In October, CUNA presented the 2014 Community Credit Union of the Year Award to two credit unions (two for honorary mention) for their exemplary displays of community involvement and positive influence in the field of service.
Among the winners was Alternatives Federal Credit Union, Ithaca, N.Y., which received first place in the less than $250 million in assets category.
Alternatives Federal Credit Union’s Directory of Community Relations and Development, Karl Graham, participated in a Q&A with Credit Union Magazine providing great advice to other community credit unions and sharing insight on new initiatives.
CU Mag: Being strong believers in financial education and in looking at your Free Tax Preparation program, do you have new initiatives/ideas/programs in the works to help educate your members?
Graham: Rather than confine financial education to specified programs and staff, we seek to embed financial education across all points of member contact at the credit union. We offer formal financial education through our community programs. Loan officers and member service staff have also been important sources of guidance and information for our members. We are now providing member service and loan staff with formal financial education training utilizing CUNA’s Certified Financial Counselor eSchool. This formal training will allow a greater number of staff to assist members in a more comprehensive way.
We are also implementing products and services to make it easier for members to save for emergencies or important life events. The Free Tax Preparation program offers clients a 12-month share certificate paying 10% interest. This grant supported product incentivizes clients to save a portion of their tax return for the inevitable financial emergency that will occur sometime during the year.
Another recent incentivized savings program is for graduates of our seven-session Money Management course, MoneyWise. In addition to the standard focus on tools and tactics for tracking spending and saving money, MoneyWise asks clients to recognize there is frequently an emotional aspect to spending. We do not tell clients how they should or should not spend their money. If the client tracks their spending and is aware of spending triggers, they can better manage their finances. If the graduate saves $10 a week for 10 months, they earn a $100 bonus. The goals of this program are to encourage a savings habit and help the graduate achieve a $500 emergency fund.
A third program, which began in late 2013, is for elementary school students eligible for free or reduced lunch. The student and family commit to saving $2 a week at one of our elementary school credit union branches. The funds are deposited into a share certificate earning 10% interest. In this program by saving the minimum $2 a week, a kindergarten student will have $2,000 when they graduate high school. Our goals are to develop a regular savings habit in the student and incentivize families who are not currently saving for postsecondary education for their children. This program, like the tax program certificate, is grant supported.
CU Mag: What is essential for being a successful community CU?
Graham: In our opinion, to be a successful community credit union requires an understanding of the financial needs of potential members and the development of products and delivery systems which are customized to the target market. Doing so will help the credit union occupy a unique position in the mind’s eye of potential members in the community.
Early credit unions cultivated unique loyalty through service to people with a common bond. Community Credit Unions can build that same affinity when they develop a mission and vision that resonates with their audience and separates them from banks. In our instance, Alternatives has defined itself as a Community Development Credit Union. We exist to serve the underserved. Therefore, services are designed to meet the needs of people who are often underbanked and outside the financial mainstream. We made our deposit products less restrictive and loans easier to obtain, in some cases challenging traditional assumptions of banking. Even within the Community Development space, the nature of poverty can vary greatly from one community to another. Rather than offering a one-size-fits-all, cookie cutter solution, community CUs are positioned to be uniquely responsive to the challenges of their service area.
CU Mag: What are the biggest challenges you’ve faced and how have you overcome them?
Graham: One of the most significant challenges we've faced is communicating our brand to a community-wide audience.
Many people are unfamiliar with credit unions in general. For those who are familiar with the traditional attributes of credit unions, Alternatives’ status as a Community Development Credit Union requires further explanation, as our credit union serves as a financial and social service hybrid with a mission to build wealth and create economic opportunity for underserved people and communities.
For some of our lower-income members, the phrase "credit union" can be a barrier, based either on misperception or a previously unsuccessful relationship with another financial institution. To combat this, we provide a very informal, un-banklike environment that helps create a unique sense of place (which lends itself to the tagline, "where good things happen").
In addition, our marketing materials are designed to provide a different visual representation from traditional financial institutions, while also conveying the professionalism one would expect from someone trusted to hold deposits. While our products are mostly designed for an underserved audience, we rely on the support of members of higher incomes, both as savers and borrowers as well as donors to our 501(c) 3 affiliate, Alternatives Impact. Communicating a set of mutually reinforcing value propositions to different audiences is an ongoing challenge.
Another ongoing challenge has been to take ideas, products and services which have made a significant difference in the lives of members and bring them to increased scale. Internally, we have referred to this as migrating from a "big little" credit union to a "little big" credit union.
Technology is paramount in being able to provide members with expected ease of use while enabling Alternatives to maintain the operational efficiency necessary to deliver the broad range of services we offer. Within the last two years, Alternatives converted to a technology platform used by most of the largest credit unions, which has improved upon many aspects of the member experience. Through investments in technology and training we are positioning ourselves to be an even more compelling factor in the financial well-being of our community.
