To me, social impact is sort of a buzzword, and honestly one that I use frequently. As I have reflected on what it means, I have reached the conclusion that we may be overthinking it. At its core, I think social impact is really about tracking the outcomes of our strategies in new ways by using a lens on how we impact people and communities. In other words, instead of reporting loan growth, it could be framed as how much we improve member cash flow. I think this distinction is important because it makes social impact less daunting and allows for incremental, achievable progress.
There are a couple of uncomfortable realities many credit unions face today: 1) many communities and the people who live in them are not thriving, and 2) for many credit unions, it’s getting harder and harder to differentiate the credit union value proposition. These two realities are why I think social impact may be one of the imperatives of our day. Furthermore, if we link these realities, they may present us with new opportunities to live our mission and sustain our industry.
Most individuals have hopes and dreams for their future, and most of these hopes and dreams are supported by access to financial services. The reality is many people in our communities are in survival mode, not hoping and dreaming mode. This is happening for a series of reasons, some dating back generations. I imagine we don’t even have to look outside our own organizations to find people who are struggling or just getting by. While this is unfortunate, credit unions are in a unique position to be catalysts for positive change. It perhaps is Pollyannaish to think credit unions can solve all the problems in our world, but I am confident we can deliver progress on some.
It's in our DNA
For many credit unions this mindset is not new. It’s what we do, it’s in our DNA. I think what may be new is a set of lenses that creates more focus on social impact and better tracks our success.
Credit unions are local and know their members and communities, making them ideally positioned to be local change makers. But to truly solve systemic problems you need a deep understanding of what the community needs. If you don’t have this intimate knowledge already, don’t be afraid to ask some tough questions. Start with the people closest to the members: tellers, call center staff, business development teams. They have some ideas. Then be courageous and get outside your building, engage with community groups, foundations, and local governments. If you enter this discovery with an open mind and curiosity, you may get a clearer picture of what your community truly needs.
As Harvard Business School Professor Michael Porter says, “the essence of strategy is choosing what not to do.” The hard part for impact-focused credit unions may be choosing which community need is a priority, and where your credit union wants to apply focus. In some ways, less may be more. It may be better to select one area of focus where you can make a true impact, even when you know there are competing needs within your community. The final piece of the puzzle is to develop your credit union’s impact scorecard to help track progress. This scorecard should be rooted in outcomes and impacts on members and the community, not just the credit union.
I think that last step may be one of the most important and ties into why Social Impact is an imperative. Most credit unions tell a story to their market, but many are telling a story about rates, fees, and convenience. Don’t get me wrong, these elements are critical, but they are not differentiators, they will not set your credit union apart in the long run.
Tell a different story
I believe one way credit unions can tell a different, more compelling story is by talking about the outcomes their investments have on the communities they serve. How their focus has helped first-time homebuyers, increased affordable housing options, provided second chance loans, gotten members out of debt faster, helped retrain/retool the workforce, and provided short-term loan alternatives.
These are just a few examples of product designs and strategic priorities which differentiate credit unions and when implemented, communicated, and tracked can start a virtuous cycle–doing good helps your credit union attract more members and grow, as you grow, you can do more good.
There is no silver bullet for success. Investing in social impact does not have an immediate return; however, over time, I believe if a credit union is able to show, with action, that they are committed to making members and communities better, it will lead to better outcomes for the credit union.
Callahan & Associates is a sponsor of Filene's Center of Excellence for Community Social Impact.