A blog addressing issues and topics of interest for Montana credit union board members. Read a new post every week.
Volunteering. It brings to mind a sense of community -- contributing to the betterment of one’s world. Pitching in to help where help is needed. Involvement -- by choice, not by paycheck.
At the national level there are discussions that paid "volunteers" are actually the future of credit union boards. If you ask me, it kind of ruins the whole notion of volunteering when you affix a paycheck to it. NCUA regulations allow directors to be reimbursed for travel expenses related to credit union business, education expenses, and accident insurance. The compensation is clearly defined and restricted to specific items like these.
In some states, the state-chartered credit unions already have the authority to compensate their volunteers, and many have chosen to do so. For credit unions choosing to exercise their right to compensate discussions are occurring on how much. An article in Credit Union Times documented compensation ranging from a few hundred dollars to over $93,000. “In Rhode Island, all nine state-chartered credit unions collectively paid their 100 board members more than $1 million in compensation in 2011.”
In Montana, state-chartered credit unions are permitted to compensate the board treasurer, but none currently do. I believe this is an historic carryover from when the Treasurer tended to be the one handling the day-to-day work of the credit union.
Does the compensation of board members result in more qualified directors? CEOs interviewed by CU Times reported that their directors are all professionals. There is some merit to this point. As credit unions continue to grow and diversify, they get more complex. Add in the numerous regulatory changes that occur every year and it is easy to see why directors are faced with a steep learning curve that requires more time, effort, and commitment than they had experienced in the past.
Or will board compensation result in a pool of people out for a quick buck? In our current economy, if you knew you could get elected to a director position, work one to four hours a week, and get paid over $50,000 annually, wouldn’t you be interested? This could be a great supplement to one’s retirement income.
I’m concerned that paying directors goes against one of credit unions' key differentiators. Boards should represent their membership. If a credit union’s membership is comprised of professional positions, then it is appropriate to have professionals on the board. However, if your members are line-pullers, ranch hands, or housekeepers, then don’t we have a responsibility to ensure that in our democratic system that those members are represented on the board?
To me, this is the bigger issue. Feel free to debate the merits of offering compensation and what is a reasonable rate of compensation. But also look at the diversification of your field of membership and make sure your board reflects it.
Next week, Donya will continue this discussion and share some information on work at a state committee level.
Tabitha Garvin is the VP-Fee Based Services for the Montana Credit Union Network. She would welcome any questions or comments on this material. You can email Tabitha or call her at 800-745-5546, ext. 132.