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How Self-Help Credit Union Helps Communities Help Themselves

The Remarkable Credit Union, episode 94, with Randy Chambers of Self-Help Credit Union

Is “ownership and economic opportunity for all” an idealistic pipe dream, or is it an achievable goal? Self-Help Credit Union would like to think the latter. Its mission statement embodies the credit union’s penchant for thinking big and pushing the boundaries of what credit unions can do and be.

This month, we’re thrilled to be joined by Randy Chambers, President of Self-Help Credit Union, to talk about what ownership actually means, how credit unions can advance economic opportunity one neighborhood at a time, and the ways in which a credit union’s WHY should inform all marketing efforts.

We’ll also be addressing this month’s BIG question:

What are the biggest challenges we currently face when it comes to the health and vitality of our neighborhoods, and how can credit unions meaningfully address these challenges?

 

Key takeaways

  1. Ownership can help families achieve financial stability, but it is about so much more. It’s also about taking pride in something, investing in something you can control, and on a much broader scale, closing the racial wealth gap. Almost all of us start as renters, but there are so many systems that are built around ownership and historically, these have excluded so many Americans.
  2. A credit union is a means, not an end. A credit union is one of many tools a community can leverage to support small businesses, affordable housing initiatives, and other community development projects. Self-Help’s CDFI designation helps the credit union better invest in and serve its communities, and the credit union also works with its non-credit union affiliate to support projects in ways they can’t because of regulatory restrictions. As Randy says, a responsible financial institution is not the most important thing in a community – that honor belongs to local leaders, parents, teachers, and others – but also, a community cannot thrive without one.
  3. Marketing is as much about listening as it is about messaging. Self-Help aims to be present, reliable, and responsive, which entails truly listening to its members’ needs, including being intentional about ensuring that their board represents their members. These member needs can be very different in each community, and marketing efforts should be targeted accordingly.

 

Read the transcript

Cameron Madill:
Hello and welcome to another episode of the Remarkable Credit Union podcast. We created our podcast to help credit union leaders think outside of the box about marketing, technology, and community impact. Each episode we bring on expert guests from inside and outside of the industry for conversations about innovation. Our goal is to challenge your preconceptions about business as usual, and provide you with actionable takeaways that you can use to grow your membership, improve the financial health of your cooperative, and magnify the positive impact you have in your community.

Today’s big question: what are the biggest challenges we currently face when it comes to the health and vitality of our neighborhoods, and how can credit unions meaningfully address these challenges?

I’m Cameron Madill, the CEO and Co-founder of PixelSpoke.

Kerala Taylor:
And I’m Kerala Taylor, a co-owner and the Senior Marketing Manager here, at PixelSpoke. I’m so excited today to welcome Randy Chambers, the President of Self-Help Credit Union. Randy has been at Self-help for an impressive 26 plus years. He started out as a financial analyst, then took on the role of Chief Financial Officer before becoming President in 2010. He is also the co-founder and former treasurer of Latino Community Credit Union, and served as board chair of Inclusive, an organization that’s near and dear to us here, at PixelSpoke, back when the name of it was the National Federation of CDCUs.

Randy has a Master’s of Public Policy from Duke University. He also has three kids, two dogs, and one wife. His family enjoys traveling to and volunteering in Guatemala, which is a native land for two of their three children. Randy, thanks so much for joining us.

Randy Chambers:
Hey, it’s great to be here. Thank you.

Kerala Taylor:
So, Self-Help Credit Union is involved in so many innovative and impactful initiatives. I’ll admit that I was having trouble finding a way to focus our conversation today, and I don’t think there’s any way we’ll be able to tackle the breadth of what you do in a 30 minute conversation. But let’s just start with the self-help mission. Can you just tell us what your mission is and, in a few sentences, how you’re approaching carrying it out?

Randy Chambers:
That’s a good question, Carol. So our mission is creating and promoting ownership and economic opportunity for all, especially people of color, women, rural residents, and other low wealth families and communities. And there’s a lot of intentionality on that mission statement because we realized that you have to both help people create wealth and have access to economic opportunity, but you also have to help them protect it. So thinking about how a financial institution, how a nonprofit organization can do that work. So for us, it’s lending. Duh, right? We’re a credit union. It’s responsible financial services. So thinking about how our bank accounts give people access to their money in ways that don’t hit them with harmful fees and make it harder for them to access their money. And then it’s thinking about how do we build communities, coalition, and do the policy work that actually helps protect the wealth that so many folks struggle to attain in their lifetimes.

Kerala Taylor:
I just really love the phrase ownership and economic opportunity for all, and I am definitely a huge fan of economic opportunity, and I do feel like it’s something that gets discussed at least in certain circles, a fair amount. But ownership, less so. It’s something I’ve been thinking a lot about as a relatively new co-owner of a worker-owned co-op, just what ownership means, and I feel like there’s really not much talk in the broader business community about what business ownership means or other forms of ownership in the realm of affordable housing, at least here, in Portland, I hear a lot about rent control or rental assistance, but not so much about how do we get people into homes that they actually own or into buildings that they own a piece of. So I was just curious if you could talk a bit about why is ownership central to the self-help vision, and why do you think it’s important?

