Monday, August 21, 2006

Who Cares About Credit Unions?

I recently returned from a conference where I learned that 2 out 3 consumers believe credit unions should be taxed. Another statistic: more than 50% of credit union members do not know the difference between a bank and a credit union.

I believe in credit unions and I wish more folks understood our unique structure because I believe that with that understanding would come increased loyalty.

Credit unions are not-for-profit. We are not a charity and we are not a for-profit organization, like a bank. We are a cooperative. The difference is when we make money we either give it back to our members in terms of favorable rates or we set some aside for a rainy day or we build another branch or hire another quality employee. We don't have stockholders. Our members vote for eligible board of directors that happen to also be members. Every member can vote. Our board of directors are not paid.

Because we are not-for-profit only a select group of people can join our credit union, or any credit union. For Verity Credit Union, the common bond of all members is that they live or work in the state of Washington. We do pay taxes: state sales tax, federal and state unemployment tax, state labor & industry tax, federal income tax on non-credit union related activities, county property taxes, social security and Medicare taxes, and other employment related taxes. We do not pay a business tax and a federal income tax. A lot of other for-profits may not pay these taxes either, via sheltering or creative classification. At this conference I also learned that the total credit union exemption, about 1.6 billion, translate into about 10.6 billion in consumer benefits (loans, savings, etc.).

Credit unions have about a 5.8% market share in the financial services industry. Ten years ago, our market share was just over 4%. What we provide to the consumer is simple: a choice. Our not-for-profit model is unique and provide a different approach to business. I think these differences translate into a service model that is member-driven, member-focused and member-oriented.

What do you think?

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