Report From The States
The Credit Union Journal asked state leagues: With members of Congress openly questioning the CU tax exemption, what are you doing in your state to demonstrate the value of the credit union tax exemption? If you aren't currently doing anything on this front, why not? If you are, why do you believe this is important for your credit unions?
Report Being Shared With Lawmakers
BIRMINGHAM, Ala.-As in all other states, credit unions serve a valuable purpose, and credit union membership is a significant asset. In 2005, the Alabama CUL and CU-Vote, a subsidiary organization, commissioned a study on the economic impact of credit unions in Alabama, which was produced by the University of Alabama Center for Business and Economic Research. This independent study found:
Credit unions in Alabama create 8,777 direct and indirect jobs, produce $543 million for Alabama's economy, and create $288 million in Alabama household earnings;
Alabama CUs save their members over $113 million through lower fees and interest, and higher rates on savings, which creates an impact of over $218 million for the state, money which would not exist were it not for the credit union difference.
In the year studied (2003), the additional economic impact created by CUs generated $24.1 million in tax receipts for the state.
The league and CU-Vote have shared this 22 page report with lawmakers in Washington and in Montgomery, and these proven benefits of credit union membership are shared with credit union members in newsletter articles, statement stuffers, and direct mail pieces. The study allows us to share with policy makers, and the people of Alabama, the true, quantified, benefits that CUs provide to their members and to the state of Alabama.
Actions Stronger, But Words Also Used
PHOENIX, Ariz.-The Arizona Credit Union League's Government Affairs Team demonstrates that political involvement is fundamental for the survival of the credit union movement. In tandem with our activities to argue against anti-credit union efforts to tax credit unions, we seek a proactive approach to serve our members through legislation.
Our political action programs along with CUNA's advocacy efforts encourage involvement through attendance at CUNA's Governmental Affairs Conference and our State GAC. We strive for full participation in programs such as The Capitol Club, Project Zip Code, and Payroll Deduction. In addition to developing an interactive website to communicate with our members, we also attend our credit unions' staff and board meetings to discuss the importance of being politically active.
We also take every opportunity to share the credit union difference with the media, consumers and our members. An example of that is the production of a 16-page print publication "Members Make it Happen in Arizona" that was coordinated by the league and distributed statewide in October 2005 through The Arizona Republic, Tucson Star-Citizen, Arizona Daily Sun newspapers for a total of 450,000 copies. Two 60-second radio commercials aired on six radio stations in the Phoenix, Tucson and Flagstaff markets.
The league and member credit unions purchased ads and provided articles explaining the "credit union difference" along with articles on financial education and money management of interest to credit union members and consumers alike.
Data Being Collected, Will Be Distributed
LITTLE ROCK, Ark.-The Arkansas League is planning to collect data from the credit unions and publish it in a form suitable to hand to each member of our Washington delegation. We also think we will be able to use the same information if necessary at the state legislature.
Advocacy Campaign Just 1 Part Of Effort
RANCHO CUCAMONGA, Calif.-California and Nevada credit unions have launched new activities that are proving their value in educating consumers and decision makers about credit unions, and demonstrating that the credit union tax exemption is good public policy.
The leagues' innovative Public Advocacy Program is founded on a solid radio and print advertising campaign that emphasizes messages proven effective through research in building support for credit unions among members and non-members alike. These include:
* Credit unions have long served members who work on behalf of the community.
* Credit unions' profits are reinvested in the local community.
* CUs are locally owned and run, so members' money stays local.
* Credit unions help keep bank rates competitive.
The grassroots component of the Public Advocacy Program began with more than a dozen "rallies for credit unions" to enlist growing numbers of credit union leaders in advocacy activities. More than 1,000 participants-mostly new faces-attended these initial training sessions, and we are now providing assistance and information for their meetings with opinion leaders in local communities. Thousands have also registered in our new "Connect for the Cause" database which provides improved information and access to support overall advocacy activities.
Benefits Of CUs Underscored In Meetings
ARVADA, Colo.-For our 1.8 million members - 1 in 3 citizens-preserving the tax-exempt status of Colorado and Wyoming's credit unions is a key mission. Members of Congress in other states may question the credit union tax exemption, but our Congressional delegations remain very supportive, in part because of the actions we've taken.
We've met with every House and Senate member, underscoring the benefits that credit unions provide to our members and all of society, showing them how their constituent credit union members would lose $6.3 billion a year in benefits if credit unions are taxed. Even bank customers would lose another $4.3 billion in benefits if credit unions weren't there to force banks to compete for business!
We're working with individual credit unions to capture stories of how they help their members and contribute to their communities every day, by providing lower loan rates, helping finance first-time car and home buyers and providing business loans to members that can't get the attention of the mega-bankers. The $3 million raised for hurricane relief by our foundation and nationally underscores our community involvement.
We will work in 2006 with CUNA and NCUA to quantify all the benefits credit unions provide to their members.