Randy Chambers:
That’s a great question, and I do think that the affordable rental’s still a really critical piece. It’s how all of us start out life is renting, right? That’s the first thing we do as an adult when we are on our own is we rent someplace, and we’ve got to have it be affordable, otherwise, we can’t pay our bills.

But I think the thing that is powerful about ownership is both the joy that it brings of owning something, and so if you think about all the things that you accomplish in life, so we were chatting before the podcast about our kids. And so the joy we get from seeing our kids ride a bicycle, it’s like, wow, she did it. He did it. They can do this on your own. There’s a pride in ownership. So when people own a home, they get to think, okay, what sort of flowers do I want to plant? Or I’m not a florist, I’m going to dig the yard up and put a sculpture in it, whatever you want to do. You can paint the walls your favorite color. So there’s a certain part of ownership that is pride and investing in something that you control.

But there’s also this really important financial component about building wealth that we don’t talk enough about as a society, and yet, we have this huge set of systems; incentives, tax incentives, that award ownership so that if you’re paying $2,000 a month in rent for 10 years and I’m paying $2,000 a month in a mortgage in 10 years, at the end of 10 years, just the principle that I’ve paid down over those 10 years is now something that I own and control and that I can borrow against.
And so I think of a couple of stories about the power of ownership. I was actually at an event last night, we’re having our mayoral elections here in Durham over the next couple months and I was meeting one of the candidates, and he had been a public educator for maybe 10 or 15 years, and his wife is a really gifted cook. So she started catering out of her kitchen and then they wanted to start their own restaurant. And Leo tells the story about how they went to a number of financial institutions, couldn’t get a loan. They were a startup. Restaurants startup restaurants are highly risky. They weren’t purchasing real estate, so the loan would’ve been, essentially, for working capital, so it’s a risky loan.

What he did, which is profoundly courageous, is he borrowed against his retirement that he’d accrued over his 10 or 15 years as a public educator to help finance his wife’s first restaurant. The story ends very nicely. The restaurant did really well, they now have three restaurants. Leo’s been on the city council for a couple of years and is now running for mayor. But I think about that. If he hadn’t had a retirement savings program at his work, that was wealth, he controlled it. Now sometimes you cringe and say, oh my gosh, you tapped your retirement for current economic investment. That’s what all the professionals tell you not to do. But that was his choice. He had the control over that, the wealth that he had accumulated in that deferred asset was of value.

Mine is my parents bought a home when they were in their mid 30s, which was actually relatively late for their peer group, but it was a time when there was high inflation. So I’m relatively old, so late 70s and early 80s, we had inflation that was 8 or 9, 10%. And even if their house had only appreciated in inflation, they bought it for $95,000 in 1975, and I went to college in 1988, so 13 years. If you take a $95,000 asset and you have it grow by an average uncompounded of 10% per year, it means that house had grown by 130%, so maybe 30, $250,000.

And so a guy came through my house my senior year of high school and he had a wheel on a stick that was measuring the floor. And I lived in a townhouse because I lived in Washington DC, so dense urban neighborhood. And when he got to the second floor, I said to my dad, I said, “Dad, what is that guy doing?” And he said, “He’s an appraiser. He’s going to give us a value on the house because I’m going to borrow against the house to send you to college.” It had never occurred to me at that age, I wasn’t smart enough to think about debt that, of course I’m not going to take on debt to go to college, I’m 17 years old. But my dad, because he had that asset, was able to borrow against it. And I got to graduate from college from a private college debt free.

So that’s the power of ownership is that we are able to build wealth. And I would say the single most important principle that Self-Help has focused on for the last 35 years is the racial wealth gap. So we’ve got all kinds of problems that are the legacy of slavery, Jim Crow, and ongoing racism in this country that puts folks of color at a massive disadvantage. But one of them is this wealth gap. So the average white family has net worth. So we know this in financial institutions; assets minus liabilities is your net worth. Average white family has between 175 and $200,000 of net wealth. So my family, the story of my dad investing in that house that he bought at 35 and sending me to college when he was 48, the average African-American family has about 10% that. So maybe 17 to $20,000. And half of black families have zero or negative net wealth. Latino families, it’s a little bit better, it’s maybe a seventh or an eighth of white families.

But you think about all the things if you stop in your life and you grew up in a place where your parents owned their home or own their business, and you think about all of the benefits you got from that. So the financial benefits that I described that Leo had when he started the restaurant with his wife, that I had in going to college, and then you think about the, I didn’t move from 1975 to 1988, so from the age of five to the age of 18, well, guess what? I went to the same school every year for elementary school, then I went to the same school for middle school, and the same school for high school. So I didn’t have that, got to meet new friends, got to learn new principals, and teachers, and new neighbors, figure out which bus to get on to get to school.

