Category: Co-ops in Capitalism

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A Compensation Revolution Started by a CEO

Credit unions, corporations and multiple organizations are finding it difficult to fill vacancies. One response is to raise pay for both existing and prospective employees-especially at the lower end of the wage scale.

Some credit unions have announced increases to a $15 minimum starting wage; others have used hiring bonuses or payments for employee referrals.

The majority of these adjustments are at the entry level or bottom of the pay scale.   But is there another way to think about compensation that would start at the top?

What if credit unions were to emulate the example of CEO Dan Price and rethink their approach to pay starting with the CEO?

Reducing the CEO’s Pay from over $1 million to $70,000

Gravity is a  credit card processing and financial services company founded in 2004 by brothers Lucas and Dan Price. The company is headquartered in the Ballard neighborhood of Seattle, Washington and employs 100-200 people, including a branch in Boise, ID. It is a private company and plans to stay that way.

In 2015 CEO Price, now the sole owner, reduced his salary to $70,000 and made that amount the starting annual pay for any employee in the company.   The story went nationwide.   Inc magazine reported the action immediately; there have been follow ups to see the results  into 2021.

The company’s efforts were converted to a Harvard Business School case study.   This January 2018 article summarizes the case and concludes with a link to a 27 minute video in which Price and the Harvard professor discuss the underlying reasons at a Young Presidents Organization meeting.

In an April 13, 2021 twitter post, Price summarized the company’s results since the 2015 change as follows:

Since our $70k min wage was announced 6 years ago today:

 *Our revenue tripled

 *Head count grew 70%

 *Customer base doubled

 *Babies had by staff grew 10x

 *70% of employees paid down debt

 *Homes bought by employees grew 10x

 *401(k) contributions grew 155%

 *Turnover dropped in half

Price says a number of employees earn more than this minimum.  As the sole owner, this aspect of Price’s wealth grows as the company value increases.   He explains his approach and why it upsets many in the private sector:

“I did this as a private business owner. It affected no one but myself (I cut my salary from $1.1M to $70k) – the definition of private enterprise. But what I did was very threatening to them because it disrupts the narrative of “CEOs must be paid 1,000x more than their employee.”

Is there a Credit Union Lesson in This Spirit?

The increase in CEO salaries has continued across credit unions even during the pandemic.  Numerous consulting and trade firms provide data and peer comparisons to ensure CEO’s compensation remain competitive and growing.

What would happen if the whole salary paradigm were turned upside down as Price did at his company?  Gravity is a customer service firm where relationships matter. Price is very important.  Success depends on sales and every employee being an entrepreneur and accountable.

Price acknowledges this approach to compensation is contrary to most economic theory and business models.

He believes that once an employee’s concerns over money worries becomes only the fifth or sixth priority in their lives, more powerful intrinsic motivators will become dominant.  These include mastery of a craft, serving a bigger purpose, and autonomy.

When these characteristics spark employee behavior, then the business outcomes he cites can happen.

What Would Happen If?

Critics point out that the majority of Price’s wealth is in his ownership of the company.  So he can call the play Warren Buffett uses.   Buffett has been paid the same annual salary for the last 40 years-$100,000.

Credit union CEO’s do not have Price’s “stock” appreciation—although a small number have cashed out their positions by negotiating significant special merger payments as their credit union’s final act.

Skeptics point out this model would not work in low pay, low margin, slow growth industries such as food service and mass retail. In these industries robotic solutions and customer self-service are replacing traditional low wage employees converting variable salary expenses to a fixed capital investment.

Price’s response is automation makes the need for creativity, marketing and initiative in the remaining jobs even more critical.

Today a number of credit unions share their success with employees through various gain sharing programs.  These do not change the basic structure of the salary scale.

What would be a cooperative equivalent of this approach to employee motivation, accountability, compensation and organizational success?  Or as Price alluded, would this change be too disruptive of the existing narrative about how credit union CEO’s are compensated?