Two-Pronged Approach Being Taken
WALLINGFORD, Conn.-Connecticut is taking a two-pronged approach. First, we are beginning to gather information that shows the good work credit unions are doing in serving all of their members, and in particular those of modest means. For years we've delivered this message anecdotally to our members of Congress, particularly our two representatives on the House Ways and Means Committee, Congressman John Larson and Congresswoman Nancy Johnson. Now we're looking for hard data to support what we know is true. Some of this information is already available since state-chartered, community credit unions have been subject to a community reinvestment law in Connecticut since 2003. The second prong of our initiative will be to provide resources to our credit unions to help serve individuals of modest means. Early last year the CCUA board established a Community Outreach Committee, comprised of credit union professionals, to develop new ideas and tools to help credit unions in serving individuals of modest means. We've had preliminary conversations with a number of our credit unions about these programs and they have been receptive to them.
Repeated Emphasis On The CU Difference
TALLAHASSEE, Fla.-We believe that credit unions enjoy great support among Florida's congressional delegation. Florida is fortunate that its hard working credit unions have kept up a steady and productive line of communications with our Federal representatives, which we believe has nurtured a favorable relationship for credit unions among our elected officials.
The Florida League constantly works with members of Florida's congressional delegation, as well as their capable staffers, to ensure the "credit union difference" remains in the forefront of their minds. This is accomplished via regular contacts, as well as our exceptional public service and education efforts.
Locally, credit unions continually pursue public service projects that, not only differentiate themselves from other financial institutions, also add value to the enhancement of the financial well-being of people of modest means.
Florida's credit unions recognize that they are in a great fight for survival. Which is why so many of them work hard to build good will with the lawmakers and policymakers of this state to ensure a healthy environment that allows credit unions to flourish and to continue to serve their members.
Number of Initiatives Are Launched
DULUTH, Ga.-Credit unions throughout Georgia have implemented several initiatives to improve the financial health of consumers and to let the public know about the significant contributions that Georgia credit unions make to the 1.8 million members we serve.
Global Principles-Georgia credit unions have adopted four global principles: One Member, One Vote; Members, Not Just Customers; Service Makes the Difference; and Profits Belong to the Members. These unifying principles help define the credit union difference and ensure that credit unions focus on what matters most ... the member.
Cooperative Advertising-Georgia credit union have launched a successful cooperative advertising strategy. Featuring the tagline, "Georgia credit unions, you'll like us better," the campaign, which included a 30-second spot that aired during the recent Sugar Bowl, employs broadcast television, radio and cable to ensure statewide coverage.
CU GROW Campaign-This important endeavor connects credit unions to financial literacy resources and quantifies training efforts on a quarterly basis. The campaign also features the GettingAhead Association-a collaboration of credit unions and community partners that work to assist Georgians in lowering their cost of living. The association provides an online resource center (www.gaarc.org) and was recently awarded a grant from NCUF.
Steps Taken Emphasize Accountability
HONOLULU, Hawaii-Since the House Ways and Means Committee hearing, HCUL has been promoting the need for credit unions to provide more transparency, accountability, and verifiability in fulfilling their mission. Our suggestions for Hawaii credit unions to be more accountable in serving people of modest means include the following:
* Review products and services to ensure they appeal to and address financial needs of all members and potential members, including those of modest means.
* Assist members in realizing the dream of homeownership through participation in CUNA's HLPR program or supporting the Hawaii HomeOwnership Center (a private, nonprofit organization formed to assist Hawaii residents buy their first home).
* Attract and retain youth and senior citizens as members;
* Participate in HCUL initiatives to provide financial counseling to members in need.
* Educate members and the general community in the principles of financial literacy.
In addition, HCUL has been distributing specially-prepared packets of information to make lawmakers aware of credit union uniqueness and what credit unions do to improve the communities they serve. These lawmakers are on the federal, state, and county levels of government."
'Difference' Is More Than Just A Slogan
BOISE, Idaho-The credit union difference isn't just a slogan in Idaho, and we have long understood the need to make legislators and the public aware of it. It is important to put a spotlight on the good things CUs do because it is through those experiences that we can best teach others about the credit union difference.
We have worked for many years to highlight the things credit unions do to help those Idahoans and Idaho communities that most need the help. For instance, in many of our smallest communities, credit unions are the only depository institutions willing to provide financial services through a local branch. Other providers of financial services abandoned these communities; if it were not for credit unions, these communities, some of which are in isolated locales, would have no local financial services.
We also focus on sharing the news about credit union efforts to provide financial education in the schools, to make small loans, and to provide honest and low-cost service to their members as a way to help us to strengthen and perpetuate the reputation of credit unions.
Constant Efforts, Constant Reinforcement
NAPERVILLE, Ill.-The Illinois Credit Union League (ICUL) continually educates state and federal lawmakers on the importance of the credit union tax-exempt status by: emphasizing ICUL's commitment to encouraging credit union participation in Project Differentiation, informing policymakers about the work of the Illinois Credit Union Foundation (which includes grants to help credit unions expand their ability to provide financial services to people in low-income and underserved areas of Illinois), and maintaining our focus overall on serving low-income/underserved areas. All of these activities are constantly reinforced to lawmakers through local grassroots efforts, chapter meetings, candidate interviews, and campaign involvement. This message is also reiterated at ICUL's annual Legislative Day event, which includes Hill visits and is attended by more than 100 credit union activists.
