Big Potential From Partnerships With Co-ops, But There's One Sticking Point

MONTREAL, Quebec–Credit unions were urged to develop closer relationships with other co-operatives, although as discussion made clear, many CUs know little about their fellow co-ops.

During a session at NAFCU’s annual meeting here, Thomas Bowen, director of Membership with the National Cooperative Business Association, acknowledged that during the 20 years he spent working at a credit union, “I’m embarrassed to say I didn’t know we were a cooperative. We didn’t talk about it.”

Montreal CO-OP

Thomas Bowen of the NCBA talks about building partnerships with co-ops during NAFCU meeting in Montreal.

But there are numerous reasons to talk about it today, Bowen said, beyond just the bottom line benefits that are to be had for both CUs and the broader co-operative community.

“Co-ops are very trendy right now,” said Bowen. “Millennials love the idea of a shared economy. This is Uber. Airbnb. Taking advantage of that cooperative tab is something we should all be looking at.”

Bowen pointed to the Seven Cooperative Principles, most especially “cooperation among cooperatives,” as an opportunity the NCBA is working to build upon. But first, there are some hurdles.

“Not all 50 states have laws that protect cooperative businesses,” he said. “Credit unions, rural electrics, they do because they are regulated. One of NCBA’s goals in year ahead is to review the 50 states and the laws. If the laws do exist, they are ancient.”

For those unaware of the extent of cooperatives in the U.S., and many in his audience were not, Bowen ran through the numbers: there are 40,000 co-ops in the U.S., representing two-million jobs, generating $652-million in annual sales and $3 trillion in total assets. Well-known corporate brands that are actually cooperatives include Nationwide Insurance, Ace Hardware, TruValu, Sunkist, Ocean Spray and REI.

The numbers and the well-known brands did not impress everyone in his audience, with one person asking Bowen, “Yes, but how does joining a cooperative help us?”

$346 Billion in Potential

Bowen noted that in half of the co-ops he visits, half use a bank, not a credit union. I have seen many co-ops with ATMs in their stores, but they are not credit union ATMs.”

Citing a study the NCBA conducted in conjunction with the Filene Research Institute, “Cooperation Among Cooperatives,” it was concluded that there is a potential for up to $346-billion from cooperative businesses that is going somewhere other than credit unions.

“These co-ops are really doing a lot of business, food co-ops especially,” said Bowen. He urged CUs to look to co-ops in verticals such as utilities, farming/forestry, fishing, groceries, sales/marketing, and social services.

There is a potential for up to $75 billion in potential deposits, and $100 billion in potential loans to co-ops from credit unions.

Bowen further said credit unions should look to the local Cooperative Business Associations the NCBA is pioneering, essentially chambers of commerce for cooperative businesses, beginning in Austin, and now expanding into Philadelphia. Other strong markets for cooperatives, said Bowen, include Chicago, Seattle/Portland, and western Massachusetts.

Can You Name a Co-op?

“Do you know the co-ops in your area?,” asked Bowen. “There was a woman in the last session who said she lived in Buffalo, N.Y. and they have no co-ops. So I went down the list and gave her a number of companies in Buffalo that are co-ops.”

Bowen also encouraged credit unions to look to “Operation Connect,” which is a partnership between The Rural Electric Association and a credit union in Virginia and another in Georgia. In the program the electric co-op is turning over its list of delinquent accounts to the respective credit union, which will offer financial counseling.

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Copyright Year: 2019
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