It’s no secret to Oakland residents that this is a community that cares. Locals regularly demonstrate a social consciousness with how and where their money is spent, and on Small Business Saturday many Oakland consumers will be found at local shops instead of corporate retailers — but in the midst of the “think local” rhetoric is the often overlooked opportunity to bank locally through community-supported credit unions.

In October 2013, eight credit unions from across the country and PSCU, the leading provider of traditional and online financial services to credit unions, launched a grassroots education campaign challenging everyone, but particularly the millennial generation, to make their money matter by investing with local credit unions. Through an interactive online experience, the Make Your Money Matter website informs the local-minded consumer about the differences between global banks and community credit unions, and the enormous benefits local credit unions offer their members, and their community.

So what is a credit union anyway?

Local credit unions are cooperatives that exist to provide financial services to its members, and virtually anyone can find a credit union they are eligible to join. First established by the Federal Credit Union Act of 1934, credit unions are exempt from federal and most state taxes because they are member-owned, democratically-operated, not-for-profit organizations designed to meet the credit and savings needs of all consumers, but particularly those of modest means.

As a member of a credit union, you are a partial owner of a community cooperative — meaning the credit union’s profit is reinvested in its members as dividends, rebates and lower interest rates. For every $100 deposited at a credit union, an average of $67 is redeployed to individual borrowers within the membership.

Comparatively, global and national banks are owned by their shareholders, and up to 97 percent of the money deposited will leave the local branch into the pockets of stockholders. Essentially, depositing money to a bank with a global or national distribution means that your dollars leave the municipality in which they were initially deposited. Shareholders of big banks will use this money to invest in for-profit measures, such as high-risk investments and predatory lending practices. According to Make Your Money Matter, big banks made $45 billion off of their members last year.

Through an engaging interactive campaign, Make Your Money Matter aims to bolster the profile of local credit unions by highlighting their critical role in the local consumption movement. Unlike big banks, the fundamental purpose of the local credit union is to build the equity of its members and, as a result, the community created through this membership. Fredda McDonald, the executive vice president of PSCU, notes that, “with membership, the money you deposit stays in the community – your dollar could become somebody’s college degree or a loan for a family’s first home – and it’s these types of reinvestments that draw local-minded consumers intent on consumption that keeps communities growing.”

Common misconceptions of credit unions

Through well-illustrated and succinct infographics, the Make Your Money Matter campaign aims to bridge the gap between credit unions and the millennial generation, demystifying the two components young people value and perceive credit unions to lack — the convenience and ease of technology, through ATMs and online banking.

PSCU is one of the key sponsors of the Make Your Money Matter campaign and a leading provider of financial technology solutions for member credit unions. Through PSCU, credit unions are able to keep up with digital banking solutions and find innovative new approaches to allow people to keep their money local but access it anywhere through iPhone applications, online banking, and other global solutions.

One of the key myths that drive consumers from credit unions towards banks is convenience. But not unlike big banks, credit unions have a large network of ATMs locally, and nationwide. There are 5,000 shared banking branches in the credit union network and 100,000 ATMs in the shared ATM network. There are more than 1,000 credit unions that participate in a shared branching network as well.

The Make Your Money Matter website offers an easy-to-use credit union locator. Inputting downtown Oakland’s zip code, “94612”, yields 20 nearby results, including the PSCU-member and San Francisco-based Redwood Credit Union, Alliant Credit Union, headquartered in Chicago but with multiple locations in Oakland, PatelCo Credit Union, headquartered in nearby Pleasanton, Calif., and Golden 1 Credit Union, headquartered in Sacramento, Calif.

While membership to a credit union is often determined by one’s address, membership to a community or cooperative is rarely restricted by zip code, and credit unions are no different. Through the Federal Credit Union Act of 1934, the United States government authorizes credit union membership to those who share a common occupation or association, as well. For example, the Navy Federal Credit Union offers a space for members of the U.S. Department of Defense to save their finances and keep their money within this community through the credit union.

Building community equity

Fed up with big banks and their seeming immunity to financial strife, the Occupy Wall Street protest gained serious traction nationwide, but had a resounding impact in Oakland, and though the smoke has cleared, the commitment to bridging the gap of financial inequality in the community remains.

Ashley James, the program associate for income and asset development at the Urban Strategies Council, highlights the resounding social impact available through the opportunity to invest in local credit unions. “Credit unions are not-for-profit and are owned by their members,” James says. “This means that any money made by the credit union goes back to its members in the form of lower cost or higher interest earned on savings.”

James also coordinates the Alameda County Community Asset Network (AC CAN), a coalition of more than 30 organizations committed to increasing the income and assets of Alameda County, which is housed at the Council. Researched conducted by AC CAN staff concludes that not all residents have the access to build wealth and economic security, largely due to an unequal distribution of essential financial services and opportunities.

“For example, people of color have less wealth than whites due to historical injustices and ongoing inequitable distribution of wealth building opportunities,” James says.

AC CAN offers a curriculum to improve financial literacy in the local community, similar to the approximately 1,244 credit unions that offer financial literacy classes to their members.

Since September 2011, more than 3.7 million Americans have joined credit unions, and have seen their money benefit their membership community. Since 2007, 2.4 million members have obtained credit from their credit union, while for-profit lenders pulled back on this during the same time frame. In the past year, credit unions have helped almost 44,000 members refinance their debt, and more than 37,000 families have qualified for fair value private student loan financing.

Unlike big banks, local credit unions work for their members to build community equity. In the past year, credit unions have invested $630 million in community infrastructure. Oakland Local and partner organizations urge residents to really make their money matter, today and every day, by investing in credit unions and helping them build community equity in Oakland.

Visit Make Your Money Matter to learn more about joining a credit union in your community.

This post is sponsored by Make Your Money Matter, in association with PSCU, though all views expressed are my own.

Leave a Reply

Your email address will not be published.