Direct Message Through Direct Meetings
INDIANAPOLIS, Ind.-Protecting the federal tax exemption is Priority One for the Indiana League. Keeping our credit union message in front of our legislators has been a key to emphasizing the importance of credit unions' tax exemption. During 2005, we met directly with Indiana's congressmen 27 times, including meetings in D.C. and in their districts. We also met twice with a challenger who advocates the tax exemption. A week prior to the House Ways & Means Committee Hearing, a group from Indiana flew to Washington to brief Indiana's congressmen and staff.
During the hearing, Indiana Congressman Chris Chocola's comments and advocacy of credit unions stood out at a key time. He used information we had provided that was specific to Indiana credit unions and their service to members, including those of modest means. His comments also opened the door wider for the credit union witnesses to paint a positive national picture. Indiana's congressmen are not questioning the credit union tax exemption and their support is due to many years of providing information and building relationships. More than 80 Indiana credit union representatives will be at this year's CUNA GAC to continue our advocacy efforts.
Importance of 'Alternative To Banks' Stressed
DES MOINES, Iowa-Demonstrating the value of the credit union tax exemption and, more generally, the value of credit unions' presence in the marketplace has been a focus of the Iowa Credit Union League for a very long time. Over the years, for example, we have shared data with our lawmakers that shows the aggregate savings Iowa credit union members realize from lower rates on loans and higher rates on deposit accounts. Similarly, we use HMDA numbers to demonstrate how our credit unions outperform other lenders in Iowa when it comes to making home loans to low income individuals.
Each time we need to call on credit union members for grassroots assistance, their response to lawmakers is further evidence of the value of the tax exemption. Their personal stories of how a credit union helped them is often more beneficial than any data we can share. However, if Congress takes away the tax exemption, credit unions will essentially become banks-and those grassroots stories will disappear as not-for-profit financial institutions will no longer exist. Continuing to communicate the value of credit unions as an alternative to the for-profit banking industry will always be a key component to our government and public affairs activities.
PR Outreach Always Stressing The Value
HARAHAN, La.-In Louisiana, we are constantly working to demonstrate through our public relations outreach and governmental affairs efforts the value of the credit union tax exemption. We work closely with our Congressional delegation; bringing a large group of credit union volunteers and professionals to Washington twice a year and holding special events for our elected officials here at home in their districts. In addition, we continue to educate our credit union professionals and volunteers on the issues facing credit union on the state and national level, on the nuances of successful lobbying and on the importance of contributing to CULAC.
Taking Every Opportunity To Explain CUs
WESTBROOK, Maine-From the distribution of statewide newspaper inserts to regular contacts with the Maine media, the Maine Credit Union League takes advantage of every opportunity to explain how credit unions are structured and how our structure benefits members in the form of lower fees, better rates and a more rewarding overall financial services relationship.
Recently, the league commissioned a highly-respected Maine economist to conduct a study to examine the financial benefits credit unions provide to Maine consumers. The study not only concluded that credit unions provide Maine consumers with a direct financial benefit amounting to $40 million but it also pointed out the important role raised in the House hearing that credit unions have in serving some of the lower income and more rural areas of our state. Credit unions are serving these areas not as a result of Congressional mandates but rather this is where a segment of our membership lives and works.
We welcome the opportunity to discuss the Credit Union difference with consumers, state and federal lawmakers and the media. Credit unions have a great story to tell on the significant contributions and benefits that credit unions provide to the people and communities they serve.
MARYLAND & DC
Telling The CU Story Is League's Top Priority
COLUMBIA, Md.-In Maryland and D.C., we absolutely believe that telling the story of credit union commitment to serve people from all walks of life, including those of modest means, is a top priority.
Almost a year ago MDDCCUA embarked on a project called Real Solutions with the Filene Research Institute to encourage CUs to stretch further in their outreach to low wealth families. Twelve credit unions embarked on the program and have implemented strategic and innovative business plans that call for adding payday lender-fighting small loans, remittances and employ revised policies to welcome folks needing further assistance.
MDDCCUA is embarking on a strategic partnership with Casa de Maryland to provide job opportunities to bilingual workers in credit unions, develop a brand that encourages credit unions to adopt operating principles friendly to serving low wealth families, and to opening branches in low wealth neighborhoods.
As the state association that is home to most members of Congress and their staffs, we are embarking on our largest cooperative advertising campaign in history to encourage area credit unions to "be the difference" in their members lives-helping members to "get the difference" found at every one of the region's credit unions. The campaign includes radio ads that drive consumers to a CU search engine; a CD and web page that contain links to legislators and promotional materials; and the distribution of 100,000 tabloid newspapers promoting financial literacy.
CUs Demonstrate Value Of Exemption
SOUTHBOROUGH, Mass.-The credit unions of Massachusetts, like credit unions throughout the United States, are tax exempt because they are not-for-profit, democratically controlled, financial cooperatives. Each of those characteristics of the credit union identity continues to play a real role in demonstrating the value of the credit union tax exemption.
