Addressing Charitable Donation Account-Related Member Concerns

When the NCUA approved Charitable Donation Accounts, Redstone Federal Credit Union saw them as another avenue for giving back to our communities and as an embodiment of Redstone’s guiding principle to “Be a Catalyst for Positive Change in Our Community.”

Charitable Donation Accounts are combination investment accounts that also generate funds for charitable giving. The accounts must contribute at least 51% of their gains to qualified 501(c)(3)s within a specific time period.

Redstone has used these accounts to facilitate donations to various public, non-profit endeavors that provide lasting benefits to the entire community. However, sometimes those sponsorships are met with questions from members, such as “Why didn’t you use that money to pay me more interest?” Or, “How will this donation affect my dividends?”

Helping our members understand the thought processes behind these donations and how they benefit our communities and this cooperative is vitally important.

Since 2016, Redstone has contributed or committed more than $6 million to public, non-profit projects that include: $2.5 million to help build three new libraries; $250,000 to upgrade, renovate and expand a historic theater and performing arts center; $250,000 to the Cook Museum of Natural Science; and most recently, $3 million to support the establishment and construction of a statewide cyber and engineering technology school.

Much research, discussion and scrutiny go into selecting the “big money” projects. It’s never done in a vacuum because we understand that our diverse members bring their own unique experiences to bear when viewing these projects. Our goal can never be to please everyone, but to do an exceptional job communicating how these selections benefit the community and our cooperative in positive ways.

Selection Process

There are thousands of good causes out there. But we look for those that will make the greatest impact.

Deciding which projects to sponsor usually starts with a conversation with a community advocate. In all cases, the project must meet the qualifications of the CDA. Then we have an internal Community Involvement Committee that reviews the request. For major decisions, the committee sends its recommendations to our executive staff for further discussion. We then take our recommendation to the board of directors for a final decision.

When considering a project, we want to know how it will benefit our membership and community. For instance, in addition to our name on an area inside the Princess Theatre Center for the Performing Arts, our members also receive a discount to its summer camps, performances and classes.

Our support for the Alabama School of Cyber and Engineering Technology Foundation establishes the cybersecurity and technology school across the street from our headquarters.

Cybersecurity is a clear and present danger for financial institutions around the world. Our cyber team responds to over a million security events each month. This school will give the city of Huntsville and state of Alabama an opportunity to attract and retain the best and brightest in that field.

In addition to Redstone’s name on the entrance to the school, Redstone will offer financial education classes there.

These are examples of the types of projects we will most likely support. We consider the greatest impact, over the greatest time, for the greatest amount of people. In most cases, education-related projects fit that bill. Not only is education a great equalizer, it also impacts families for generations to come.

Answering Member Concerns

When members ask if the contributions their credit union makes will negatively affect their dividends, interest rates or loan rates, we assure them that they do not.

In addition, the amount we give back to our members continues to grow, year over year.

Last year, Redstone gave $33 million back to our members in various forms – dividends, lower rates on loans, reduced fees, credit card rebates, incentives, etc. That was $15 million more than in 2017. We remind members that as a co-op, we must serve both savers and borrowers.

We offer members several ways to take advantage of accounts that pay higher than average dividends, including Brighter Day Savings and 12-month MemberPlus! Share Certificates.

In late 2018, Redstone introduced the Brighter Day Savings account, which pays 5.09% APY on savings up to $2,500. That rate is 50 times higher than the national average savings rate. For balances over $2,500, the rate is currently 0.70% APY as of Sept. 1, 2019.

Living the “people helping people” philosophy won’t always win accolades from every member. However, that should not stop us from being that catalyst of positive change and reminding one another that when the cooperative prospers, we all prosper.

Joe Newberry is President/CEO for Redstone FCU. He can be reached at 800-234-1234 or jnewberry@redfcu.org.