Credit Union Offers Effective Giving Advice 

One of the credit union industry’s most notable characteristics is its culture of charitable giving, but for many credit unions, the act of giving goes far beyond simply writing checks to charity. There’s the matter of deciding which causes to support, for example. Credit unions also have to choose where, when and how to donate, as well as coordinate the day-to-day mechanics of their community investments.

Those tasks can be challenging for any credit union. The Newport News, Va.-based Langley Federal Credit Union’s recent decision to donate $1 million over five years to help build a new children’s mental health hospital, for example, took considerable research, teamwork and planning, and the credit union’s involvement will likely continue long after it writes the checks. Langley Chief Marketing Officer Fred Hagerman, who is also chairman of the credit union’s Langley for Families Foundation, which is partnering on the donation, shared how the credit union decided to support the mental health cause, described how it evaluates requests for donations and offered some advice for other credit unions that want to make their giving programs more effective.

Million-Dollar Question

As is the case for many credit unions, Langley’s decision to donate stemmed at least in part from a conversation about which causes the credit union wanted to support.

“We have been in dialogue for about two years just saying, ‘Are there any major causes that we might want to go a mile deep on?’” Hagerman said. “There are big names like cancer, or Alzheimer’s, or diabetes, or things like homelessness and so on. But as we started to look at it … you’ve got a number of areas where it seems like we’re giving to help the symptom but not the cause. And it started to dawn on us that mental health was an underlying cause of a lot of the requests that we were getting for charities. So we’ve come to that conclusion.”

According to Children’s Hospital of The King’s Daughters, which is building the children’s mental health hospital, one in five children in the United States has a diagnosable mental health condition and fewer than 25% receive treatment. Virginia has only one free-standing children’s hospital, and children who have mental health issues sometimes stay in the emergency room for days while waiting for a bed in a psychiatric center or are sent to an out-of-state facility away from family, according to the credit union.

After identifying which causes to support, choosing where to donate is often next. That can be tricky, especially for credit unions that receive a lot of requests for donations. Langley FCU has $3 billion in assets and about 264,000 members.

“We’ve got a pretty detailed process, I would say, for evaluating the individual asks,” Hagerman noted.

In general, the credit union first categorizes the applications that arrive online. Then, the senior management team meets quarterly to evaluate the requests. The foundation board also meets quarterly. The merits of the requests, the size of the requests and the availability of funds are key decision drivers, Hagerman said.

“Historically, our giving has been an inch wide, a mile deep – so, small amounts of money to a large number of organizations,” he said. The average request and the average donation is around $5,000 to $10,000, he noted.

“We look carefully at them to understand how much of every dollar that we give is going to program expenses versus overhead or fundraising or things like that. So we’ve got some parameters in place that guide us in those decisions. And even when they’re off, we can ask more questions or get more up-to-date financials. But we do that due diligence in general very thoroughly eight times a year.”

Hagerman said having some history with local organizations can facilitate the due diligence on bigger asks.

That was the case for Children’s Hospital of The King’s Daughters, which will use Langley’s seven-figure donation to help build a 14-story mental health facility in Norfolk, Va. It will include 60 inpatient psychiatric beds, a mental health education program for professionals, more outpatient mental health therapy services and a comprehensive day-treatment program, according to hospital officials. The $200-million-plus project is scheduled to open in 2022.

“They approached us when they kicked off the capital campaign. But we had been in parallel doing some digging, asking locally [at] the homeless shelters we work with, some of the other hospitals [and] some of the other agencies that we support, what impact mental health was having on their populations. How big of a factor was it? What kind of resources were available? And so when they came and spoke to us, it was kind of [like] we hit the fork in the road together,” Hagerman said.

Goals for Giving

Hagerman had three pieces of advice for other credit unions trying to develop systems and processes for efficient and effective giving.

1. Get on the board. Credit unions have to invest time and energy overseeing the deployment of their donations.

“We have 20 board positions in our community organizations occupied by Langley Federal Credit Union employees [and] senior managers,” Hagerman said. That involvement gives the credit union insight into whether charities are really using their money. “We have in the past identified areas where things start to slip and maybe we need to pause on our giving or pass altogether,” he noted.

Directorships also provide professional development opportunities for credit union employees and get them active in the community.

“We don’t want to just represent with money, we represent with our time. And when you think of banking and senior leaders, we have a lot of good business acumen that could be helpful to some of these smaller organizations that are passionate about their cause but may not know how to build a building or get funds for the building,” he said.

2. Do research and build relationships long before giving. The credit union’s existing familiarity with Children’s Hospital of The King’s Daughters was a factor in the choice to make such a large donation, according to Hagerman. It was a lot of money to give away, which created real anxiety in terms of making a decision, he said.

“We know the institution, we serve on a board there, we’re very, I would say, aware of the things that they do. We know who we’re working with. So I think that intimacy, if you like, is probably what made the difference. So always, if you’re giving money away, know who you’re giving it to,” he said.

3. Don’t do it to boost membership or the bottom line. Avoid attaching financial return metrics to giving programs. “We have no Langley Federal Credit Union business objectives out of this,” Hagerman said. “We don’t expect to raise membership or create new accounts or anything like that. Our goal is to make sure our communities are healthy. And we do that through participation.”