Achieving diversity among board members is difficult enough at most credit unions, but community development and low-income credit unions face special challenges of their own.
Should CDCUs and LICUs be required to have a certain number or percentage of low-income folks on their boards? Is this fair? What about the fact such credit unions have a mission of improving the lives of their members. If a member's income improves, should he or she be removed from the board?
Most experts and insiders agree that holding these credit unions to strict quotas is a bad idea.
Samira Rajan, CEO of $17.4 million Brooklyn Cooperative FCU, said flatly, "A quota would be unnecessarily limiting and very difficult to put into practice. Why limit ourselves?"
Pete Weldon, who wears two hats as secretary of the National Association of Credit Union Chairmen (NACUC) and chairman of the board at $211 million-asset 1st Community FCU in San Angelo, Texas, said: "It is a bad idea to require these credit unions to have a certain number of low income board members."
"Quotas are limiting," Weldon said. "No one should be excluded, by income or any other factor. You want the best qualified person you can find in the community. It may be a school teacher, a farmer or a bank clerk, all of which we have had on our board at one time or another. When we search for a new board member, we look for someone who is qualified, can handle the financial side, and is interesting. We never think about their income."
Chuck Fagan, president and CEO of the Credit Union Executives Society, also was adamant that, "Quotas are not the right way to go."
The decision as to who sits on the board "has to be in the best interest of the credit union," said Fagan.
"All board members have to contribute. If someone can be a good representative of the membership and contribute that is good, but I do not advocate just putting someone on the board to fit a category. They still have to contribute to the board."
Self-Renewal
Jim This, president and co-founder of the Paragon Group, an Olympia, Wash.-based CUSO owned by $894 million TwinStar Credit Union that offers board effectiveness evaluations, agreed with the general concept that it is important there are some people who can represent a low-income community's perspective on a CDCU or LICU board.
He said Paragon Group works with several credit unions that are "very much dedicated" to a low-income community. Many of these CUs work with agencies that serve lower-income people.
"Here in Olympia there is TULIP Cooperative Credit Union. The credit union's board has two low-income directors, but most people on the board work with agencies that serve that community. Therefore, in their working life they have gained perspective on working with low-income people."
Focus groups and outreach also help CUs gain any needed perspective, according to This. TULIP Credit Union serves members of the Olympic Food Coop, and its representatives "spend a lot of time talking with people from the food coop to find out what they need."
"TULIP makes sure its staff talks to the people who come in to make a loan application," he said. "It is not necessarily necessary to have a low-income person on the board, as long as the board has that perspective."
Of course, This said, it is important for all CU boards to have the greatest amount of diversity they can get, and use associate board member programs. "Boards say they have trouble finding members, much less someone with specific skills or background, but I say that is their job. The self-renewal of the board is very important. You have to do it, and you can do it."
Recruiting Matters
Susan Mitchell, CEO of Las Vegas-based credit union consultancy Mitchell, Stankovic & Associates, pointed out there are many ways to recruit board members who represent the underserved.
She said volunteers on community service organizations such as Boys and Girls Clubs, outreach programs, Big Brothers and Big Sisters, church groups, Latino or other ethnic chamber of commerce members who run businesses, are just a few examples of people who may not be classified as "underserved" themselves but who are in touch with the underserved.
"Understanding the needs of the underserved through demonstrated engagement is the critical representation factor," Mitchell said.
Dr. Brandi Stankovic, partner at the consultancy, said that if serving a low-income community is part of a CU's membership outreach, "then having a board representative that was formerly of that demographic, works with that demographic, or potentially is a part of the demographic, could be insightful."
The term "low-income" does not necessarily mean "mismanagement" or poor choices, Stankovic added. "It just means that person has low income. I like to refer to it as 'members of modest means.'"
FDR & JFK
Mark Lynch, a credit union consultant based in Sault Sainte Marie, Mich., specializing in growth strategies and board governance, said if the FOM is low-income, the governance should represent the members — in general.
"But that does not mean every person on the board needs to be low-income," Lynch added. "There are examples in American politics of wealthy politicians who led programs to help low-income people, including Franklin Roosevelt and John Kennedy."
Although having just one low-income person on the board could provide a "much-needed viewpoint," Lynch said he often meets people at volunteer conferences who complain about being the only "one young person" or the "only reformer" on their respective boards.
"Being 'the one' can get tiring," he said.