So ownership just has this really powerful thing that is part psychological for us, and is, as a financial institution, is so deeply ingrained in giving us the opportunity to start a business, send our kids to college, take chances on our own selves because we’re, essentially, borrowing from ourselves when we’ve got wealth. And if not, we depend on the willingness of others to lend us money.

Kerala Taylor:
Absolutely. My partner is Black and a first generation wealth builder, and he moved 11 times. He went to 11 different schools between kindergarten and the end of high school.

Randy Chambers:
Wow.

Kerala Taylor:
And the single most important thing he wants to pass on to our children is a stable childhood and wealth, and so that’s what we’re focusing on. So that rings true for me on a very personal level, for sure.

Randy Chambers:
And it’s funny you say that. We’ve all got those stories. Anybody who grew up with wealth has the story that I do, and anybody who didn’t grow up with it has the story that your partner does, and so we don’t talk about it. We think about, oh, this job makes $60,000 a year, that one makes $80,000 a year, but we don’t think about wealth in our day-to-day living, and yet, it’s so ever-present.

Cameron Madill:
Thanks for sharing that, Randy. And I think the stories make it, yeah, the statistics are shocking and powerful, but the stories are what make it more tangible as to what the reality is, growing up with or without.

Randy, we were reflecting that we met in the before days, I believe in St. Louis at the inclusive conference. But I remember going to Filene’S conference, Big.Bright.Minds in North Carolina, I think, in 2018. Again, before days I don’t remember anything before I had a child and there was a pandemic. But I remember seeing this visual, because we went around and got to do some cool activities with Self-Help, of how you guys are set up as an organization. It was pretty cool. It’s almost like a molecule, like a hydrogen. No, I’d make it a sugar molecule, it’s very sweet. It just opened my eyes to how much flexibility there is in how the credit union model can be structured, though some are more common.

And one of the things that really stood out was you have a non-credit union affiliate that handles and oversees a lot of your community development work. And so I love structures. I’d love if you could share with our audience a little bit about how does the credit union interface with your affiliate? How did that structure come about? What was the thinking behind this overall system design?

Randy Chambers:
Yeah, great question, Cameron. I think one thing I would say that is really important, if we think back to the founding of credit unions, a credit union is a means to an end. It’s not an end goal, in of itself, to create a cooperative financial institution. The founders of the movement, whether it was in the 19th century in Germany, or when the movement came across the Atlantic and started in Quebec and then came down through New Hampshire, the credit union was seen as a means to address financial insecurity. And so, I say that as a preface to answering your question because that’s what our mission is, this ownership and economic opportunity, creating it and protecting it, and bringing it access to the folks who traditionally don’t have access to it. Sounds to me like a credit union. So each of our nonprofit affiliates, or charitable nonprofit affiliates, is just another tool in that box.

So for example, we have two traditional charitable 501c3s. The founding organization is an organization called the Center for Community Self-Help that was created in 1980, and it really, at that time, was thinking about, a little bit, what you all have done is, how do we create worker-owned cooperatives so that we can give people ownership of businesses who come from very modest means, basically, because it’s really hard to start a business with no wealth unless you’re a cooperative. So that was the founding institution.

And the founders, two or three years in, came up and realized every time we try to create a worker own cooperative to convert a sock factory in central North Carolina or a furniture factory in the foothills of Western North Carolina, we then go to buy the factory and we need financing, and we keep getting turned down for loans. So very familiar story. And they said, well, let’s create a financial institution. Let’s see. We know something about cooperatives. We got no money. So I think there’s something called a cooperative financial institution, you could start with zero capital. It’s called a credit union. So they created the credit union, again, as another tool in that box to support the worker-owned cooperatives that they wanted to create, and the members of those worker-owned cooperatives.

They also knew that there would be activities that they would want to do that you couldn’t do in a regulated financial institution. So in those days, often, loans to worker-owned cooperatives that had very little wealth, that being invested by the worker members of the co-ops wouldn’t have passed NCUA’s muster. Not sure they’d passed NCUA’s muster in 2023, they certainly wouldn’t have in 1983.

Cameron Madill:
Right.

Randy Chambers:
And they knew that a charitable loan fund, which, what we ultimately created, what we would now call a CDFI loan fund, could raise capital from sources that you can’t get into an insured depository. So charitable contributions, they’re often government subsidy programs, like in the last 25 years, the new markets tax credit, that you can bring into an organization that are almost impossible or, actually, don’t regulatorily work for a credit union. We then quickly realized, as we started to want to do some real estate development, recognizing that creating these assets in the community that would be of interest to nonprofits, to homeowners, that, that was also work you couldn’t really do inside a credit union. So we ended up having Self-Help Ventures fund as the non-regulated, charitable, again, now what we would call CDFI Loan Fund, doing the kind of work that is consistent with the mission of a credit union, but isn’t really consistent with the legal purpose restrictions and charter of a credit union. So for each of those we created, they had a purpose that was towards this broader mission.

