Chip Filson
“Cooperation made the movement great. Yet many do not realize that there are still as many ways to cooperate as there were in the past. . . what I mean is going beyond the attending of meetings and sharing of ideas, but instead pooling of resources, mainly in the form of CUSO’s.”
(Ed Callahan April 1988, Callahan Report)
“Out of many, one” is the motto of the United states. The many states joining to form one union.
This is often how we approach any project, piece by piece, brick by brick, member by member.
Yet cooperative design rests on a different premise. From a place of community (later called field of membership), the credit union emerges to serve individual needs.
Community is the foundation of cooperative design. Even as individual credit unions become financially self sufficient (post sponsor era), and accountable for their individual performance, sustainability requires continuing to create a sense of community. This may be geographic, values based, common employment or even shared purpose.
A shared commonality is the key to maintaining member relationships, which are the real capital on which every credit union depends.
Many factors are powering the multiple fintech startups in the financial sector.
The advantages of internet-based platforms are clear: low startup costs, rapid and continuing market responsiveness, easy scalability, preferred channel for younger demographics just entering markets, etc.
An example of the fintech ecosystem’s many segments can be read here.
But another reason financial services are subject to such extensive external disruptive efforts is that the barriers to entry for traditional charters are enormous. New charters for both banks and credit unions are costly, time consuming and closely monitored.
As a result, de novo charters are few and far between. Five new CU charters have been approved by NCUA in the last decade. The average organizational effort is more than four years, and often longer.
For cooperatives, incumbent credit unions are protected from new entrants by a massive regulatory chartering obstacle that effectively prevents new competitors, no matter how much needed by organizers.
However, if one looks at the number of new and innovative CUSO startups by credit unions, the appetite for innovation and new solutions is clearly understood. But without an openness to new charters, these ventures will be outside the traditional charter structure. While that may be a necessary short-term path for innovation, is that approach hindering a credit union’s ability to change themselves?
Outsourcing technology innovation and solutions to new organizations is expedient. But will it stymie more dynamic and necessary approaches in traditional credit union operations and services?
How does one retain hope in the face of seemingly contrary system ambitions, apathy for engagement beyond immediate responsibilities, and the all-consuming worship of credit union institutional success? Where is purpose in a time of national agendas dominated by topics such as cannabis legislation, CECL accounting, cybersecurity and secondary capital? How do member circumstances become a priority that supersedes traditional product messaging?
It seems the unceasing focus on credit unions’ performance constantly overwhelms the uplifting of member hopes.
How can cooperative leaders better balance competitive requirements and corporate vision? The resolution may line in a brief phrase from Leonard Cohen, the poet and composer, who wrote:
Ring the bells that still can ring
Forget your perfect offering
There is a crack, a crack in everything
That’s how the light gets in.
Today is tax filing time for consumers and most corporations. State chartered credit unions file Form 990 as a non-profit, exempt from Federal taxes by an IRS ruling.
What do credit unions have in common with the following US corporations? Amazon, IBM, Chevron, Eli Lilly Deere, etc. These companies paid no federal income tax in 2018. These are among sixty large, profitable US corporations on a list compiled by The Center for Public Integrity, which paid no federal income tax. In fact, the group collectively received tax benefits amounting to $4.3 billion that is a negative tax rate!
So, is “good company” a sufficient explanation for the credit union tax exemption? Or should it be good purpose?