Tuesday, March 29, 2016

"Small" Credit Unions: "Intertwined" in American Communities…?

ABA Boinkers News

I used "to sneak" access (still do!) to the ABA Bankers News for two important reasons. 

First, to try and stay attuned to the national issues - other than "those demonic credit unions"! - which were of the greatest concern to America's bankers - "know your adversaries" is generally excellent advice in the fields of business, politics, and love.  

And second, to have the chance to read the column of the then editor, Virginia Dean.  Ms. Dean was an entertaining, insightful writer with a a wicked sense of humor.  In one column, Ms. Dean did a riff off Jim Collins - the "Good to Great" guru - who was putting the finishing touches on a new book seeking to measure performance in the non-profit sector - a daunting task! Here's what Mr. Collins ended up with:   

"In the social sectors, the critical question is not, 'How much money do we make per dollar of invested capital?' but 'How effectively do we deliver on our mission and make a distinctive impact relative to our resources?'"

"The number one resource for a great social sector organization is having enough of the right people willing to commit themselves to the mission."

Collins maintains that "the right people" are "productively neurotic" and wake up every day, compulsively driven to do the best they can because it is simply part of their DNA."

Sounds about right to me!  There has been substantial back-and-forth recently on the ineffectiveness, lack of efficiency, inability to compete, idealistic "La-la land" backwardness  of "small credit unions". 
To which I'd like to respond to those smug little naysayers with this one simple statement…

  "You don't know how to count, nor do you know what counts."

And BTW, why do I admire Ms. Dean as a writer so much?  Here's how she describes the critical importance to Main Street America of "less than large" financial institutions ...

"Small, community-based financial institutions are as intertwined in their communities' inner workings as two teenagers in the backseat of 
a '69 Camaro."

(Can't beat that!)  


Anonymous said...

Everyone would like to think that to be true but that is not always the case. Remember the Congressman who thought credit unions should not be in the business of making a profit? He actually took the words not for profit literally. But then again if he did not think that way how could he have been elected. We must remember, that despite all the social issues of doing good you cannot do anything without the magic dollar. That is why for all financial institutions, the bottom line is $$$$$$$$$$$$$.

Jim Blaine said...

Wish we could at least agree on the terms "profit" and "non-profit" !

Try this formula : If a credit union earns enough from its services to pay a fair return to savers, reasonable operating costs, and to fund a "well-capitalized" reserve for safety and soundness then it is a non-profit.

If a credit union funds the three items above and returns any excess to members then net income is zero - and no tax liability, regardless of tax liability.

Anonymous said...

You are right on all points but using the wrong word; non-profit means you are a charity which means you solicit funds from others to use for whatever the charity was created to do. Credit unions and other cooperatives are not-for-profits which means we are operating a business for the benefit of the member/owners. Our tax status is conferred by congress because of our structure and our purpose which is to serve people of modest means. You and I both accept (actually embrace) the social mission to serve working class folks and I want to preserve the tax status so I can do more good in our communities. GooooHeels!!!!
Georgia Birddog

Jim Blaine said...


I stand rightfully and properly corrected... not-for-profit is the better and appropriate phrase!

Glad we're back to agreeing on the really important things in life. We all need to stop and smell the peaches!