it is absolutely great marketing and public relations," he noted.