And then the last, the youngest one is in 2002, we created the Center for Responsible Lending. We always knew that system change starts with individuals. It’s the family you give a home loan to who you invest in, who you believe in, who you’re going to be successful for that individual family. But if we want to close the home ownership gap where 45%, roughly, of African Americans own home, and 75% of white families own homes, we can make little, little progress, one loan at a time. But we don’t have system change making the environment more attractive by providing down payment assistance to low wealth families to buy homes, to overcome the fact that, for the first 40 years after the end of World War II, we had these massive subsidies that were only accessible to white families, this is why we have a 75% home ownership rate and the legacy of 300 years of slavery.

So we created the Center for Responsible Lending, really, saying, we’ve got to also protect that wealth. And it was really in the late 90s, early 2000s, we started to have borrowers who’d come to us with their stories of what we would now call a subprime mortgage loan where they had done everything that we thought they were supposed to do, buy a home, pay their mortgage, and all of a sudden, five years later, they owed $50,000 more than they had paid for the house. And so we said, okay, it’s really, we can’t put our heads in the sand on this. We’re having a great year. We made 120 mortgages last year, and yet, this one finance company out of Dallas in the state of North Carolina was doing a couple thousand refinances of loans to low wealth borrowers and stripping the wealth out of their home. So they were doing more damage in a year than we had done good in 20, at that point. So we added this protecting piece and realized that, again, there’s these different tools in a box.

So an advocacy nonprofit that can do research, do communications, do lobbying, do policy work, can actually compliment the work of our credit unions and of our CDFI loan fund. So each of those five pieces, the three charitable nonprofits and the two credit unions, all work together towards this common mission. And again, for me, as someone who’s been here a really long time, it’s just recognizing that these are just tools in the box, and a credit union is an amazing tool, but sometimes it’s not enough.

Cameron Madill:
Thanks for sharing that. Yeah, it’s so comprehensive how you guys have approached it. And so maybe I’d love to get into some of the specific work. I think I actually did a bus tour of Walltown, which is this neighborhood in Durham that you guys have really put a lot of energy into revitalizing as part of the broader affordable housing and home ownership work. So I’d just love to have you share a little about what is the project, what inspired you to take it on, and how has the neighborhood evolved over time as you’ve engaged there?

Randy Chambers:
Yeah, that’s a lot of questions, in some ways, in about a question and a half. So Walltown is a neighborhood that is here, in Durham, just north of what we call east campus of Duke University, which was the original campus of what was originally, then, Trinity College, and then when the Duke family endowed, it got changed to Duke. And I say that’s important for a couple of reasons. One is, when you think about economic development, you often want to build off of something that’s also going on that’s productive in the community. So it’s really hard to do revitalization in a desert. You want to have someplace where there is a little bit of an oasis.

So for us, we had Duke University, which is on the south side of Walltown, very stable use that had the second benefit that Duke University wants to see the neighborhoods around its campus be safe and vibrant, if just cynically, because they have students coming in from out of state who parents want them to be safe. And, I think, more altruistically recognized that the university is only as successful as the communities that it rests in. This neighborhood also was bound on the north side by what we used to call a shopping mall. So the places that we used to go in the 80s and 90s to actually do commerce, so we thought of that as a stable land use, as well.

And then on the east and west side had two home ownership neighborhoods. So in some ways, it was the hole in the donut, and not shockingly, the hole was a 90% African-American community at that time, probably 10% other, 9 of that 10 was Latino. So it was a predominantly African-American neighborhood, predominantly absentee landlords who were almost all white. So we had the opportunity to acquire a portfolio of poorly maintained, what we call shotgun duplexes. So these are mill houses, one story, with a wall down the middle with one family as a tenant on one side and one on the other. And shotgun means that you could take a shotgun and shoot it through the front door and go all the way through the back because, essentially, you go from the living room, to the bedroom, to the kitchen, and then maybe the bathroom off to the side.

And so we had the opportunity to acquire all those properties into our nonprofit charitable organization and then figure out what sort of home ownership revitalization could we do. And so we worked with, particularly, the churches in the neighborhood to put together a plan. And then because Duke was both invested in the success of this neighborhood, my recollection is they loaned us one or $2 million at 1% for 10 or 15 years to provide subsidy for us to acquire and renovate the properties. And then we got the city and the state to provide subsidized mortgage financing, so second and third mortgages that the borrowers didn’t have to pay. And that meant that the people who lived in that neighborhood, they weren’t all from the neighborhood, but most of the buyers of those homes over the next eight or nine years that we were renovating these single family homes, ended up being people who lived and worked in that neighborhood, or lived in that neighborhood and worked near the neighborhood, often, for the university.