The fact that Massachusetts credit unions are not-for-profit delivers tangible benefits to the people of the Bay State every day in the form of low fees and better interest rates. CU pricing which is based on maximizing-value is an essential counter weight to the maximize profit philosophy of the national and international banking companies.
Every year the thousands of members who attend credit union annual meetings stand as witnesses to the fact that democratic control is another tremendous structural benefit of the credit union movement. The fact that the people who use the credit union own it ensures that, unlike local banks, the credit union will not be sold to the highest bidder.
Finally, the credit union is a financial cooperative that is run for the benefit of the people who own it and the community in which they live. This type of unique financial resource is vitally important to the financial well being of millions of Americans.
Community Reinvestment Survey Proves Worth
PLYMOUTH, Mich.-The importance of the MCUL's Community Reinvestment Initiative (CRI) has never been more apparent as it was during the House Ways & Means Committee hearing on the credit union tax exemption. The MCUL conducted a special fall Hike The Hill the week prior to the hearing, bringing 38 credit union officials to Washington, D.C. to reaffirm our congressional delegation's strong support for the credit union tax exemption. Michigan was the first state to garner written statements of support from our entire delegation.
At the Ways and Means Hearing, Chairman Bill Thomas (R-CA) made it very clear that he is concerned by the credit union movement's inability to document information that would support the industry's arguments that credit unions are fulfilling their mission and should retain their tax status. The chairman added that he is interested in the NCUA requiring more transparency from credit unions, more documentation, and Community Reinvestment Act (CRA) type data. This documentation and tracking of credit union social mission fulfillment is at the heart of CRI.
To date, 29% of the league's 375 affiliated credit unions have completed the CRI survey. When Michigan CU officials march on Capitol Hill during the CUNA GAC, they will be armed with quantifiable data gleaned from the CRI survey that clearly shows what they are doing to serve all their members well and why the credit union tax exemption is still deserved.
Additionally, the MCUL and its affiliated credit unions committed $2 million last year to the league's statewide cooperative advertising campaign aimed at promoting the credit union brand. This successful advertising campaign geared towards the public, lawmakers and existing credit union members, helped drive home the importance of the credit union tax exemption in allowing credit unions to provide affordable financial services to 4.4 million Michiganians.
There's A GREAT Way To Demonstrate Value
ST. PAUL, Minn.-Eliminating credit unions' tax-exempt status would severely cripple the credit union movement. It is important to demonstrate to our elected officials all the good that credit unions do, therefore justifying the exemption. Minnesota credit unions put the needs of their members and their communities first. Every year, credit unions keep approximately $120 million in local communities by providing members with fewer fees, lower rates on loans, and higher returns on savings than banks. Even non-members benefit from improved competition, which encourages banks to keep their rates and fees more reasonable.
The Minnesota Credit Union Network continues to maintain regular contact with our congressmen to ensure that our elected officials understand the credit union difference. We understand the need for constituents to form relationships with our congressmen, and work to foster those relationships throughout the year. For that reason, MnCUN established in 2003 its GREAT program, the GrassRoots Education & Action Team. GREAT members receive regular updates and talking points to help them communicate with legislators.
While members of the Minnesota Congressional delegation are not questioning the legitimacy of the tax-exemption, we are proactive in our approach and are optimistic about the credit union environment in our state.
Information Fair Shows CUs In Community
ST. LOUIS, Mo.-Informing lawmakers about credit unions, their mission and their impact on the community is an ongoing effort in Missouri.
On the state level, the Missouri Credit Union Association is hosting a "Credit Unions in the Community" information fair in Jefferson City in February to highlight various programs credit unions participate in to help the community. Credit unions will staff tables in the capitol rotunda with information for lawmakers. Credit unions will again visit with legislators during our annual meeting in early April.
On the federal level, credit union participation information is being collected and will be forwarded to lawmakers. Credit unions are encouraged to include Missouri members of Congress to event invitations, media releases, and newsletters that focus on community participation and outreach to the underserved. Credit unions will visit with federal lawmakers during our breakfast and appointments during the GAC, and Missouri Hike the Hill is scheduled for September.
In addition, the MCUA is collecting information on how much credit unions have given back to members in rebates and dividends. We will share that information with members of Congress and state lawmakers. At last count, Missouri credit unions returned $1,100,000 to members in 2005.
Charitable Arm Supports Underserved Efforts
HELENA, Mont.-We believe the best way to show the value of the credit union tax exemption is by supporting credit union efforts to provide services to underserved Montanans. To that end, the Montana league's charitable arm, Montana Credit Unions for Community Development, has formed working partnerships with many individual credit unions and other organizations across the state.
The focus of these partnerships vary, but three current areas of action are:
Bringing financial education into Montana communities and schools to help people of all ages learn how to better manage their personal finances and make healthy choices for their financial future. These programs emphasize giving local credit union staff and teachers the tools to continue financial literacy efforts in their communities.
Helping Montana families of modest means avoid high-cost financial services. These efforts include increasing awareness of and access to free tax-filing services, staffing credit union Volunteer Income Tax Assistance sites, co-sponsoring the montanafreefile.org website, and working to establish a plan to develop payday lending alternatives.
