Board training on a budget

Small credit unions are adept at finding low-cost options to educate and motivate board members.

January 1, 2024

Benjamin Franklin once noted, “An investment in knowledge pays the best interest.”

Yet, too many board meetings focus more on interest rates and other operational issues than on addressing strategic issues, anticipating future member needs, and embracing continuous learning.

Boards often fail to receive proper training and education around their true roles as strategic leaders of their credit unions, says Tom Sakash, CUNA’s manager of small credit union initiatives.

“The most important job of a credit union board is to set the strategic direction for the organization at the highest level,” he says. “Too many boards spend the majority of their time in the weeds and on the day-to-day operations of the credit union.”

Board members don’t typically come from financial backgrounds, Sakash says, so it’s more difficult for them to understand the context of the financial services industry.

“Understanding the options current and potential members have with other financial services providers is becoming more difficult,” he says. “Knowing your competition is crucial for boards so they can make the appropriate strategic choices.”

Meeting training requirements

At a minimum, directors need training about board roles and responsibilities, financial management and analysis, and risk management, says Alison Carr, consultant at Your Credit Union Partner.

“The biggest issue we see in our work with credit unions is the lack of development plans at the board level,” she says. “Boards need to have a development plan that outlines mandatory training topics. Then they need to budget for that training and have annual assessments and accountability for completing the training.”

Many credit unions include training and educational requirements in board policies or director job descriptions.

‘Directors need to be aware of the new risks and challenges we’re being exposed to every day.’
Jennifer Hogan

At Community Credit Union in Lewiston, Maine, all board members are required to attend yearly Bank Secrecy Act (BSA) and red flag training that covers identity theft, fraud, and information security.

“New directors are required to attend an orientation, which includes training on our financial statements, the credit union difference, and other timely topics,” says Jennifer Hogan, CEO at the $99 million asset credit union.

According to NCUA, directors should have at least a working familiarity with basic finance and accounting practices. This includes the ability to read and understand balance sheets and income statements, “and to ask, as appropriate, substantive questions of management and the internal and external auditors.”

This should occur at the time of election or appointment, or within a reasonable time to not exceed six months, the agency reports.

In addition to BSA training, Harvester Financial Credit Union in Indianapolis holds educational sessions during board meetings about topics such as the current expected credit losses standard. Board members are closely tied to the credit union’s more than 5,000 members, staying in touch with their needs and concerns, says Jason Ford, president/CEO at the $71 million asset credit union.

Reaching out to others in the movement also enables board members to not only learn new information, but also collaborate, share, and support others.

Caitlin Brama, CEO at $17 million asset Farm Credit Employees Federal Credit Union in St. Paul, Minn., invites the Minnesota Credit Union Network’s (MCUN) compliance specialist to provide BSA and risk management training. Hogan also turns to her network.

“I’ve asked other credit unions to Zoom into board meetings and share their expertise or experience in different areas,” she says. “This was a successful strategy we used this past year for strategic planning. We discussed contact centers, cannabis banking, interactive teller machines, and more. I invited credit unions from across the country to share their stories and engage in a question-and-answer session with the board.”

At Community, Hogan and the board chair are responsible for ensuring board members meet training requirements. At the end of each year, the credit union sets a board meeting calendar for the upcoming year that includes training for specific months.

Board members also are encouraged to attend an additional educational opportunity outside of board meetings.

“The required sessions are held during regularly scheduled board meetings, so it’s not something extra they have to do. We try to incorporate as many of the training requirements into board meetings as possible,” Hogan says. “I track this and follow up with board members who may have missed a training to schedule one-on-one time with them. Attendance is tracked in the board minutes.”

Hogan notes that training is more effective when the materials are shared in advance of the board meeting.

“There’s an expectation—that the directors set themselves—that everyone reviews the materials in advance and comes with at least one question for discussion,” she says. “We also review the materials at the meeting, but spend most of our time with their discussion questions. This typically leads to great conversation and a better understanding of the topic.”

Clearly communicating the timelines of requirements and gaining commitment is crucial, says Brama.

“Planning ahead of time and discussing the deadlines as a group helps tremendously,” she says. “It allows everyone to be on the same page, and leaves little room for miscommunication.”

Next: Hungry for knowledge

Hungry for knowledge

Brama appreciates that Farm Credit Employees Federal directors are engaged and hungry for knowledge.

“My board is open to continued opportunities to learn more about not only our credit union, but also the credit union difference,” she says.

While the credit union’s directors are well-versed in financials and compliance, Brama says they’re now expanding their knowledge about how credit unions operate differently from banks.

She’s considering hosting a National Credit Union Foundation Exploring Why workshop to help directors better understand and connect to the credit union difference.

Hogan says she’s fortunate her board is invested in the future of the credit union and its mission. “They understand the importance of training and have embraced it as part of their commitment.”

At Harvester Financial, all board members are receptive to training, and newer board members are especially eager to learn. “They’ll ask me to recommend webinars or other options,” Ford says.

Aside from required training, Community provides additional opportunities at board meetings focused around topics or issues the credit union is exploring or preparing for. Hogan uses NCUA board training videos that are available on YouTube.

I’ve asked other credit unions to Zoom into board meetings and share their expertise or experience in different areas.
Catilin Brama

Before examinations, she assigns board members to watch NCUA’s examination series. “Then we discuss it at a board meeting to ensure they understand CAMELS ratings,” Hogan says.

When the credit union looked into community development financial institution (CDFI) certification, the board watched the video series about CDFI to provide a different perspective.

The board also uses these and other resources, including videos about financial statements, financial ratios, and supervisory committee responsibilities, for new board member orientation.

Hogan sometimes includes articles relevant to the credit union’s strategic initiatives in the board packet. “I’ll ask everyone to read it, and then we take time to discuss it,” she says. “Board members have also brought articles to me to bring to the board for discussion.”

The biggest barriers to training at small credit unions: cost and time.

“We don’t send board members to national conferences, and it’s rare for us to bring in a focused national speaker,” Hogan says. “We try to take advantage of our state’s volunteers’ conference so directors can get exposed to some national speakers and network with other board members from across the state.”

As a select employee group-based credit union composed of members in other states, Farm Credit Employees Federal primarily meets virtually. However, Brama knows the value of in-person training.

“I’m a firm believer that in-person trainings are often more effective, as there are little outside distractions,” she says, although they’re not always conducive for board members who live outside the state.

Brama seeks to overcome this challenge by keeping informed on virtual offerings from MCUN and the national trade association.

It’s crucial to keep board members informed and up to date, Hogan says. “Things are changing so fast, and directors need to be aware of the new risks and challenges we’re being exposed to every day.”

Brama believes that without an informed board, she doesn’t have a strong leadership team to hold her accountable and “push me to my full potential to better serve our members and our staff. We’re one team after the same mission, from the board of directors to our front-line staff.”

“It comes down to the CEO’s and the board’s willingness to be strategic and think forward to the future,” Carr says. “Boards can no longer operate as they did 10 or 20 years ago. As new talent comes into the C-suite, we’re seeing inroads being made.”