CU Mag: What is the best advice you can give to other community CUs?
Graham: The best advice we can give other community development credit unions is to differentiate themselves from competitors. Given our cooperative structure, community credit unions have a unique opportunity to engage members. Don't be a wannabe bank! Participate in the community at a level which builds trust and provides insight into people's concerns. Find local economic problems to solve, define what potential members need most, and develop solutions that are uniquely responsive to the needs of the target audience, which in some cases may look very different from what traditional financial intermediaries may provide.
CU Mag: What are examples of small businesses that have benefited from your Business CENTS program?
Maria Klemperer-Johnson, Hammerstone School
Maria is a carpenter and contractor, timber-frame builder, orchard owner, and most recently (in 2013), founder of the Hammerstone School, which teaches carpentry courses for women. Several years ago, when Maria and her partner were planning their apple orchard, she attended the Farm Business Planning Course co-taught by Business CENTS and two other local organizations. Relationships developed through the farm business course led her to pilot her initial women’s carpentry course, with planning help from Business CENTS. The class was met with great enthusiasm and has evolved into a year-round carpentry school for women, offering a growing array of workshops and classes. Maria has continued to work with Business CENTS as this new venture grows, participating in our Internet Marketing Workshop Series and individual consultation. The assistance she’s received also guided her through the process of successfully applying for business loans for both her orchard (through the farm Services Agency) and Hammerstone (through Alternatives). Maria so values the services she’s received from Alternatives, she ran for and won a seat on our Board of Directors!
Greg Kops/Megan Pugh, Think Topography/Blink Digital Graphics/Studio West
Greg launched Think Topography, a marketing and software development consultancy, with several business partners about four years ago. In 2012, the group formed Studio West, a co-working business space that became Think Topography’s physical office as well as a side business and neighborhood hub of entrepreneurial activity. The partnership then fizzled, and Greg sought Business CENTS’s guidance on how to untangle the business finances and tax obligations. Meanwhile, Megan Pugh, a 2010 graduate of CENTS’s “Getting Down to Business” course, had brought her design company, Blink Digital Graphics, to Studio West as one of its founding tenants/members. Several collaborations later, Greg and Megan have recently joined their business together into a new partnership.
Paul Carman, Keyrow Tours
Paul Carman spent years living in Italy—studying theology in Rome, giving tours at the Vatican, and perhaps most importantly, developing a deep appreciation for and knowledge of all things Italian. When he returned to the United States, he wanted to start a new career that would let him share his love of Italy with others. He developed and planned his business concept—a company offering all-inclusive, small-group tours to Italy—in the “Getting Down to Business” class in 2007. That first year, he offered two group tours and filled one. In 2014, he offered and filled eight. In the intervening time, Paul has taken advantage of nearly every service Business CENTS offers, from workshops to individual consultation to networking opportunities to our Business of the Month program. He’s now giving back to aspiring entrepreneurs, sharing his experience as a mentor and a speaker in our classes. Grazie, Paolo!
Polly Wood, Toko Imports
Polly’s entrepreneurial spirit had been at work for years in several part-time projects when she was approached by Toko Imports, a retail shop selling drums, musical instruments, and other items from around the world. Long-time owner Tom wanted to retire and saw a potential business successor in Polly, a drummer who was well connected to the local music scene. Polly saw an incredible opportunity, but it was much larger than anything she’d attempted before. She turned to her coaches at Business CENTS for help first evaluating the idea’s feasibility and subsequently preparing a business plan, developing and revising financial projections, and exploring financing options. Ultimately, she was able to secure a business loan through Alternatives that provided funds for her purchase of the business, store improvements, and new inventory. Earlier this fall, Polly proudly welcomed Ithaca Mayor Svante Myrick and other guests to Toko’s official ribbon cutting under her new ownership!
CU Mag: What are some of the places your staff volunteers at for three hours each month?
Graham: As part of our community development philosophy, Alternatives encourages staff to take part in community and community volunteer activities. The credit union will allow a staff member up to three paid hours each month for participation in volunteer activities. This policy has been in place for at least the past 20 years. Not all staff who volunteer seek payment.
Currently we have 20 staff members volunteering for 47 local, state, and national organizations. Self-reported volunteer hours total 1,869 hours annually. A few examples of organizations served by our staff include: The Cancer Resource Center, Foodnet/Meals on Wheels, Ithaca Neighborhood Housing Service, the Ithaca Youth Bureau, the Ithaca Urban Renewal Agency, Cornell Lab of Ornithology, New York Credit Union Foundation, Appalachian Community Capital, CDFI Coalition Membership Committee, Latino Civic Association, Boys Scouts of America, Church of the Epiphany.