Establishing Individual Development Accounts (IDA) programs-matched savings accounts designed to help low-income and low-wealth families accumulate money for high-return investments like education, job training, or homeownership.
In each of these areas, the work that credit unions and our partners are doing fill a need that would otherwise go unmet. This work is all non-profit in nature and its ongoing success is one way to measure the value of the credit union tax exemption.
CUs Demonstrate Worth By Deeds, Words
OMAHA, Neb.-Nebraska's credit unions have and continue to educate lawmakers about the unique structure and philosophies credit unions operate under. In addition, credit unions continue to demonstrate by both deeds and anecdotes how they are making the most of their federal tax exemption by better serving their members and better serving their communities. Whether it is supporting; local charities, providing financial education or various other outreach programs, credit unions have always been about "people helping people" and that service goes beyond just our members.
Without question, Nebraska credit union actions speak louder than words when it comes to fulfilling their social mission. The significance of which has never been more important as we continue to combat the unjust criticism of the tax status of credit unions by the banking industry.
Statewide Community Outreach Just 1 Example
CONCORD, N.H.-The credit unions of New Hampshire have been working day in and day out to better the lives of the people of the Granite State for nearly a century. The programs and activities that are undertaken on both an individual and collective basis are a true demonstration of the good that can be done by financial institutions that focus on service to the community rather than their most recent quarterly earnings statement.
In addition to outstanding products and services, credit unions have shown a deep commitment to community outreach. One example of that commitment is the statewide New Hampshire Credit Union Community Outreach Initiative, through which the credit unions of New Hampshire have pledged to lend $35 million to low-and moderate-income borrowers that would not qualify for conventional financing.
Through the league, the credit unions of New Hampshire have also shown their commitment to the community through the support of the Make-A-Wish Foundation of New Hampshire. Last year alone, the credit unions raised more than $100,000 for this worthy cause.
Talking Points, Fact Sheets Help Tell Story
HIGHTSTOWN, N.J.-The New Jersey Credit Union League is working hard on behalf of the state's more than 200 credit unions and 1.2 million credit union members. Political advocacy efforts-spearheaded by CUNA's "Call to Action" regarding credit union tax exemption-were developed in a two-pronged approach. The first being visits by key league staff members to congressional representatives and their aides. The New Jersey Credit Union League representatives stressed the important work in community involvement, community outreach and economic development that is exemplified by New Jersey's credit unions. The second portion of the New Jersey Credit Union League's efforts focused on keeping league members up to date and informed on the issues and how changes in the tax exemption would impact their existence. Talking points and fact sheets were issued, and credit unions were encouraged to involve their membership in letter-writing campaigns to Congress.
Going forward, the New Jersey Credit Union League is confident that the need for tax exemption among credit unions is an issue that will probably remain as an important topic and we are prepared to mobilize our credit unions to make their strong and powerful voice heard in our state capitol of Trenton, and Washington, D.C.
Direct Lobbying, Grassroots Activities Are Key
ALBANY, N.Y.-The New York State Credit Union League persistently works with and on behalf of credit unions to ensure that every New York member of Congress knows how credit unions make a difference in the lives of his or her constituents every day. The League and its New York member credit unions have always recognized the importance of initiating contact and building support from lawmakers who have the ability to influence how credit unions serve their members. The League believes that sustaining and promoting credit unions' mission and philosophy, especially among our elected politicians, is one of the most important functions of a trade association. Through direct lobbying and facilitating CU grassroots activities, the league works to meet that goal.
Involvement In Political Process Instrumental
GREENSBORO, N.C.-Talking to members of Congress about the tax-exemption is nothing new in North Carolina or any other state. The current tax battle should simply remind us that being involved in the political process is as important now as ever. Banker rhetoric has reached new levels, and the banking industry is as united in opposition to credit union growth as it has ever been. Credit unions must stay focused on not only serving their members, but on telling their story. Elected officials, the news media and our own credit union members need to better understand the credit union difference.
One way that credit unions in North Carolina have been able to demonstrate the credit union difference and the value they bring to consumers in the state through a study conducted by Dr. William Jackson, an economist from the University of North Carolina. Completed in April of 2005, Dr. Jackson's research found that credit unions in North Carolina saved their members over $336 million in 2003 and saved bank customers in North Carolina nearly $60 million.
The $400 million in saving has been one way that credit unions in North Carolina have been able to tell our story over the past year. CUs must continue to find news ways to reach out and serve members in their local communities and the league must continue to help CUs talk about all that they are doing.
Ads Invite Public To 'Discover The Difference'
BISMARCK, N.D.-In North Dakota, our 2006 advertising campaign-Discover the Difference-will educate members and the general public on the benefits of credit unions. Additionally, we have developed a new member/consumer brochure for credit unions to use explaining why credit unions are exempt from federal taxes. This brochure also explains that credit unions do pay some taxes. The North Dakota state legislature will meet again in 2007 and our Governmental Affairs Committee is working on the best way to educate our congressional leaders on the value of credit unions' tax exemption.
We believe this is important for North Dakota credit unions because education is key.