What would  be credit union member-owners reaction?   How might such a plan influence the way employees talk about the cooperative advantage with members?

Are there examples of credit unions  aligning compensation at all levels following a cooperative approach to this challenge?

I would be glad to share any examples incorporating this innovative spirit.

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Are Credit Unions Democratic? Does it Matter?

On paper and as a long standing, unique cooperative value, the best answer is,  “Maybe.”  After all for federal and many state charters the member-owners have one person, one vote in elections, and no proxies allowed.

The required annual meeting is the recurring opportunity for members to decide who will represent them.  To approve their current leaders or to vote them out.

This is a crucial process in co-op governance.  However, the practice rarely lives up to the theory. One person sent me his summary of board elections with the title:  It’s a scam.

Here is my observation on the subject of Board elections:

1-The credit union board of directors appoint a nominating committee.  The committee are usually directors NOT up for re-election.

2- The nominating committee nominates the incumbent directors.

3-The nominating committee does not nominate any non-incumbents.

4-The ballot is “no contest” – the number of directors up for election is the same number of directors on the ballot.

5-There are no director term limits.

6-Directors arrange to “resign/retire” mid-year so the position can be filled by appointment – by the incumbent board of directors.

7-Once appointed the director will seek “re-election” by way of the nominating committee – composed of the board of directors

If a member seeks to run for the board they need to stand in front of the credit union and solicit signatures on a nominating petition & the number of signatures required is substantial.  

If it is not a scam, contested elections are certainly a rare occurrence.

While cynical, there is more than an element of truth in this former CEO’s observation.

Does the Absence of Director Elections Make any Difference?

Many very large federal credit unions have never had an, open contested board election in this century.   In seven states where proxies are used by state charters, the board itself controls all of the votes even were there to be a nomination by petition.  The result is that boards end up perpetually controlling who serves.

Incumbent directors and CEO’s would defend the process by pointing to the industry’s financial results and member growth.  They would argue that is the real measure of the responsiveness of board leadership.

Others would point out that  credit unions regularly publicize  board nominations when announcing the annual meeting, but never receive any interest from members.

For many the idea that any member might collect sufficient signatures to stand for the board is unsettling.  After all it takes expertise and experience like that of current office holders, to be able to be a director.

If most credit unions succeed without democracy does it matter?

Can this co-op concept of “democracy” succeed if the member-owners never vote?

What kind of leadership culture and responsiveness will exist at the board level knowing that their tenures are never subject to member approval?

How will co-ops present themselves versus for-profit institutions where shareholder rights and activity are frequently used to bring issues to the fore at annual meetings?

Finally, how does one explain the voting manipulation that occurs with mergers of long serving, solvent credit unions where substantial benefits are paid to the merging CEO?

The  merger transaction promises members only rhetorical future benefits. But the person responsible for the merger, who gives up leadership responsibilities, receives significantly more compensation (a golden parachute) than by staying and retiring from the job.

One writer described the outcome when democratic practice is usurped by those in power:

“when you get rid of the democratic oversight of a sector of the economy, it becomes a black market free-for-all, a winner-take-all-loser-dies-in-poverty survival-of-the-fittest dog-eat-dog game.

The masses lose, the commons suffer, individual rights get trampled, and power amasses to CEO’s maximizing their personal outcomes. “

The Most Important Loss

While the erosion of democratic processes, may take time to manifest itself, the failure to cultivate co-op’s unique member-owner design may be the system’s biggest vulnerability.

Recently the Vanguard Group of mutual funds began a new television campaign.   The theme: “You’re not just an investor, You’re an Owner.”

This is only the second national TV campaign in the firm’s history.  As their initial product advantage of low cost, index-based mutual funds and ETF’s was matched by all their competitors, they are now singling out the one difference no other fund can match.

The message: “A rich life is about more than just money. That’s why at Vanguard, you’re more than just an investor — you’re an owner. So you can build a future for those you love.”