So that, this number sounds absurd in 2023 to say, but we had people who had first mortgages that were $60,000 on a 1400 square foot, now single family home, because we left all the walls and the roof, but then turned what had been a duplex into a single family home, and then they had a $10,000 second from the state, a $5,000 third from the city, and maybe a $5,000 fourth from the Federal Home Loan Bank of Atlanta, so that the whole house was being sold for 80 or $85,000, but they only had to service the debt of a $60,000 loan. I think the key, though, were first, the stable land use is around, so this is just like geeky planner talk, to the fact that we had a partner who really wanted to see it, who was deep pocketed to see it happen, in Duke. And third, that you had the community coming together. So again, we had three or four churches in the neighborhood who were working on getting borrowers prepared to buy a home, take on the responsibilities of home ownership, and so it was a really quite successful.

I think what’s been challenging, Durham has been a very hot place for people to move in the last 12 years, this historically working class city, when I got here in the mid 90s, it was basically, like 45 to 50% black, 40 to 45% white, and 10 to 15% other in Durham for a century, because of the tobacco factories, you could get a job, sometimes even without a high school diploma. And so it was a very working class community. Blue collar, as the tech community has boomed here in the research triangle, we’ve had lots of folks moving in who are well-educated, mostly white, well paid, and so the community started to gentrify.

So Walltown has suffered from some of that, that homes that sold to those original homeowners in 1999, 2000, 2002 for 85 or $90,000, they got the wealth, which is a really good thing, right? Generationally, it was transformative for those families. But they had a $60,000 first mortgage and sold their house in 2012 for 140,000, and that’s a house that might’ve gotten sold last year for $300,000. So the neighborhood has changed. One, I think, could reasonably argue not for the better over time, but for that group that was there for those 15 years or so, it was quite transformative, and many of them, of course, are still there. They still own their home 25 years later. So I think that’s an example of trying to think about how to do it.

I think in hindsight, what we would say is we probably should have preserved some of them for rental, even if it was single family rental, because there’s just something that is challenging for middle and upper income folks when you move on into a neighborhood that has a bunch of working class folks in it, particularly working class folks of a different race or ethnicity. So if, out of, I think we did, maybe, 100 to 120 homes over a seven or eight year period, if we preserve 20 of them for rental, and therefore, maintained stronger African-American presence in the neighborhood as the community started to get whiter over time, I think it might’ve preserved more opportunity to keep prices more moderated and keep families of color invested in that neighborhood.

Again, I still think it’s been a success. It’s still a majority non-white neighborhood. I would not say 25 years later that it’s been a grand slam, but it’s certainly been a, it was a double or a triple.

Kerala Taylor:
I’d love to talk to about, you mentioned the tech boom and gentrification, and those are two things that are definitely part of the history of Oakland, California across the country. I think in many ways, it has a different history from Durham, but there’s a lot of similar themes there. I actually grew up in San Francisco, back when two elementary school teachers could raise a family in the middle of [inaudible 00:25:16] city. Not the case anymore, and all my friends, now, have migrated to the East Bay, but that exodus has driven up prices in the East Bay, and there’s certainly a domino effect there.

We were talking about how Self-Help, in your words, attempted to finance ADUs, those are Accessory Dwelling Units in Oakland. And I was just curious if you could talk a bit about what the goal was here, and then curious about your use of the word attempted. Did the initiative go as planned or were there unexpected barriers here?

Randy Chambers:
Yeah, so I would say, Kerala, it’s a work in progress, so we’re still attempting. So just to paint the picture, so an accessory dwelling unit is a polite term for building a tiny home, essentially, in your backyard, that you then rent out, and it can range from, again, so I don’t live too far from Walltown, and in my neighborhood, there’s lots of people who’ve put up a huge garage in their backyard with an apartment above that they’re renting out on Airbnb, doing quite well, or they’ve got a graduate student living in it, and graduate student may only be making $40,000 a year, but they’re going to be going on to a very nice career. So you can do ADUs in any form.

Our objective in Oakland is twofold. One, how do we build affordable tiny homes in people’s backyard so that they can lease it out to someone who’s making 18, $20 an hour?And two, how do you help families who are often moderate income, but high wealth. So somebody who bought a home in Oakland before the boom of everybody moving east across the bay, so bought it for $150,000 12 years ago, and now the home is worth $950,000. What you’re describing, right? They’re an elementary school teacher who’s making $70,000 a year. So they’re not like, hey, I’m sitting on $60,000 of cash in my bank account. I’m just going to pay for half of this ADU myself, and I can afford to take out a home equity line of credit for the other $60,000. So how do we make the cost low enough to be able to have a tenant in there who can pay it, and essentially service the debt? And two, how do we help someone who’s moderate income, but actually very high wealth, but that wealth is tied up in their property, get access to being the owner operator of the project?

