Financial Education: Do Credit Unions Practice What They Preach?

Executive Summary & Strategic Considerations

Part I of CUNA's Financial Literacy Task Force 2007 Survey of Credit Unions' Financial Literacy Activities

One of the tenets that sets credit unions apart from other financial institutions has always been that credit unions provide financial education to members. Credit unions say they really care about their members' well being.

Do credit unions have programs for every age and demographic group that constitutes their membership? In other words, are they stepping up to the challenge of providing financial education to their members at all age levels, from cradle to grave?

To find out, CUNA's Financial Literacy Task Force, working with CUNA's market research department, set out to measure and report credit unions' practices and activities.

Here's what CUNA learned, based on exclusive survey findings and our conversations with credit union practitioners.

Members need your help, so step up to the plate.

Sure, roughly 70% to 80% of credit unions from all asset sizes (of $10 million or above) believe their members have a vital need for personal finance information.

Unfortunately nearly one in four credit unions with assets of $10 million or more provides no financial education whatsoever to its membership.

Only half of credit unions with assets of $10 million or more provide financial education geared toward both adults and youth. If your credit union currently focuses its personal finance education efforts on one of these two groups, strongly consider making a priority of developing programs for the other group.

How do credit unions improve? Here are five ways to do it.

First, there has to be a commitment from the board of directors, through management and to the staff level to "provide financial education," or "improve members' financial literacy."

Second, make financial education a performance standard for appropriate staff. Now, barely half of credit unions that provide financial education incorporate such responsibilities into the job description of the person(s) overseeing these activities.

Third, add financial literacy goals to the job responsibilities for the CEO. The CEO sets the tenor and tone for the credit union, so it makes sense to include financial education in that job.

Fourth, financial education should have its own separate line item in the marketing budget. Credit unions need to dedicate funding specifically for financial literacy. Currently, less than 40% of credit unions that offer financial literacy programs do so. Sure, larger credit unions ($50 million and more in assets) are more likely to devote a budget line item to financial education. But even at its highest point - among those with assets of more than $500 million - only half of credit unions with financial literacy programs carve out a budget line item for financial education initiatives.

Fifth, make financial literacy of members a formal part of the credit union's written strategic plan. Today, just two-thirds of credit unions that offer financial literacy programs include this goal in their strategic plan.

Ideally, credit unions would have at least one full-time employee (FTE) assigned the responsibility of increasing members' financial literacy. And given the current economic environment, this could be made an immediate priority.

Unfortunately, just one in three credit unions (including just two in three credit unions with assets of $500 million or more) that offer financial education devote at least one FTE to oversee their financial literacy initiatives.

Next: Credit Unions' Financial Literacy Spending