The agency which created the ads explained: the campaign was introduced “to celebrate the benefits of Vanguard’s unique corporate structure which makes clients, owners” and that the goal is “to underscore the value that investors can realize by investing through a firm with no outside owners other than its clients.”

More than a Design

Credit unions which fail to practice and celebrate their unique member-owner design, may be surrendering the most important advantage they have.

Democratic governance is not just another organizational option.  It is a critical aspect of an organization’s beliefs and practices for relating to the members who created and own the credit union.

When the advantage is not used, it goes away.   Co-ops become indistinguishable from banks.  Members are just another name for customers.  And leadership progressively presumes its judgments and choices are the primary basis for all decisions-even those ending the charter’s independent existence.  Even authoritarian leaders can survive, for a while.

When democratic practices are habitually circumvented, they are difficult to restore.   Without regular succession processes, the ability to find new leaders, or even generate interest in leadership is squelched. And at any moment, the sirens of self-interest can appear, cancelling the credit union’s future for all members.

Democracy matters, until it doesn’t.    The good news is that this is a fundamental flaw that every credit union has in its own power to fix.

 

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Veteran’s Day: Honoring the Responsibility of Public Service

A recent news story’s headline:  Sub’s Leaders Fired after Hitting Mountain.

The article described how the USS Connecticut, one of the fastest, most modern nuclear powered submarines had hit an underwater object  described as a “mountain”  in October.

The accident injured about a dozen sailors, but the sub navigated on its own back to Guam for a damage assessment.

One immediate result of the event is that the commander of the fast-attack sub, the executive officer and the senior enlisted Master Chief were all relieved of their duties.  Vice Adm. Karl Thomas, commander of US 7th Fleet, determined that “sound judgment, prudent decision-making and adherence to required procedures in navigation planning, watch team execution and risk management could have prevented the incident,”

The Military and Leadership

From the first day of active duty, every member of the military learns about responsibility and accountability.   From the ordinary tasks of getting up, wearing the uniform, or cleaning a work area, everything is subject to inspection.

All responsibilities come with accountability.   And when performance is above average there are awards and recognition beyond a positive fitness report.  But there is also the reprimand in the file when something goes wrong.   I received both in my four plus years of active duty.

I received the Navy Commendation Medal as Supply Officer during combat support operations:

“His outstanding managerial abilities combines with a ceaseless drive to accept and surmount challenges resulted in the establishment of many services for task group ONE SIXTEEN POINT ONE personal (the Navy Seal Team at Solid Anchor) that were not previously available.  Filson’s leadership and devotion to duty reflected great credit upon himself and were in keeping with the highest traditions of the United States Naval Service.”

Fitness reports recommended “accelerated promotion and augmentation to the regular Navy.”

But there was also the letter of reprimand in the file.   Upon being relieved as Supply Officer to transfer to shore duty, the audit of the ship’s store inventory found a shortage of $1,850.   After repeated recounts, there was no explanation, but the event occurred on my watch.

Many think of military duty as primarily combat.  I was a gunfire control officer.   Several times this meant telling everyone to clear the mount so a sailor can take a 3 inch 50 round that failed fire and throw the dud over the side.  Or the evening the siren’s sounded at Solid Anchor, the phosphorous flares suspended from tiny parachutes to light up the perimeter, the immediate scrambling of the two gunship helicopters, and running in night clothes to the bunkers built with sandbags.

These moments were the exceptions from much of the daily routine.   Nevertheless, the concepts of responsibility and accountability applied to all our activities.   Captain Mann personally signed off on every communication from the ship that I authored. He explained the only way his commanding officer knew how he was doing was from reading the ship’s traffic and whether the we arrived and departed port on time.