So we’re partnering with neighborhood housing services of Richmond, which is essentially the nonprofit affordable housing partner in the Oakland area. We’re partnering with a foundation, and then we’ve been trying to figure out how to manage this construction process. The hiccup was interest rates. So our original model had been to do cash out refinances. Again, I’ll take my example. I bought the home in Oakland for 150 in 2010, now it’s worth 950. So I got $800,000 of equity. We’ll just do a cash out refinance to get you the cash, and you say, no, no, no, no, no. I got that mortgage from 2010s paying three and three 8ths %, and it’s early 2022, and Self-Help, you want to refinance it at 7%? I’m not that interested in building on my property. So we pivoted to creating a closed end second loan. So you’ll still be borrowing at 7%, but at 7% on the build out of just that second piece of house on the property.

And then trying to deal with the high costs of construction materials, in particular, that has exploded over the last couple of years. So what might have cost 125 to $150,000 two years ago, now cost $200,000, and if you try and pencil out $200,000 of debt, it’s hard to find an affordable rental. So it’s really, at this point right now, the challenges are primarily the financial pieces. So we’re trying to thread that needle of modest income, high wealth homeowner, being able to build a property at a reasonable cost, and lease it out to an affordable tenant. So we’re still working on it, but we’re not there, yet.

Kerala Taylor:
I’m glad you’re trying.

Randy Chambers:
Yeah, it’s interesting. We’re learning a lot.

Kerala Taylor:
Yeah.

Cameron Madill:
That’s great. Yeah, and I’ve seen, remember hearing a lot of cool stories from some of the CDFIs in Portland about ways they were approaching similar initiatives here, because we’ve had lots of similar challenges. So speaking of, let’s do the alphabet soup thing here. I know you have a Master’s in Public Policy, so CDF, LI designation, MDI, you guys have all these different designations, or certifications. So the community development financial institution model is something that you guys are a part of. You’re also a Low Income Credit Union and a Minority Depository Institution. I’m curious how those designations have guided your product offerings and community initiatives, or maybe, is it the other way around, because you’ve talked a little bit about that as well?

Randy Chambers:
So I would say, Cameron, that in some ways, each of those is both a brand and a tool. So clearly, the CDFI brand is one that many financial institutions want to have because it gets them into doors that the other might not get into. There’s a whole movement of investors in CDFIs who are, again, I gave the example of Duke doing the money, I think, at 1% for 10 years, 25 years ago. So there’s banks and socially responsible investors who will only invest in CDFIs. So there’s clearly some brand value that we get from being certified as a Community Development Financial Institution, a Minority Depository, and/or a Low Income Credit Union. So part of that is brand, part of is tools.

So we actually had a product that was a precursor to secondary capital in the late 80s and early 90s. We recognized that growing a credit union serving primarily low and moderate income folks didn’t generate as much net income as a credit union serving IBM engineers did. And so we created what we called equity shares, which was, again, a cooperative structure capital asset funding vehicle. And then secondary capital was put into regulation by NCUA in the mid 90s, and then enshrined in statute in 1998. So for us being Low Income designated credit union’s really critical because secondary capital helps us grow. We’re also Low Income designated credit unions are exempt from the member business loan cap. We actually had a history of member business lending, so in ’98, we met all three standards that Congress put in place. But for many credit unions being Low Income designated, it allows them to make more business loans.

So there’s that brand piece of, yes, we’re committed to this as who we are, and then there’s also the tool. So same thing. I think right now, appropriately, as we finally have started to recognize the massive racial inequality in this country, having a membership and a board to whom we’re accountable, who are majority non-white, is a level of accountability that we want to have. We want communities of color to see Self-Help as a financial institution that exists to serve their communities. And so, the MDI status, I think, is really important, if singularly from a branding, back to our members, back to our partners, back to our constituents.

So each one of them has a different piece, of course, CDFI brand, shockingly, even when I came to Self-Help, I think it was four years after the CDFI fund was created, we thought this was a little funding program that was going to support 100 or 200 community development credit unions, banks, and loan funds, and then it might not even survive a change in administration. And here we are almost 30 years later, and it’s become this really powerful engine for community development finance with bipartisan support. I think now there’s a CDFI caucus, I think, on Capitol Hill, that has a republican senator, a Democratic senator as its co-chairs. So it’s become this really powerful tool for helping us invest back in the community. So it’s a fundraising piece and a brand.

Kerala Taylor:
I’ve learned a lot about CDFIs in recent years, and it definitely seems like the number of credit unions that have become CDFIs has grown quite a bit over the past decades. I do feel like there’s still a lot of credit unions who aren’t CDFIs, I believe about 90%, and I’m curious what you think the major barriers are to getting this designation, or just the will to get the designation?

Randy Chambers:
Yeah, there’s a lot of politics, right now, around the designation. That’s not my area of expertise. What I would like to see is for every credit union to operate as the founders of the CDFI fund and the CDFI movement envisioned, and in some ways, as the founders of the credit union movement envisioned. So if we all really committed to be and delivered on being financial institutions that have a primary purpose of investing and strengthening the communities we lived in, then we would all be CDFI certified, but that means that we have to build products and services that are targeted towards folks of modest means and folks that are different; people of color, immigrants, women, rural residents, inner city residents, and eliminate the bad practices.

