The Credit Union Give-Back Model: Proving you deserve your tax-exempt halo

Credit unions have long positioned themselves as the good guys in financial services—member-owned, community-focused, and driven by a mission to serve rather than profit. But how well are they living up to that mission?

Banks argue that credit unions have grown so large that they operate more like profit-driven banks than community-centered cooperatives. The sticking point? The tax exemption. Credit unions defend their tax-free status by claiming they return that value to members and the community. But how many are actually measuring it? Spoiler alert: If you can’t quantify it, it didn’t happen. And guess who’s taking notes? Your for-profit competitors who pay taxes and think you’re skating by with an unfair advantage. 

Enter the Credit Union Give-Back Model—a framework designed to quantify ways credit unions deliver on their mission. Many credit unions I work with have something in place that measures community giveback, but it’s often inconsistent with how it’s tracked and communicated to the market. What I’m proposing credit union leaders do is to break down member give-back into four major components: Interest Rate Differential, Fee Savings, Member Dividend Payouts, and Community Reinvestment, and then bring it all together in a single measure: Net Member Benefit. By tracking these areas, credit unions can not only demonstrate their impact but also arm themselves against critics who claim they’re coasting on outdated tax breaks. Let’s unpack each component in detail. 

Credit unions often promote their lower loan rates and higher savings rates as the ultimate member benefit. But how do you quantify that in a way that resonates with regulators, lawmakers, and members themselves? The Interest Rate Differential metric does just that. 

Here’s how it works: Compare the rates on key products like mortgages, auto loans, and personal loans against average rates at local or regional banks. The same goes for deposit rates—calculate the premium members earn by parking their money at a credit union rather than a bank. 

Loan Interest Savings = Loan Balance x (Bank Avg Rate - CU Rate) 

Deposit Premiums = Deposit Balance x (CU Rate - Bank Avg Rate) 

For example, if a credit union member has a $20,000 auto loan at a rate that’s 0.5% lower than the bank average, that’s a $100 annual savings for that member. Multiply that across your entire loan portfolio, and you’re starting to get a clearer picture of just how much financial value you’re creating. 

Credit unions pride themselves on lower fees, but how often do they quantify those savings for members? Overdraft fees, ATM surcharges, account maintenance fees—all of these are ripe for comparison against the going rates at banks. And I don’t intend to ruffle too many feathers here, but the amount of fee income credit unions earn on Overdraft or Courtesy Pay programs has raised the eyebrows of folks in Washington, although the current administration appears to be backing off the pressure, for now. Regardless of your fee strategy, to really drive home the point, you need to put a dollar figure on those savings. 

Fee Savings = (Bank Avg Fee - CU Fee) x Transaction Volume 

Let’s say the average overdraft fee at a bank is $35, but your credit union only charges $20. If 10,000 overdrafts occur annually, that’s $150,000 in member savings. Don’t just list this in an annual report; turn it into a member-facing campaign that reminds people of the value they’re getting. 

Member dividends are one of the most tangible ways credit unions return value. Unlike banks that funnel profits to shareholders, credit unions distribute earnings back to members in the form of dividends. But are you effectively communicating how much you’re paying out? And how does it compare to what members might earn at a bank or fintech? 

Dividend Payouts = Total Dividends Paid - Market Avg Dividend Payout 

If a credit union pays out $500,000 in member dividends annually while the market average is $300,000, that’s $200,000 in added value. It’s a compelling story—one that underscores the cooperative difference. It’s not enough to just say you’re paying dividends. Show it and show it loud. 

Community reinvestment is where the feel-good, mission-driven stories often begin and end. But it’s not enough to say, “We donated to the local food bank.” How much did you donate? How many volunteer hours did employees contribute? What’s the monetary value of those hours? 

Community Reinvestment = Grants + Donations + (Volunteer Hours x Hourly Value) 

Assigning a dollar value to volunteer hours—say, based on the Bureau of Labor Statistics’ average wage—helps credit unions quantify their community impact. If your staff collectively volunteers 1,000 hours valued at $25 per hour, that’s $25,000 in community give-back. Now, add that to your grants and donations, and you’ve got a figure that tells a more comprehensive story. 

Net Member Benefit is the sum total of all the ways you’re delivering financial value and impacting your communities. Think of it as your bottom line of member value. It’s the ultimate answer to the question, “Why should we care that you’re tax-exempt?” 

Net Member Benefit = Interest Rate Differential + Fee Savings + Member Dividend Payouts + Community Reinvestment 

This aggregate figure is what you use to demonstrate your impact to members, regulators, and—yes—the media. It’s not just a number; it’s your value proposition. If that number isn’t growing year over year, it’s time to reassess how effectively you’re fulfilling your mission. 

Credit unions can’t rely on feel-good stories and cooperative mantras to justify their tax-exempt status. In a highly commoditized, competitive financial landscape, they need to prove their impact in measurable, quantifiable terms. The Credit Union Give-Back Model provides a framework to do just that. Like all things involving data, the model is only as good as the data you’re willing to track. Are you ready to put this model to work? Because if you’re not tracking these metrics, you’re just giving your competitors more ammo to claim you’re not pulling your weight. And if you’re not willing to measure it, maybe it’s time to rethink the whole tax-exempt thing. In a world where banks are paying taxes and fintechs are eating your lunch from an experience standpoint, sitting back and hoping members “get it” is no longer a strategy—it’s a liability.