A blog addressing issues and topics of interest for Montana credit union board members. Read a new post every week.
Last week, Tabitha discussed the issue of paying boards of directors at credit unions. This week, Donya shares her perspective.
When I first heard that credit unions in Tennessee and Washington had been given the authority in state statute to start paying board members, I was completely shocked. My initial reaction was that the timing was poor. We were in the middle of pushing our credit unions in Montana to educate their membership on why credit unions are tax exempt and tax reform was certain, with our Senator Max Baucus heavily involved. Volunteer directors were one of the main points we touted as the “credit union difference.”
Over the next few months, a couple things happened to bring me around -- not to change my mind, but to help me understand why there is a shift in attitude about volunteer directors. First of all, there are now seven states that are allowed to compensate directors. How did I miss that? Even Montana state-chartered credit unions are allowed to compensate one director (the Treasurer), but currently, none do.
A panel at the NASCUS meeting I attended last September did a good job of talking about the shift in level of responsibility for directors. Many credit unions have a hard time getting members to run, but are also quick to admit that their effort consists of asking only when openings are not easily filled.
Credit union board members are as burdened as anyone with regulatory change. Maybe even more, since they are not working in the industry on a daily basis and are held accountable to regulators, members, and auditors to ensure their credit union remains solid. As Northwest Association CEO Troy Stang noted, he had visited several board meetings as their state was considering the change, and payment does not change who credit unions are. They remain member-driven financial cooperatives, and this is just a step to enhance the credit union charter.
Other cooperatives do have paid volunteers. In Washington state, they have an especially hard time attracting professional credit union board members in the Seattle area with competition from paid boards at REI and other cooperatives.
When our state issues committee started work last year on areas to update in the Montana Credit Union Act, this topic came up. With the work moving forward, the bill will likely not include a provision to increase the compensation ability. It was just not in the appetite of the group for Montana right now. At the same time, I fully expect the issue will come up at the federal level before too long. That is the trend when something occurs in several states and the logic is seen to make it available for federal charters too.
While I am not advocating that we get “on board” with this trend, there are considerations that merit regularly revisiting whether it is right for credit unions, including those in the Big Sky. And, we are still financial cooperatives and have many other things to tout that make credit unions special, and different!
Donya Parrish is the VP-Dues Based Services for the Montana Credit Union Network. She would welcome any questions or comments on this material. You can email Donya or call her at 800-745-5546, ext. 122.