So I know that there’s a lot of dispute about this in the credit union movement, but if you look, for example, at courtesy pay overdraft, and you see members who, 30 times in a year are paying a $30 fee, many times when they’re clearing a $20 item or a $60 item, that’s not helpful to those members of a credit union. So there is a piece about being a CDFI that I believe has to be not just, we have some niche products that serve these parts of our membership, but that this is our primary purpose and we have to carry that responsibly, not just in the good that we do, and making sure that on the backside, we don’t have pieces that are taking money out of communities.

So in some ways, Kerala, I’d like to have 100% of credit unions be CDFI certified, but I’d like us to first, walk the walk before we ask for the brand, and I think that’s important to who we are. There are a lot more credit unions that are CDFI certified than there were 10 years ago. There’s a whole history. If you talk to the folks who were involved in organizing the CDFI fund, you talk to Cliff Rosenthal who was the longtime Executive Director of the, then, National Federation, there were campaigns when Bill Clinton would go around the country running for President in 1992 where he’d say, “We want to have 100 community development banks across the country.” And then somebody would ask him, “Well, what about those credit unions serving African-American communities and folks like Self-help and Santa Cruz Community Credit Union?” And so after a while, then he flipped. He modified his script and talked about community development banks and credit unions.

So the founders of the movement, both the credit union movement, the CDCU movement and the CDFI fund really envisions credit unions as being at the heart of what it is because we’re in those communities. We’ve got members, every single day, walking through our branches in the hundreds and thousands who need those services. So I think it’s great that more credit unions have gotten CDFI certified. I’d love to have every credit union be CDFI certified, but we need to walk the walk before we ask for it.

Cameron Madill:
I’d love to pivot to marketing, because that’s a big part of what we do and folks in our audience are interested. And one of the things we’ve talked about a lot is leading with purpose, when it comes to credit union marketing, a version of Simon Sinek’s, start with why. So don’t just tell people what you do or how you do it, but tell people why you do it. We saw a really cool promo, recently, for one of your certificates that had a great rate, which is obviously something everyone’s paying attention to right now, but then went on to reinforce your why with, build your financial strength with an organization that builds communities.

So I’d love if you can just concisely, in a few sentences, summarize your marketing strategy and, really, your whole approach to attracting and engaging with members, because it’s a little different than a lot of folks out there.

Randy Chambers:
So I will tell you that our marketing folks are going to be thrilled to hear this podcast and have you, as a marketing professional, Cameron, say that you like that branding. So thank you for the affirmation, as a professional. What I would say is we’ve got almost 200,000 members, and so we have a lot of breadth across our membership. So that campaign that you’re referencing is really a campaign towards targeting values-based folks who have means. You can’t make $200,000 mortgage loans if your average member has $17,000 of total family wealth, most of which is not cash. So that part is a strategy to say to the folks who want to know that their money is being used responsibly to strengthen communities, that they’re part of who we need to serve our mission. So in some ways, it’s segmented marketing, I think, would be the term professionals use.

The truth is, most of our members, like most credit unions, are what I call workaday members. They live paycheck to paycheck, they need a responsible financial institution, they bank with us because we might’ve merged in a credit union that served their employer, were in a neighborhood that they grew up in, or where they live or work, and so in some ways, that’s different. So those are folks you really have to engage with is, how do you be present, how to be reliable, and how are you responsive? So for those members, marketing isn’t something on a brochure or a website or in an Instagram post. It’s listening to them, hearing what their needs are, and figuring out, as a financial institution, what can we do to serve those needs.

So it is, really, a listen and serve piece. And amongst them are hundreds of aspiring homeowners. So figuring out, do we have a mortgage product that works for you? There are people who just need a reliable car to get to work because that’s their primary source of income, and to get their kids at the end of the school day. But also amongst them are people who have a business idea that they have been tinkering with as a side hustle, and maybe they’re ready to bring it to scale. So back to my earlier story, maybe it’s someone who’s been catering out of their home kitchen and is out of space because they’re doing so much cooking that they need a restaurant. It’s nonprofit leaders who need a bigger shelter and have a potential funder who wants to fund it, but they need upfront financing to buy it or build it. So it’s really about listening and serving.

I think one of the things that we need to recognize, a responsible financial institution is not the most important ingredient in making a community successful. Parents, teachers, small business owners, religious leaders, nonprofits, those are the people who build community. But what we also have to recognize is, a community cannot thrive without a responsible financial institution, because you can’t create homeowners, you can’t create business owners, people can’t buy new cars to get to work, people don’t have a place to safely put their money, earn some interest and get it back. And so we think that a reliable financial institution is one that does listen and serve, but we’re there to compliment and supplement the work of those other institutions, and people who are what makes a community thrive, be healthy, and be vibrant.