Tangible Examples, Quantifiable Data Needed
DUBLIN, Ohio-The Ohio CU League recognizes that it is more critical than ever for the credit union industry to define itself through tangible examples of the value that credit unions bring to consumers, their communities, and society as a whole. While Congress' question of whether credit unions still merit the federal tax exemption has been placed on the backburner for now, we've been warned, and given an opportunity to gather quantifiable data proving the value of credit unions. "Show us that you are meeting the credit and savings needs of consumers, especially persons of modest means, and your tax exemption will be secure," is the message we heard in Ohio.
The Ohio League is launching a year-long public advocacy plan to educate legislators, public officials, and media about credit unions and the value they bring to the state and all consumers. Following the House Ways and Means hearing, the plan's outreach initiatives were expanded with the realization that legislators and public officials need additional tangible expressions of credit unions' dedication to outreach.
The league's partnership with the Filene Research Institute and 20 Ohio credit unions in REAL Solutions, an outreach initiative to attract, engage and serve low-wealth households, will provide additional quantifiable evidence of the value of credit unions. Participating credit unions are focusing on three areas of outreach: serving the growing Latino population, finding alternatives to payday lenders, and identifying new mortgage lending options for first-time home buyers.
Ohio credit unions also had the opportunity in the last two years to share the credit union difference with the state General Assembly, as credit union legislation was considered. Credit union leaders told legislators how they serve those people of modest means through small and short-term loans, check cashing, home buying initiatives, and financial education.
The window of opportunity is open for credit unions to better define who we are and to control our own destiny.
Weekly CU Day Provides Visibility In Capitol
TULSA, Okla.-The Great State of Oklahoma defends the tax exemption for credit unions each and every day!
In Oklahoma, we continue our efforts to educate our state legislators and members of Congress on the differences between credit unions and other financial institutions. Each Tuesday during the legislative session, we host Credit Union Day at the Capitol with one or two credit unions taking part each week. We invite members of their board and staff to go to the Capitol with League staff and visit their individual legislators as well as legislators with a large number of members in their district.
The CU representatives visit with their legislators about their credit unions, their service to their members, important programs that target specific member groups, and other facts that help educate legislators about our unique differences and importance of our tax exempt status. We leave with them specific information about our industry and comparisons between our credit unions and other financial institutions.
On an ongoing basis, we maintain a website, www.creditunionscare.com that is highlighted in our cooperative advertising campaign. The website not only has consumer information about credit unions, but helpful information directed specifically to both state and federal elected officials to further explain our differences and defend our tax-exempt status. It is our opinion that the foundation of our argument is our unique structure. Credit unions do not operate to make a profit...they operate to serve their members, and in Oklahoma we share that with our elected officials every opportunity that we can.
Education Of Elected Officials Is New Focus
BEAVERTON, Ore.-The most important way to demonstrate the value of the credit union tax exemption is to look at our basic structure. Credit unions were created to provide financial services in a democratic, not-for-profit, cooperative manner with member ownership and control. Those characteristics are the foundation of the tax exemption and still are true in 2006 as they were in 1934. As Congress stated in 1998, "Credit unions, unlike many other participants in the financial services market, are exempt from federal and most state taxes because they are member-owned, democratically operated, not-for-profit organizations." Today, credit unions, regardless of size, continue to be cooperative financial institutions, dedicated to meeting their members' financial service needs.
Credit unions in Oregon demonstrate their value everyday to their members. From providing exceptional member service to free home buying seminars, to spending time in the classrooms teaching financial education to waving fees for a member having a difficult time, credit unions are making a difference in the lives of their members-one member at a time. Another example of credit unions serving the needs of members is our alternative payday loan product. Many Oregon credit unions are offering a short-term loan product at very low rates to assist the needs of our members.
Finally, credit union advocates throughout Oregon will be meeting with elected officials in their communities talking about the credit union difference discussing the value of the credit union tax exemption.
While credit unions demonstrate to their members, everyday, the credit union difference and the value of the credit union tax exemption, we don't do a great job of telling elected officials and that will be our focus in the coming months!
'Overreaching' Photos Worth 1,000 Words
HARRISBURG, Penn.-In Pennsylvania, a top priority of our Association is advocating the credit union philosophical difference to elected officials, regulators, the media, and consumers to improve the operating environment for our member credit unions. Embedded in our advocacy efforts is continually demonstrating the value of the credit union tax exemption. Like many within the movement, we do that anecdotally in our PR materials, through our cooperative advertising campaign, on a statewide television show we sponsor, with grants from our charitable foundation, and in meetings with legislators, regulators and others.
In attacking credit unions, the American Bankers Association offered a bounty for photographic proof of credit unions "over-reaching" their original mission. In response, PCUA submitted more than 100 photos as visual examples of credit unions "over-reaching" for the betterment of their local communities. While we didn't win ABA's contest, we were recognized as "2005 Best of Show" at CUNA's Blockbuster Awards. This year, our Annual Convention theme is "Doin' the Right Thing" and will feature credit unions' staying true to their original mission and improving the quality of life in their local communities. In Pennsylvania, as across the rest of the country, CUs routinely do the right thing in relative silence. At PCUA, we work hard to continually publicize these efforts as loudly and as strongly as we can.