Respect for Service

The military gave me the chance to meet some of the most honorable, decent, and effective people I have ever known.    When I left banking to join Ed Callahan and Bucky Sebastian, it was not my thought to seek a government career.  Rather it was seeing in them the same qualities that make the military service special.   They believed that government employees are responsible to the public, that wise stewardship of resources is expected, and that everyone will be accountable for their duty.  Success was always a team effort.

Government service for them was not about political ideology or power.  Rather it was about serving the public.   When Ed announced the three of us were leaving NCUA in 1985 to form an undefined new company, he explained that we had accomplished what we came to do at NCUA, and it was time to move on.   Just like service in the military.

Dishonoring a Heritage of Service

Yesterday I received a member notice dated November 4, 2021 announcing the proposed merger of the $457 million Heritage Credit Union with the $3.7 billion Connexus, both in Wisconsin.  Each is very  strong financially.

The required disclosures say that the Heritage President, a 40-year employee, will retire immediately after the merger.  The additional benefits she will receive for her final action includes a $487,546 payment due as employment contract runs through 3/2/2023; continuing health care benefits of $1,750 per month through age 65; a lump sum payment on her 457(f) in the amount of $425,282; and a merger clause payout  per her employment contract of $326,284.  The total of the additional compensation known amounts is $1.239 million plus the monthly health benefits.

The practice of a retiring CEO selling the credit union as a final effort to create a personal golden parachute is not new.  The most troubling aspect is the leadership failure by both the CEO and board ending all that Heritage had enabled–the shutting down of independent career opportunities for 124 employees, the ending of local relationships in 12 communities, and the betrayal  29,000 members’ loyalty first begun in 1934. This action is the antithesis of  the credit union’s founding story on  their web site-an event that enabled the professional leadership opportunities  the CEO and board have enjoyed for decades.

But it takes two parties to make a deal.   Connexus’ CEO and board agreed to these sale terms, issuing a joint press release.  Merger math is simple:  1 + 1 = 1.  The cupidity of the one side is matched by the morally comatose on the other.   Members are not dumb.   They see the self- dealing and loss of their Heritage.

Moreover employees of both organizations will look past the superficial statements of what’s in it for them.  They will ask is this the kind of organization, leadership and values to which I want to be a part of?

Why We Remember Honorable Service

This additional example of self-enrichment trumping fiduciary responsibility is even more troubling because the regulators-both state and NCUA-routinely sign off on these self-enrichment practices.

The concepts of responsibility and accountability have traditionally been the hallmark of effective public service—professionals in their conduct and expertise and conscientious in their duty.

The military’s example, combining honorable service with accountable conduct, is something we properly salute.   We celebrate the values inherent in this public duty. But these concepts should not be limited to military employees.

The credit union system could stand much taller and be more potent if the traditions of honorable service that created the $2 trillion system today, were followed by those responsible for overseeing its conduct today.

The logic of mergers like Heritage and Connexus is nothing more than simple monopoly capitalism.  Members become the means to growing ever larger, not the reason for the cooperative’s creation.  Management’s self-interest has usurped member’s best interest.

A good first step would be to learn from the Navy example.  There is an obvious regulatory shortcoming  of “sound judgment, prudent decision-making and adherence to required procedures.” There needs to be  “relief of duties.”

But that would take leadership at the top.  Leadership that can distinguish cooperative purpose from corporate capitalism.   And that remembers the values and commitments that created the credit union alternative in the first place.

Veterans Day tributes remind all of us what really matters in life, especially by those who aspire to public service.

 

 

 

 

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The Critical Difference in Bank Capital Versus Credit Union Net Worth

At September 30, the credit union system’s net worth was  10%, or 300 basis points above the 7% well capitalized level.

Bank’s simple core capital ratio at June 30 is 8.83%.  But comparing these two ratios is extremely misleading.   For $1 of credit union reserves is much more valuable than $1 of bank capital.

Here’s why.

Credit union reserves (equity) is from retained earnings which is free in two senses of the term.  Unlike banks, credit unions pay no taxes on their earnings.  Whereas banks are subject to whatever their marginal tax rate is on each $1 of earnings.

