Why, How CUs Should Partner With Co-ops
At the beginning of the year, the United Nations launched the 2012 International Year of Cooperatives (IYC), its first ever global campaign to educate the public about the benefits of this vital business model.
The campaign's official slogan and core mission is to build awareness and demonstrate to all business sectors that "cooperative enterprises build a better world." According to research conducted by the IYC team, cooperatives are on track to become the fastest growing business model by 2020. In the United States, member-owned organizations account for $3 trillion in assets, $500 billion in revenue and more than one-million jobs. Their collective achievements are even greater when these cooperative businesses collaborate, to enhance their offerings and make successful inroads for the future, thereby benefiting millions of Americans.
Increasingly, partnerships between cooperatives and credit unions are highlighting how like-minded member-owned organizations can work together to create win-win scenarios that provide solutions, enhance business and create new opportunity. The synergy between these entities is a natural one, since credit unions and member-owned financial institutions, like NCB (the "Bank"), share the same cooperative DNA.
These shared principles are not only promoting business growth, but also providing solutions for organizations in challenging situations. A well-documented example is the predicament facing Iowa's credit unions in 2010. The state's corporate announced plans to terminate vital banking services its CU members relied on to manage their organizations. The credit unions not only required a financial institution to provide correspondent banking services, but one that understood the needs of its members. Their journey took months of town hall meetings, in-depth discussions and some industry angst.
Their final decision was to work with a cooperative bank that understood the intricacies of member-owned organizations, such as credit unions. A year later, the state's corporate credit union announced plans for a partnership for correspondent banking services with the Bank. In a show of support for the plan, 102 of Iowa's 127 credit unions chose the new correspondent banking solution. Together, they represent some 800,000 Iowans. The Iowa Credit Union League, through its subsidiary known as The Members Group (TMG) played an integral part in underpinning the success of this new endeavor. Furthermore, TMG has stayed on to provide customer service and operational support for the program.
Working Together Pays Off
This partnership underscores how similar-minded organizations can work together to create new, vital solutions to protect the future of their businesses. The result for Iowa was a cooperative solution that combined the member service capabilities of TMG with the products and financial strength of the Bank. Today, that allows Iowa's credit unions to obtain numerous products and services that can be delivered more economically than they could access individually. Those offerings include deposit accounts, cash management services, settlement with the Federal Reserve, item and card processing, international services and credit facilities.
The mutually beneficial deal gave the Bank another strong and stable source of funding that translates into providing capital to credit unions and other cooperative customers in support of their continued growth.
As the Iowa deal clearly demonstrates these partnerships can solve difficult financial challenges, but they can also address social change. Part of the mission of the 2012 International Year of Cooperatives initiative is to highlight how businesses based on collaboration are continuing to support the social and economic development of communities and individuals around the world. Nationally, credit unions are again partnering with financial cooperatives to raise funds to make a difference through their national philanthropic organization, the National Credit Union Foundation (NCUF) and its Community Investment Fund (CIF) program.
The goal of NCUF is to raise millions of dollars in funds in order to provide grants, manage innovative programs and provide education to empower consumers to achieve financial independence through credit unions. The CIF program allows credit unions to donate funds to support the NCUF's various programs.
In yet another show of strengthening alliances between credit unions and financial cooperatives, the NCUF collaborated with the Bank to provide a new CIF deposit account where all or part of the interest earned on the account is automatically donated to NCUF programs that support financial literacy, cooperative education and community development programs across the U.S. Credit unions have been supporting this initiative in earnest-since launching the CIFwithNCB program 154 credit unions have placed $23.4 million in these accounts.
Complementing The Mission
For the Bank, the partnership with NCUF and other credit union organizations presents a great opportunity to complement its own mission of helping underserved communities and cooperative enterprises, as well as the larger efforts of the 2012 International Year of Cooperatives. It all comes back to putting into action the key cooperative principles that all of these organizations have in common, and represents the importance of social impact. In a sense, the benefit of the investment is multiplied since it supports the good work of these organizations and gives back to the communities most in need.
As financial cooperatives and credit unions look to the future, successful partnerships as the ones mentioned above, will continue to evolve and grow. With collaboration as a fundamental component, financial cooperatives and credit unions will continue to do business the only way they know how: working cooperatively to find innovative solutions that provide much needed services for their members.
The UN's 2012 International Year of Cooperatives is the ideal platform for these organizations as they take steps and make future plans to build stronger businesses, and a better world.
Steven Brookner is president/CEO of NCB,FSB.