Meeting With Public Officials Is Vital
WARWICK, R.I.-Rhode Island credit unions truly represent freedom of choice for consumers of financial services. In recent years, the financial landscape in the Ocean State has come to be dominated by huge national and international banking companies. The natural choice for a consumer seeking a locally-owned financial institution is a credit union.
They affirm their belief in credit unions by bringing more and more of their business to credit unions every year. They also participate in the governance of their credit unions by attending annual meetings in huge numbers.
The leaders of Rhode Island credit unions also go to great lengths to reinforce the unique qualities of their institutions with elected officials. In addition to building relationships with lawmakers at home in the community, numerous credit union people participate in gatherings like CUNA's Government Affairs Conference and the Rhode Island Credit Union League Governmental Affairs Day. These events provide the opportunity to reinforce the credit union difference and the vital importance of preserving the structure that stems from and permits that difference.
CUs Must Promote Truth To Defend Exemption
COLUMBIA, S.C.-It is important to note that Congress has not questioned credit unions' tax-exempt status, but has actually reaffirmed support for maintaining it. Rather, Congress wants credit unions to do a better job of making known their service to members and the public.
South Carolina credit unions serve 1.2 million members in a state where 39 of 46 counties meet the federal definition of underserved. In addition to higher savings rates, lower loan rates, and lower fees for services, our credit unions are providing the AFCA National Child Identification Program's child ID kits to all school-age students K-12. Over the past two years, credit unions in both Carolinas raised over $1 million for Victory Junction Gang Camp. Palmetto State credit unions remain leaders in financial education, providing the NEFE materials and training for teachers statewide. And our credit unions were instrumental in passage of our state's anti-predatory lending and mandatory financial literacy legislation.
Through Project Differentiation, our publications, and our public relations efforts, we get the word to our members, the public and our elected officials at all levels that credit unions are meeting their mission and earning their corporate income tax exemption every day. We will continue to work with our credit unions to share the truth and correct our detractors' misinformation.
Relationships With Lawmakers, Press Are Key
SIOUX FALLS, S.D.-On Feb. 2 we were in our State Capitol to provide a continental breakfast for our legislators. We were there to remind them about the Credit Union difference. We are fortunate to be able to meet and visit with our legislators in the Presidents' and Speakers' Lobbies at the State Capitol where all the action is located.
At the beginning of the session, we provide each legislator with information about the CU difference. We want them to know that there is a difference between credit unions and other financial institutions. Credit union staff and volunteers come from across the state to join in this meeting. They need to know that the relative small size of most of our credit unions makes it important that the tax exemption be maintained, as it is only through net income that credit unions are able to build capital and capital is necessary for continued growth and service. Many of our legislators are, in fact, members of a credit union but some may not understand that Congress granted CUs a federal tax exemption based on their unique structure, mission and purpose. It is important that every legislator understands that we exist to serve our members, not to make a profit, that we are member owned and operate under a one member, one vote system. We want them to know that our CUs are guided by volunteer boards who are not compensated for their service. All should know that CUs' services are affordable, that they assist members to become better-educated consumers of financial services and that they exist to help people, not to make a profit. We are asking our credit unions to put to paper good news stories that we can present to our legislators during our visits with them in South Dakota and in Washington.
Regular Meetings Keep CUs In Political Eye
CHATANOOGA, Tenn.-We have a continuing program of regular meetings and receptions between credit union leaders and their congressman. We use these meetings to discuss the credit union position on specific issues. We always prepare for individual credit union manager or volunteer discussions with anecdotal reminders of how credit unions have helped and supported constituents.
We use the data from operation zip code to remind members of Congress of the size of their credit union constituency. We communicate that constituency benefits would be greatly diminished, if not lost, without tax exemption. This is an on going, continuous program. We have increased the focus that tax exemption is the key to continuing service of credit unions to their membership.
Tax exemption is critical to the continuation of credit unions and the fulfillment of their philosophy, as we know it today. Without it, credit unions would have to adopt the same or similar financial techniques and decision process utilized by successful, for-profit, taxable institutions. Over time, how we operate, who we serve, the price and terms of our services will become ever more similar to those of for profit institutions. Taxation also would mean a significant reduction in the ability to grow and serve members. CUs have a relatively high leverage ratio of more than 10%, capital to assets. Taxation would reduce capital growth by the amount of the tax bill. Every one hundred dollars of capital growth lost to taxes, means one thousand dollars in asset growth, would also be lost. In order to sustain current rates of capital and assets growth, credit unions would have to increase prices and ration products based on profitability, to provide capital growth, after taxes. In summary, if we are taxed, we either fall behind significantly through slow growth or adopt a new set of approaches for making decisions on products, service, costs and members/customers into the future. All of this means falling behind or blurring the difference between the taxed, cooperative institutions and the taxed, for profit, stock institutions.
