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Banning Volunteers From Board Raises Questions

Have credit unions simply become too sophisticated for volunteer board members to oversee? To understand? To manage any longer?

A decision by the Illinois CU League would seem to suggest that they have. And if that's the case, it raises an Illinois round barn of other questions.

As Credit Union Journal reported in the May 13 issue, The Illinois league has passed a bylaws change that prohibits credit union volunteers from serving on the league board. The argument for the change is that the issues before the association's board have simply become too complex for the average credit union volunteer to handle, and that it's best left to CEOs and professional management.

The challenging irony here is that if a trade association is too complex for a CU volunteer to participate in its board, then how could these same volunteers possibly be qualified to oversee their own credit unions? It's not like from Chicago to Peoria you'll find nothing but a bunch of one-office CUs operating part-time out of their sponsor's basement. Alliant Credit Union in Chicago has $8 billion in assets. CEFCU in Peoria has $5 billion. And in between there are dozens of others in the Prairie State that are equally sophisticated and, dare we say it, complex. Somehow, those credit unions keep growing and expanding, despite their volunteer boards.

 

The Tough Questions

There's another thorny paradox, too. Volunteers are the elected representatives of the member-owners of the credit unions. Those same CUs are, in turn, the owners of their state association. Now the member-owners are banned from the organization of which they are members and which they own. (But you don't have to take my word on that member-ownership thing; it only appears in every document, advertisement and testimony from credit unions when it comes to explaining the tax-exemption and what makes credit unions different.)

The league has also argued that participation by CU volunteers on its board has been low and it's been years since a CU director was also an ICUL director. That may be true, but as an unnamed source once said and as was later made famous by Winston Churchill, "Democracy is the worst form of government, except for all the others." If low participation were reason enough not to include all stakeholders, most local government elections would have to be cancelled.

 

Change For The Better?

In the early 1930s, credit union pioneer Thomas Doig was hired to help five Midwestern states, including Illinois, organize credit unions and state leagues. Doig was quite good at his craft, building nearly every new CU from the ground up with volunteers. Indeed, Doig was so successful he was inducted into the Illinios CU Hall of Fame in 1996. As the league noted at that time, "The Thomas W. Doig Chapter was so named in northern Illinois to commemorate Doig's laudable efforts in this state."

Doig died in 1955, and supporters of the change in Illinois will argue that times change. Indeed, they do. But foundations do not, and if the concepts of member-ownership and democracy are not the bricks in the credit union movement foundation, then the structure is shaky.

Coincidentally, at the same time the Illinois league was enacting its new rule, author Scott Belsky was telling credit unions, "One of the things that's most interesting to me is the value of the cooperative. Certainly my generation is very cynical about financial institutions. I think this has real value and should be played up."

That comment brought an observation during CO-OP's THINK 13 conference from CUNA CEO Bill Cheney that "Our younger employees should have an understanding of the history and the values and the philosophy of credit unions. Not to brainwash people, but there are shared values there. When you tell young people, you can see the light go on."

Belsky then added, "A lot of young people look at (the co-op model) and say 'why would we recreate this?' They say intrinsic rewards are as powerful as financial rewards."

Belsky wasn't aware of what had taken place in Illinois, yet his observations deserve note. He is an outsider looking in, and he sees a "light," a great, intrinsic value in the CU business model, especially for younger people. That includes the democratic governance model and volunteer board members who represent the owners. Many others see that value as well. Why not the insiders?

 

'Wave' of the Future?

In the March 18 issue I wrote of the changes in volunteerism occurring in some states, such as Tennessee and Washington, where legislation now allows for the oxymoron "paid volunteer." That piece was about how evolution occurs in micro-steps, and was headlined, "The Little Things Seem So Little, And Then 1 Day..."

Is the new policy in Illinois one of those micro-steps, the waves lapping at the sand castle that individually cause only subtle change, but collectively wash the castle away? Or is the move the wave of the future?

Credit Union Journal welcomes your thoughts and feedback.

Frank J. Diekmann can be reached at fdiekmann@cujournal.com.

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