I closed my last column on credit unions with the following:
Might not our local credit unions or banking institutions adopt some of the admirable practices demonstrated by Vancity or the other sustainable credit unions and banks? Given their enviable success across the triple bottom line, let’s hope they ask themselves, “Why not?” We credit union members should use our voices to encourage them.
It seems the leadership brought into manage credit unions isn’t exposed to sustainable possibilities. To see our institutions move into those directions, we need to judge the benefits of such practices and how we might accomplish that.
The credit unions’ boards are elected representatives. Every credit union has a one member-voting process. When was the last time we remember voting for board members? And how knowledgeable were we about them when we voted? Did we have any control over who might become a candidate? My investigation of credit unions’ board election processes discovered the norm is driven by a board subcommittee. They come up with members for election. The candidates are handpicked with CEO influence on the process. I’ve seen this become a who-knows-whom exercise in my interaction with nonprofit boards. A real danger is the board becoming a private club, where the CEO makes board nominations.
One approach to checking board control is reserving seats for certain constituents. Another approach is letting members nominate other members for candidacy. Nominees require 1,500-member signatures within six weeks to qualify, the same number required to run as an independent for the U.S. House of Representatives. Vancouver Credit Union Vancity has a large membership base, and only requires five letters of nomination. They show board election information on their website, something rarely done.
My research shows local credit unions reflect the national trend, acting like private businesses instead of co-ops. A Filene Research Institute report titled “Credit Unions and Cooperatives: How Charter Choice Drives Social Enterprise” showed credit unions operating within cooperative ethics in pursuit of a greater strategy.
“Member owned institutions operated in accordance with cooperative principles were one of the earliest forms of business organization that integrated the pursuit of broader social goals within a for-profit vehicle,” the report said.
A 2004 Filene report showed an opportunity being missed with these principles.
“A new generation of members awaits, one of which is more civic-minded, socially conscious and motivated by causes such as ‘green growth,’ ‘local food,’ and ‘gender opportunity,” the report indicated. “The obligation remains with credit unions to put the greatest emphasis on nurturing values, as well as generating value for their members.”
One thing studying sustainability taught me is how systems require feedback. If we want our financial institutions to grow and make money regardless of cost, silence is the key to making that a reality. However, we can let them know what we want, to make them triple-bottom-line performers. All credit unions have annual membership meetings. How well they advertise and how pro forma it is varies. Members should be able to ask questions or make suggestions at forums. Otherwise, communicating with the board mandates investigating websites for contact information.
Getting 500 or 1,500 signatures is a challenge to reforming the board’s direction through elections. One can begin by calling for a lower nomination threshold. You don’t need to wait for the board to eventually address issues of sustainability. Each member has a voice. It can be simplified by getting others to join you. It’s your credit union.
(Consultant Terry Link was the founding director of the Office of Sustainability at MSU).