As of June 30 banks pretax ROA was 1.67 for the first six months, but actual ROA was 1.31 after tax.   It takes a $1.27 of net income, on average, for a bank to add $1 to retained earnings.

For credit unions, every $1 of net income adds in full to reserves.  The same $1 in bank net income will, on average, convert to .78 cents of additional equity.

Banks have multiple sources of capital options.  Of the second quarter’s $55.3 billion increase in bank capital, 40% came from additional stock and 60% from retained earnings.

But simple share capital comes with a price and longer term expectation.   The price is whatever the dividend paying practice is for the bank. That is, the bank pays rent to use their owner’s capital.

At June 30, banks paid 51.9% of their earnings in dividends.  Credit unions have no such “dividend” requirement, so it is “free” or no cost, in this second meaning as well.

Moreover, bank owners expect to see the value of their shares appreciate over time, a factor easily monitored by the daily stock price.  Or through comparisons with multiple bank stock indices.

If a bank’s stock price falls below these industry indicators over time, investors can sell, sometimes to owners who will seek better returns or new management.

False Comparisons

So when anyone starts to equate credit union reserve levels with bank capital ratios as an industry standard applicable to all, it is a false comparison.

The purpose of cooperative design is to provide financial services in the member’s best interest.   One of the advantages credit unions have meeting this goal is that there is no conflict between the returns to owners and the benefits offered consumers.  They are one and the same.   In banking this tradeoff occurs continuously.

Credit union’s capital advantages versus banks are real and measurable.  False comparisons not only mislead credit unions and the public; but it has the paradoxical consequence of causing some to lament the absence of capital options used by banks.

What these advocates miss is the costs of these alternatives and the tensions in allocating income between the returns required by capital providers and consumer benefit.

The Ultimate Advantage

Credit union’s simple leverage ratio has worked as an all-sufficient measure of capital adequacy for over 110 years.  But its most conclusive advantage noted by one observer is something more: “It’s the genius of simplicity. Any fool can get complicated.”

 

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One Photo, Hearts on Fire, a Credit Union and Community Respond to a Vital Human Need

Clearwater Credit Union, Missoula, MT, is involved with solutions to one of the most difficult challenges facing their community, the nation and the world: refugee immigration.

Every day this story moves from Afghans on the front page to Haitian migrants huddled under a bridge over the Rio Grande.  Politicians pose and procrastinate while hundreds of private organizations, individuals and communities respond to this never-ending need for human relief.  The temptation to stir up public fear is never far away.

This is the story of how Clearwater and its community joined to respond to this on-going human tragedy .  

Founded in 1956 by eight police workers, Clearwater Credit Union is the second largest of Montana’s 47, with over $850 million in assets plus a $250 million mortgage servicing portfolio. 

It is the state’s largest Community Development Financial Institution (CDFI).

In 1979 Missoula was a resettlement community for Hmong refugees from Southeast Asia, allies during the Vietnam war.  Today, that community includes farmers, food service operators and active vendors in local open markets.  The forty year history of this immigration experience is described in this 2016 article  in the Missoulian:

While their contributions to the outdoor markets are perhaps most visible, first-generation Hmong immigrants and their offspring are bankers and real estate agents; decorated war heroes and high school valedictorians; sports standouts and chefs; entrepreneurs, business owners and probably a dozen other things around town.

The Need Arises

In 2016 the refugee resettlement needs rose again in Missoula with people from Syria, the Congo, Iraq and Eritrea trying to find a new place to raise families, often following harrowing escapes.

The turning point for the credit union and many in Missoula was the picture of Alan Kurdi, a three year old lying on an island beach off the coast of Turkey.  His mother and brother also perished-all Kurdish refugees hoping, somehow, to get to Canada.

In memoria aeterna erit justus  (The righteous-innocent-will be in everlasting remembrance)

The still boy beside moving waters. This face of tragedy energized a community.  

