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Cause Marketing: How Credit Unions Can Improve Commitment to Community
Monday, March 14, 2016 6:35 AM

By John Pesh, Director of Executive Benefits, CUNA Mutual Group

According to IEG, which produces reports about corporate sponsorships, banks are 4.5 times more likely to sponsor a cause than the average corporate sponsor (topped only by pharmaceutical companies at 6.7 and retailers at 7.6). Bank of America topped all cause sponsors, with 17 percent of the causes that report a financial sponsor naming it as a partner. Wells Fargo was tied for fifth highest at 12 percent.

Credit unions can make a difference too, which generally suits our mission. We often highlight the close ties we have to our communities to differentiate ourselves from large commercial banks. By developing a consistent “cause marketing” strategy, which involves charitable donations, employee participation and publicity, your credit union can stand out by deepening its commitment on a local level. And to help with this effort, credit unions have the NCUA’s go-ahead to use a new funding mechanism for charitable donations.

NCUA Approves Charitable Donation Accounts

In December 2013, the NCUA opened the door for federal credit unions to take advantage of charitable donation accounts (CDAs), which can make use of investment vehicles previously impermissible under part 703. Many states have followed suit and allow their state-chartered credit unions to also have CDAs.

By using professionally managed investment portfolios, your credit union’s CDA can potentially earn significantly more than traditional credit union investments, thus resulting in more income that can be used for charitable giving.

The rules for CDAs require that a minimum of 51 percent of the investment returns be paid to qualified 501(c)(3) charities at least every five years. If your credit union fulfills this among other requirements, you can retain up to 49 percent of the earnings for other uses.

Other stipulations for CDA assets include that they must be held in a separate custodial account or special-purpose trust. Also, the total aggregate investment is limited to 5 percent of a credit union’s net worth for federal credit unions. (Individual states may have different rules).

The bottom line is that you have the potential to get greater return on investments, give more to your preferred charities, and retain extra income for your credit union.

Research: Increasing Appeal for Businesses that Support Good Causes

Cone Communications regularly surveys consumers about the impact of corporate social responsibility. Survey participants are asked, for example, how likely they are to switch from one brand to another that is associated with a good cause, given similar price and quality. The percentage of those who indicated they’re very/somewhat likely to switch brand loyalty has increased almost 20 percentage points (66 percent to 85 percent) over the last 22 years.

5 Basic Cause Marketing Strategies

Your CDA investment can work much harder for your credit union if you follow some basic cause marketing strategies:

1. Believe wholeheartedly in the cause
Connect with a cause that your board, management, and employees can all get behind. Give everyone a reason to be enthusiastic about participating in fundraising and other volunteer activities.

2. Align with a non-profit that supports your mission
Know your community’s greatest social concerns and build partnerships, perhaps even branch by branch (as long as the overall campaign is coordinated centrally).

3. Forge a formal partnership, including marketing
Make your cause marketing a formal partnership and work together with the non-profit on specific goals. Share one another’s marketing platforms to increase awareness of what you’re doing together. Focus on social media to tap into those who are active in the cause you’ve chosen, and prompt other organizations to add their weight and credibility to your cause marketing efforts.

4. Do more than donate money
A key to differentiating your credit union is by engaging your entire staff in volunteer activities to augment monetary donations. This shows that your interest in the charity is sincere. It also leverages your best asset—your employees—as goodwill ambassadors.

5. Show a clear impact
After you’ve identified an important need, written a clear strategy for meeting that need, and engaged your resources, including your staff, document your results. This can be the cornerstone of your cause marketing efforts—nothing speaks more eloquently or persuasively than positive results.

Proprietary insurance is underwritten by CMFG Life Insurance Company. Proprietary and brokered insurance is sold by CUNA Mutual Insurance Agency, Inc., a wholly owned subsidiary. This insurance is not a deposit and is not federally insured or guaranteed by your credit union. Representatives are registered through, and securities are sold through, CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, 2000 Heritage Way, Waverly IA 50677, toll-free 866.512.6109. Insurance and annuity products are sold through CMFG Life Insurance Company. Trust services available through MEMBERS Trust Company, 14025 Riveredge Dr., Suite 280, Tampa, FL 33637. Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the credit union.