That White Hat Also Brings With It Expectations
Tax-exempt organizations of all kinds-including credit unions-are being scrutinized more seriously than ever by federal and state governments, regulators and watchdog groups.
This newspaper has well documented the hearings, GAO studies, and regulatory surveys responding to lawmakers' concerns about whether credit unions continue to deserve their tax exemption. But credit unions are not alone. At the same time government officials are calling for CUs to document their services and make other disclosures, the Smithsonian Institution is being challenged for "excessive executive compensation" and for striking deals with corporations on licensing agreements. Legislation has been introduced to limit salaries of Smithsonian leaders. And the Nature Conservancy was dragged before Congress and still has IRS auditors in their offices because they were "perceived" to have provided insider advantages for board members.
In fact the entire non-profit sector is under scrutiny by the federal government and states' attorneys general. Why? Part of the reason is because the non-profit sector has become so large: 7% of our nation's GNP. Non-profits now generate more dollars for the U.S. economy than the entire computer industry.
While a number of tax-exempt organizations have been accused of unethical behavior, all non-profits are now expected to do more for consumers at the lower end of the economic ladder. Facing larger national and state deficits, politicians are looking for revenue everywhere they can. The non-profit sector makes itself vulnerable if we don't meet expectations.
Whether or not you agree with this is almost irrelevant-because those in control are saying that credit unions must meet these expectations. This is why the leadership that credit unions provide in serving people of "modest means" or "low-wealth" is so critical. Everywhere I go I see credit unions raising money for hurricane victims, conducting events for Credit Unions for Kids, building homes with Habitat for Humanity, or working with local social service charities, and so much more.
But the new expectations mean that social responsibility should be more than community relations and charitable support. All organizations are being held accountable for how they operate, what they produce, the impact of their work, with whom they work, how they treat their employees, how they contribute to the community, how they reach out and do more than they are required to do, but are expected to do.
In other words, how organizations rate against this entire checklist is becoming the measure of acting in a socially responsible manner. All are expected to understand this new environment and act accordingly.
A recent study by the Center for Corporate Citizenship at Boston College pointed out that organizations seen as acting irresponsibly are likely to face difficult relations with employees, consumers, communities, and ultimately lawmakers and regulators-which all have direct impacts on the top and bottom lines. On the positive side, the study found, "There is often a relationship between good social and good financial performance. Institutions tend to perform better in the long run when they operate in a socially responsible manner."
When I was in Ohio recently at a league meeting on "Revitalizing Your Commitment," credit union leaders were asked: "Do you and your credit union participate in real financial contributions to the underserved in your field of membership and your community?" Most everyone at that meeting held their hands up. They were then asked to list examples. The list was very interesting and fit into two broad categories:
1) "Community Relations"-This included contributions to things like Credit Unions for Kids, Toys for Tots, United Way ... various "walks" and "-thons." Again, these are all important are critical to marketing and brand awareness.
But understand the expectation is that all institutions of any significance do community relations-whether it's a huge company like Booz Allen Hamilton (where I used to work), big banks, small banks, your local newspaper/TV stations, and your credit union. Of course, because credit unions are non-profit and tax-exempt, there is an even greater expectation. Credit unions are expected to do even more.
2) "Community Outreach"-The second list that emerged during the "Revitalizing Your Commitment" discussion featured specific credit union programs designed to reach the underserved in their communities. These products and services include: financial education, low-cost check-cashing, payday advance alternatives, immigrant accounts, outreach to the disabled, IDAs, and affordable first-time home loans.
These are the types of outreach efforts that will demonstrate to lawmakers, community groups, consumers, the media, and anyone who challenges the tax exemption, that credit unions are meeting expectations.
I believe many CUs, in partnership with their state leagues and foundations, are taking a progressive leadership position, and are doing a lot to help ensure that credit unions meet-and even exceed-all expectations.
The National Credit Union Foundation sees itself as a partner to help make that happen. Cooperatively we are raising funds, identifying innovative outreach efforts, and replicating programs that serve people of modest means. Together we are showing how the entire credit union movement is responding. And that is what it's going to take to meet even higher expectations in the future.
Steve Delfin is executive director of the National Credit Union Foundation. He can be reached at sdelfin