Mary Poole, who had been a tree-climbing arborist before her first child, found the photo gut wrenching.   She was determined to do something and raised the topic with her local book club. They began research to find out what worked well in other successful refugee programs. Montana was one of only two states that did not have a path to welcome refugees. 

This grassroots group invited the International Rescue Committee (IRC) to open an office in Missoula and serve as the city’s resettlement agency, creating that path.  They then founded a 501(c)3,“Soft Landing Missoula”, to support newcomers and connect them with all aspects of community life.  

Her story and this remarkable organization, can be seen in this 2017   8 minute video.   

Transforming the Credit Union

Jack Lawson became Clearwater’s CEO in 2013.  His prior roles included Founder and CEO of Brooklyn Cooperative FCU (1998-2008) and COO, Self-Help FCU ( 2008-2013).  After making sure the trains ran on time, Jack posed the question how the credit union could differentiate itself for its employees, members and from competitors.  The credit union chose to implement a values-based approach to business strategy.  

The history of this transformation and what it meant for the credit union’s priorities  is described  in their 2018 Annual Report.  As Montana’s largest CDFI and their strategic repositioning, refugee settlement was exactly a situation for which the credit union intended to have a positive impact.

Jack too had been moved by the photo. The credit union was chosen by the local office of the International Rescue Committee (IRC) to be the designated provider of financial services for refugees.

As Jack related: “It was an easy fit for us.  We saw it as a way to improve the financial well-being of some of our most vulnerable new neighbors.” This support involved the following initiatives:

  • Becoming a financial services provider for both Soft Landing and IRC
  • Coordinating with IRC to provide financial accounts for all incoming refugees
  • Adopting telephone bank translation services, at the credit union’s expense, to help each branch team serve people speaking languages they do not know-for example, Swahili, French, Tigrinya, and Arabic.   
  • With IRC, developing financial education classes for refugees to help them understand the US financial system, products, and services
  • Providing credit builder loans to build credit histories for the new arrivals
  • Contributing tens of thousands of dollars of philanthropy toward Soft Landing and IRC
  • Publicly celebrating the credit union’s work with the refugee community to help normalize their presence as neighbors

Refugees typically have no credit or personal financial history. The credit union teaches them how to participate in the financial system and establish a personal record.  The credit union has now hired its first refugee employee from among those  who have resettled in the community over the past five years.  

But the credit union’s role was much broader than offering financial services. As related by Mary Poole, CEO of Soft Landing:

“I met Jack on a soccer playing field.  He is part of the community and attends multiple public events. He knows the community and cares for its people because he is a part of it.  He came to us and asked what the credit union could do.  They supported local sporting events, annual fundraising, provided volunteers–we now have a CCU employee on our Board.  

There is a whole culture at the credit union reflected in their support for our work.  This is not just part of Jack’s job or the credit union’s service efforts.   It is how they interact with everyone and view their mission.  They are a thought leader in the local and world community-it’s the culture of the credit union.”

In the new federal fiscal year starting October 1, Soft Landing anticipates 75 Afghan and 150 other country refugee arrivals will be resettled in Missoula by the International Rescue Committee.  When Soft Landing first announced the idea of welcoming new neighbors in 2015, over 300 community members signed up to volunteer to help with school, housing, learning English, transportation and the dozens of other immediate personal needs of new arrivals- all before a single refugee came to town.

This interest has not faded, and has recently been  invigorated by the needs of  incoming  Afghan evacuees. Community connections are what makes these life transitions effective. The programs also celebrate the diversity, skills and experiences refugees bring to their new community.  

The Credit Union’s Strategy

Having moral imagination is expected of leaders, but nonetheless difficult to fully practice. Many in positions of authority ignore the imperatives of ethical truth in moments of life’s difficult choices.  It is much easier to follow the utilitarian pragmatism which suffices for many a leader’s everyday decisions.  

