The credit union motto of “Not for Profit, Not for Charity, But for Service” is the hallmark of the credit union difference. Every credit union executive, board director, employee, and even members should know it and its meaning. This motto goes to the very substance of what distinguishes credit unions from other financial institutions. We are “not for profit” because we place people before profits, “not for charity” despite the generosity in giving back to communities, and “for service” because credit unions meet the needs of its members and the neighborhoods they live in. My last article, Let Diversity Be The “D” In Your Credit Union’s DNA discussed the role of diversity. In this installment, we will turn our focus on the purpose of letting Not-for-Profit Be the “N” In Your Credit Union’s DNA.
Over the years, credit unions have withstood the constant and consistent criticisms of other financial institutions regarding its not-for-profit status. Largely in part because income is exempt from taxation, financial products are competitive yet affordable and fields of membership are diverse and inclusive. However, truth be told, the philosophy of “people helping people” is the driving force behind the industry’s not-for-profit status. Credit unions’ not-for-profit roots run deep and existed way before the Internal Revenue Service was established in 1862 and tax exemptions were codified. As a matter of fact, historians trace credit union beginnings as early as the mid-15th century in Europe when the Montes Pietatis translated “Mountains of Piety” were formed. These charitable institutions of credit considered by many as the predecessors of credit unions lent money at low rates of interest or in some cases no interest at all to those of poor and modest means. As faith-based, service oriented financial institutions, the average citizen was protected from the ravages of predatory lenders similar to the way credit unions provide such protections today.
That said, the notion of having a not-for-profit status should resonate within the credit union itself as well as without. Member-owners should be informed and educated to understand the reason profits are retained rather than issued as dividends for the purpose of providing financially superior banking products such as low interest credit cards and higher rate CDs. Unlike other institutions that have shareholders who are issued stock, credit unions are not driven by quarterly earnings and dividends but are motivated by providing service excellence and access to credit. Not just member-owners, but all employees should undergo an orientation regarding the credit union difference and what it means to be a not-for-profit vs. a for-profit corporate entity.
Additionally, credit union professionals, especially those who are executive officers must lead with the approach that the greatest is the least in the credit union. All are called to serve the corpus and the members. The principle of not-for-profit should encourage personnel to be motivated by service and not income. Consequently, this will in many ways limit self-enrichment. Not-for-profit is not just a tax status or lofty ideal, rather it is an everyday business mindset when practiced will contribute to minimize fraud and corruption. We know hearts cannot be legislated, but they can be directed toward the higher call to service.
Board directors also have a not-for-profit responsibility to members and to the credit union. All policies and decisions affecting the institution must be adopted in a not-for-profit manner in alignment with the duties of care and loyalty to the credit union in order to prevent self-dealing and self-aggrandizement. Directors should be the not-for-profit conscience of the credit union providing proper and steadfast oversight. To assist in that effort, credit union boards should consider creating a Board Chaplain. Like other board officers (e.g., treasurer, secretary, etc.), the Chaplain at the top of the agenda would be charged with opening board meetings with prayer and/or a reminder of the credit union’s mission and each director’s charge to be a good steward of trust. In doing so, this will help to empower employees, officers, and volunteers to let Not-for-Profit be the “N” in Your Credit Union’s DNA.