Making sure credit unions reflect their communities
The NAFCU Journal
One defining factor of 2020 was an acceleration of changes that credit union leaders may have had in the pipeline, but the global pandemic and its effects on individuals and businesses necessitated immediate implementation of plans as opposed to further study or introduction over a period of time.
A focus on diversity, equity and inclusion (DEI) within an organization and its members is one of the most important areas to move up the list of priorities throughout the industry. “Most credit unions were at the beginning of their DEI journey in recent years, but 2020 was a watershed moment for everyone,” says Paul Dionne, research project manager at Filene Research Institute. Credit unions quickly shifted from merely acknowledging the importance of DEI at an organization to actively taking steps to ensure the organization represented the community it serves, he adds.
The nature of credit unions and their ties to the community means that many already had latent DEI practices in place, says Dionne. “The next step in the journey is to evaluate what already exists and to be more intentional to fill in the gaps and create a more coherent DEI strategy.”
One way to reflect the needs and interest of a community is to make sure members and potential members see staff and leadership that look like them, says Carlos Calderon, president and CEO of OAS FCU. This diversity is not just about race or culture, it is also about age and gender of employees and volunteer board members, he points out.
“When thinking about race and culture, it is also important to remember that there are many sub-groups within the Latino population in North America,” says Calderon. A range of dialects and terminology for different countries means that just translating information into Spanish may not be effective if it is not produced or reviewed by a native speaker of the region represented in the community.
Create Development Opportunities
Another important step when hiring people is to be sure you are not just filling positions to meet specific percentages on a checklist, says Calderon. “Look for talented, skilled people first, but be open to candidates who might not normally be considered for interviews,” he says. Once hired, be ready to mentor and train people to prepare them to move into management and leadership roles, he adds.
Hiring talented employees who reflect members’ background may be difficult in some credit unions because there are specific skillsets needed, but an organization can take steps to develop talent for the future workforce and leadership positions by creating internships, scholarships and mentoring programs that give minority community members and employees the knowledge and tools they need to have a successful career in a credit union.
Mentoring does not have to occur only within the individual credit union, says Renée Sattiewhite, president and CEO of the African-American Credit Union Coalition. AACUC offers a mentoring program that connects AACUC members in the early stages of their career with experienced members to create a reciprocal learning experience.
Mentors within the credit union organization do not have to be Black or Latino, because mentoring responsibilities are the same regardless of race, age or gender, says Sattiewhite. The goal is to mentor and nurture potential future leaders, which means conversations about career aspirations and advice on what skills are needed to move upward and how to learn them, she says. “It is also important to reach out to different organizations that represent groups in your community to recruit talent,” she adds.
Diversity From The Top Down
Just as the employees with whom members interact need to reflect the community served, so do executive committees and board members. “Credit union boards and management are usually white, but I don’t think this has happened intentionally to leave people out,” says Sattiewhite. “Instead it is a reflection of human behavior that we all choose to surround ourselves with people who have things in common with us.” Thinking beyond traditional sources of board members to find people who have the skills needed on the board but are also representative of the different facets of the community is the first step to building a diverse board.
Building a diverse board, management team and workforce is not an overnight achievement, points out Pablo DeFilippi, senior vice president of membership and network engagement for Inclusiv, a national association of community development credit unions. “It takes time to recruit qualified people for these positions, and it takes time to create the structure that will develop people into leaders,” he explains. “As an industry, we are good at collaborating with each other, but we have to expand our thinking and collaborate with other organizations to identify advisory board members with diverse ideas as well as backgrounds.”
Enlisting the support of minority organizations in your community to recruit potential employees and volunteers is a good way to broaden efforts to diversify, suggests DeFilippi. “We’re not starting at zero. We have a strong foundation with organizations such as Inclusiv, AACUC and the Network of Latino Credit Union and Professionals promoting financial inclusion and leadership diversity both at the board and senior management levels. We also have more than 500 [minority depository institution (MDI)] credit unions serving minority communities and now the entire industry is having an honest conversation about diversity equity and inclusion.”
Offer Relevant Products & Services
Latinos, especially those who have immigrated from other countries, are not familiar with the U.S. financial system may need additional education and guidance to learn what is possible, says Calderon. “A very successful credit union in North Carolina offers a financial education class before an account is opened to explain credit, loans, savings and checking with information that is targeted to their specific community.”
By not assuming that every new member understands what financial products are available and how everything works, a credit union not only ensures that members get the most from their services, but they also forge a more lasting relationship, says Calderon. “Because family is important in the Latino culture, there may be multiple generations living in the same household, so be aware that messages must appeal to all ages,” he says. “It may take more time to build the relationship with a Latino member, but once you do, you find that they are very loyal members who come to you for all of their financial needs, as well as their family members’ needs.”
One product that is popular is an Individual Taxpayer Identification Number loan for home, auto, business or personal use, points out Calderon. Most ITIN holders don’t go to traditional financial institutions for loans because they don’t believe they will qualify for traditional loans. “Although other financial institutions believe ITIN loans are risky, credit unions can fill the gap by offering them,” he says. “The Latino community is strong and its members are buying homes and cars, and saving for vacations and school, so offering them services they need is a good business strategy.”
Credit unions serving minority, low- or moderate-income and rural communities have access to resources through the U.S. Department of Treasury’s certification as a Community Development Financial Institution (CDFI), as well as through the NCUA’s low income and MDI designations.
“These are valuable credentials that were created in recognition that credit unions serving low-income and minority communities required a different regulatory framework,” explains DeFilippi. The significance of the designations is access to capital investment funds through intermediaries like Inclusiv and the authority to raise secondary capital to support member needs. “The importance of this work has been recognized by the inclusion of CDFIs, MDIs and LIDs in the recently passed economic stimulus package that provides $12 billion in resources for these institutions,” he adds.
Change is not easy, but it is inevitable. “By 20451, Blacks and Latinos will represent the majority of the U.S. population,” points out Sattiewhite. Changing to better represent and serve a diverse membership is a requirement for credit union sustainability, she says. “Aren’t we about serving people? This is not only the right thing to do, but it is also our business.”
For a more in-depth look at diversity, equity and inclusion in the credit union industry, Filene offers a free report, Diversity, Equity, and Inclusion in Credit Unions; Approaches, Insights and Future Directions at: filene.org/learn-something/reports/diversity-equity-and-inclusion-in-credit-unions-approaches-insights-and-future-directions
Published article available here.