But there is another model.   To be moral is to be oneself.   Instances of compassion multiply and attract others of similar purpose. A person with this leadership capability is celebrated in the oldest of all literature:

Beatus vir, qui timet Dominum. . .

Generatio rectorum benedicetur.

Et justitia eius manet saeculum saeculi.

Exortum est in tenebris lumen rectis

Blessed are those who fear the Lord. . .

The generation of the upright will be blessed.

And their righteousness endures for ever and ever.

Unto the upright there arises light in the darkness. 

That is the vision Jack has set for Clearwater.

An Example of One Refugee Family: From the 2018 Clearwater Annual Report 

A refugee family moved to Missoula from Eritrea, Africa. Thanks to the credit union, they had the help they needed.

On average, it takes a refugee two years to resettle — that’s two years of waiting and wondering what’s next. Here’s how we helped Desbele and his family make themselves at home.

Desbele Tekle and his family came to Missoula from Eritrea, Africa, in May of 2017 during the magic of a Montana springtime. His sister and her family came too, and they all quickly grew to love the mountains, the people, and the “long-running river.”

Staff from International Rescue Committee (IRC) Missoula met the family at the airport and brought them to their new home. After settling in, Desbele and his wife Samrawit attended our “Understanding the U.S. Banking System” class for refugees, which IRC Missoula and Clearwater Credit Union created together.

This class teaches families like Desbele’s how to write a check, use an ATM machine and debit card, and understand the difference between a savings account and checking account, with trainings offered in Arabic, Swahili and Tigrinya through on-site interpreters from IRC Missoula.

The Family Needed a Car

Some challenges of resettlement are distinct, like language and culture.  Others are universal.  In a family of six, everyone has different schedules, Desbele’s children (ages 5,8, 13 and 15) go to daycare, elementary school, middles schools and high school.  Any parent will tell you that four kids in four schools plus after school activities, will make transportation tricky.  

Clearly they needed a vehicle.

Desbele went to a dealership first, where he tried to navigate a car purchase with a $500 credit card in hand. When that didn’t work, he called a friend (our translator for this interview) and together they went to our credit union.  Because of the banking classes he had taken, Desbele knew we would be able and willing to help with his first purchase here.

With a loan from the credit union, Desbele was able to purchase a minivan Now he can run errands and transport his entire family to church and school.

He can also get work.  Back in Eritrea, Desbele was a midwife.  Now, because of the car, he can make the commute to the Village Health and Rehabilitation Center, where he’s now employed.   Desbele is thrilled to be working again in the medical field. 

“So happy getting a loan because otherwise, it would take a very long time to get money to get a car, which would distort our plans.  This opportunity allows us to dream.”

With his family all together, a reliable set of wheels, and help from the local credit union, Desbele and his family are finding their place here in America — a place where their dreams can come true.

Recently, that dream led them across the country to join up with long-separated family and friends and a life in another city.  The start and “soft landing”they experienced  in Missoula provided them a solid foundation for success in their new home as well as life-time friends to return to visit in this little mountain town.

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“Institutional Memory” Keeps a Student Co-op Relevant for their Community

NASCO is the acronym for the North American Students of Cooperation.   The organization serves student cooperatives, primarily those providing housing and dining options on college campuses.

Their monthly newsletter presents stories about their members.  This month’s edition linked to an article in The Oberlin Review, the student newspaper published on October 8th.

It opened as follows: After temporarily closing its doors during the pandemic, the Oberlin Student Cooperative Association (OSCA) has resumed housing and dining operations.  Harkness House member Tal Clower says, “It’s so important that we make first-and second-year students aware of OSCA because it gives people a sense of place-a special community that makes you feel like you belong.”

The full article is here.  

I found several points insightful as an example of the appeal of cooperative solutions.