Lawmakers Statements Of Support Crucial
FARMERS BRANCH, Texas-To date, the Texas Credit Union League has secured written statements of support for our federal credit union tax exemption from over 80% of our 34-Member Congressional delegation, and the number continues to rise each year since we started this program in 2004. Each written statement given to TCUL from our delegation in essence answers CU Journal's question about the value of the credit union tax exemption from the viewpoint of the Members of Congress, in their own words. Typically, they recognize and value how their credit unions, as locally-owned and operated not-for-profit member-driven financial institutions, serve their constituents, including those of modest means, thus making credit unions the most popular choice among consumers of all financial institution types in poll after poll, and that CUs earn our federal tax-exempt status every single day with our people-first membership philosophy.
Recent Modernization Bill Raises Awareness
SOUTH BURLINGTON, Vt.-Because Vermont's credit unions underwent a statute modernization in Montpelier in 2005, they and the league are well prepared, if it becomes necessary, to justify and defend their tax-exempt status to legislators. As a general rule, a high level of focus on this issue is maintained in addition to ongoing advocacy efforts. The extensive education of legislators and league-organized grassroots efforts during the statute modernization project yielded an increased level of visibility for credit unions in Montpelier. As part of the overall advocacy plan for 2006, the league intends to build upon this heightened visibility and actively work towards the 2006 elections. Looking to the future, the league and Vermont credit unions intend to increase reinforcement and awareness of long-standing credit union principles of not-for-profit, member-owned cooperative, volunteer governed, and community focused. As to what is coming up in the immediate future, a group of Vermonters will again meet with our congressional delegation at the GAC. The league has also scheduled a "CUs in the Statehouse" event where CU CEOs and volunteers will be introduced to their state Senators and Representatives.
Community Involvement Survey A Vital Effort
LYNCHBURG, Va.-Every January the Virginia League conducts a community involvement survey of our members to gather statistics on how Virginia's credit unions serve their members and community in keeping with the philosophy of People, Not Profits. Last year's survey showed that our members raised over $2.16 million and donated over 15,000 volunteer hours to various charitable and community organizations throughout Virginia. These facts strengthen our presentations to our elected officials. We put a face on the data by including specifics on what credit unions do, especially in their districts, and how those services are offered. For instance: credit unions that offer payday lender alternatives, support U.S. troops by donating money to buy phone cards or provide other assistance, financial literacy education, or services offered at cost or at a loss because they meet members' needs. Credit union members and league staff convey these examples either in writing or by personal meetings. We have staged rallies with over 1,000 volunteers telling elected officials their credit union stories. Each year we also hold a Congressional Luncheon in D.C. in conjunction with the GAC to bring our credit union members together with elected officials. Their stories and specifics demonstrate to lawmakers the value of our tax exemption.
Congressional Questions Are Easy To Answer
FEDERAL WAY, Wash.-Members of Congress are not openly questioning the credit union tax exemption. Rather, some (just a few,) are asking if the arguments by banking trade groups have any merit, if credit unions can help improve the financial well-being of the average citizen, and if Congress should artificially carve-up the sovereign financial system of the United States by awarding (as banks ask) certain powers to bankers only. These are easy questions to answer, and the Washington League welcomes every opportunity to share the facts regarding the consumer benefits of credit unions, as well as their important role in the economic engine of our nation. Members of Congress have an obligation to help all of the good businesses in their home state succeed. This responsibility includes assisting with appropriate credit union regulatory relief, progressive powers within the Act that keep pace with the times, and unrestricted access to financial cooperatives for all Americans.
Face-To-Face Visits Develop Relationship
PARKERSBURG, W.V.-We are fortunate enough in West Virginia to have a Congressional delegation which feels that credit unions earn their tax exemption. In fact, Congressman Mollohan expressed his concern in writing to Ways and Means Committee Chairman Thomas regarding the legitimacy of tax hearings held last November. This is something though that we do not take for granted. Throughout the year, we arrange face-to-face visits between our league member credit unions and our congressional delegation in Washington, and occasionally in their home district. Nothing works better than constituents telling their story to their elected representatives and/or their staff-and they have plenty of real-life examples to share. This approach works well because it keeps our credit unions active and in touch with lawmakers on a regular basis.
CUs Show Lawmakers REAL Solutions
PEWAUKEE, Wis.-The Wisconsin League is urging CUs to participate in REAL Solutions-an initiative that helps credit unions develop or improve services that combat predatory financial practices such as high-cost payday lending. The goal is to meet consumers' immediate needs for transaction services while moving consumers through the steps of opening basic deposit accounts, building creditworthiness with small loans, and-over time-building wealth. As a result, consumers become less susceptible to using predatory services and gain a more solid financial footing over the long term. This effort has enormous potential to demonstrate credit unions' service to low-income people and, in so doing, support the tax exemption. Though measurement tools still need to be determined, the project stands to have a significant impact. So far, the effort involves 40 credit union partners with more than 140 locations statewide. Those credit unions have more than 846,000 members (about 41% of all members in the state) and upwards of $6.2 billion in assets (about 43% of Wisconsin CU assets). Moving forward, credit unions have prioritized developing and expanding services to three target groups: low-income tax filers, Hispanics/Latinos and users of payday loan services.