  • It is a student-owned, nonprofit organization that offers housing and dining services to almost a quarter of Oberlin’s students.
  • An OSCA member since 2018, a senior, said the co-op experience provides an intimate, close-knit community, and has given her skills she feels will inform the rest of her life.
  • Preserving co-op traditions is the most important way to attract returning students now. In house meetings, older students are presenting Harkness House’s “personality” to potential members.
  • So vital is preserving OSCA’s historical role, that campus co-ops such as Harkness and Tank (another dining option), have created “institutional memory” positions. These story collectors document newsworthy events, take pictures, record oral histories, write articles, and tell the co-op’s role as OSCA reintegrates into daily life on campus.

What Credit Unions Can Take Away

While this story is location and business specific, the re-introduction of the coop option to a new generation is an ongoing challenge no matter the service provided.

Re-presenting your organization after a partial or full closure due to Covid is a universal challenge.   How do you restore the “sense of place” where members feel they own and belong?   Do you have a process to document your institutional memory?   What kinds of creativity will be necessary to reintroduce yourself into member’s lives, especially as they have become more proficient in on-line search options?

How might a credit union partner with these student led coops to broaden their experience with other coop services?  NASCO has a list of these campus-based student owned housing efforts.  This feels like a win-win situation for a credit union seeking the next generation of members.

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Combinations, Corporations, Culture and Credit Unions

Are credit unions corporations?   Not in the technical legal sense, but in the way they see their role in society as they grow?

A critic of many aspects  of corporate activity is writer Jared Brock.   His posts cover many segments of endeavor, but always come back to an institution’s impact on individual lives.

Here are some of his recent assertions:

The entire point of multinational corporations is to shatter local resilience and self-reliance, disconnecting people from land and place and generational skillsets, creating a system of utter corporate dependence.

But as you can see, much of our shopping is human-scale and relational.

If you’ve ever been to a corporate “community event” or witnessed a corporate-created “grassroots campaign,” you know exactly what I mean. Everything’s a bit sanitized and clean and proper and nice and… off.

That’s because corporations aren’t relational — they’re transactional.

They can’t give freely and creatively.

Their legal fiduciary reason for existence is to take.

And human beings can smell it from a mile away.

People create culture → Corporations kill culture.

A question for credit unions:   Given his critique, do mergers of financially sound and long serving credit unions promote cooperative culture? Or are they examples of the transformation to a corporate mindset?

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Learning from Other “Movements”

Richard Rohr is a Franciscan Scholar who  created the Center for Action and Contemplation in Santa Fe, New Mexico.

His writings focus on the universal themes found in all spiritual traditions.  Often his concerns are directed at the transformation of religious activity as a source of hope and societal betterment through love, to becoming part of established authority and values.

Richard: It’s possible to trace the movement of Christianity from its earliest days until now. In Israel, Jesus and the early “church” offered people an experience; it moved to Greece, and it became a philosophy. When it moved to Rome and Constantinople, it became organized religion. Then it spread to Europe, and it became a culture. Finally, it moved to North America and became a business. This isn’t much of an exaggeration, if it’s an exaggeration at all. The original desire or need for a “Jesus” experience was lost, and not even possible for most people. Experience, philosophy, organized religion, culture, business—in each of those permutations and iterations, Christianity was seen as above criticism. It simply was the religion, the philosophy, the culture.

Parallels for the Cooperative Movement

Credit unions are just over a century old versus the two millennia of Christianity’s evolution.   But it is hard not to see a similar transformation occurring in this very short experience.  From a movement, to a self-supporting system, to an industry, and finally just becoming another option in the financial services business sector.

The “member’s best interest” has become a rhetorical phrase to justify leadership actions, organizational priorities and political lobbying positions that have nothing to do with member’s well-being.

While individual credit unions may pursue their own plans for a while, the two strategic choices would appear to be:

  1. Continue the transition to becoming an indistinguishable part of the broader banking industry, or
  2. A reformation where the member’s involvement and benefit are once again the primary reason for a credit union’s being.

Is there a third choice?