Cameron Madill:
I love that. This is a nerdier side, but I think you might appreciate it. I read a book on the history of oil years ago, and it just confused the heck out of me because they spent, this is a big book, like 800 pages, the first 500 pages, and they kept talking about marketing and all the money they would spend on marketing. And literally, what it meant for these oil companies was building a pipeline, getting the thing to market. And while, obviously, oils is more than a little unpopular today, I actually really liked that framing of marketing’s job is to build that direct connection to the customers or potential members, and that I think that kind of listen and serve mechanism you’re talking about is really marketing at the deepest level. And it’s not that you don’t need whatever, online advertising, and website, and social media, and email, and all the other stuff, but I thought that was a really powerful, just, distillation of ultimately what marketing is all about because we can get a little lost in the jargon.

All right, end pontification. Let’s do some rapid fire questions, Randy. You ready to do this?

Randy Chambers:
I will try.

Cameron Madill:
All right. If you could wave a wand and change one thing, what would you change?

Randy Chambers:
So I’m going to be heavy. I’d eliminate hatred. And I say that particularly today, we have three branches in Jacksonville, Florida, and we’ve got a community that’s really hurting because somebody with a horrible ideology and presumably some mental illness and access to guns, went and killed three black folks for being black at a Dollar General, and then killed himself. And so there’s lots of things underlying that and that are beyond that. But if I really had that magic wand, I would eliminate hatred in a heartbeat. I think it would make the world a lot more loving and there’d be a lot more people alive today who were not alive two days ago.

Cameron Madill:
Thanks for sharing that, Randy. I would, sure we would all support that. If you could have dinner with one historical person, who would it be?

Randy Chambers:
Yeah, I’ve been thinking about that one. For me, this is going to be like a public policy guy, it would be someone that I would want to see be better who could have influenced the world to be more humane. Thomas Jefferson’s this extraordinary visionary for democracy and independence, and yet, he left it incomplete. And when you read biographies of Jefferson and some of the other founders who were slave holders, including Washington, you think, if they could have just lived less extravagantly, they would’ve had less debt. They could have freed their slaves and been exemplars for their peers and for generations to come. So in some ways, it’s these folks who I admire, and yet, their flaw is so blindingly obvious, if they just had someone to sit down and say, “Let’s think about how we could do this rather than why we shouldn’t do it.” So that was the one that came to mind. I’m sure there’s a dozen, if not hundreds, of others like that.

Cameron Madill:
I love that. It’s a dinner with the founding fathers and a lecture on financial responsibility and [inaudible 00:42:50] .

Randy Chambers:
Yeah, exactly. How to manage their wealth better.

Cameron Madill:
Yeah. You guys are having dinner with me, not the other way around. So Randy, what’s your life’s slogan?

Randy Chambers:
I don’t think I have a life slogan, but the bumper sticker that has most impacted me was a really simple one from my childhood, in the 80s and early 90s, which was think globally, act locally. So you can make a difference with the loan you make to a single homeowner. You can make a difference if you are the one, don’t worry about whether somebody else can scale up building ADUs. Do you have a backyard you can build an ADU in? Is there some clothing in your closet that you can use to clothe the naked? Is there food in your pantry that you can use to feed the hungry? So for me, that one of, okay, global warming’s overwhelming. Hatred and poverty are overwhelming. But I can do something tomorrow that makes one grain of sand of difference. So I love the; think globally, act locally.

Cameron Madill:
Right. And what is a place you’d like to visit you’ve never visited?

Randy Chambers:
There’s so many places, I don’t even know where to begin. I’d love to see Easter Island. It’s just so fascinating. I’ve been to Stonehenge and it was just totally overwhelming, when I was 18 years old. I thought about, I’d love to go to some place in the Alps that isn’t overrun with tourists. I love mountains, so to breathe that fresh air and see the top of a mountain peak and not have 7,000 people trying to see the same mountain peak. So those were the two that came to mind. But I got a list that’s so long I won’t get to it in my lifetime.

Cameron Madill:
You won’t get to it. Well, and then I want to do a bonus question when we did our little prep before the call; Randy, why is middle school so terrible? Sounds like we all agree on this, but can you explain?

Randy Chambers:
My personal experience is the awkwardness of puberty is encapsulated in middle school, and probably all the way, at least for boys, through ninth grade when you’re at the bottom of the totem pole in high school.

Cameron Madill:
All right. A likely culprit.

Randy Chambers:
Yep.

Kerala Taylor:
Yes, we’re talking about middle school. My daughter is about to enter it, so it’s making me relive that portion of my life and be very glad it’s not me, but have a lot of empathy for her.

All right, Randy, let’s do our final take. The big question today was what are the biggest challenges we currently face when it comes to the health and vitality of our neighborhoods, and how can credit unions meaningfully address these challenges? So Randy, if you could think of this as the conclusion of a five paragraph essay, just in a few sentences, can you summarize your thoughts on this question?

Randy Chambers:
That’s a big one. We need to be more neighborly. What is the impact of my decisions and the actions that I take that help make a community more successful and make people happier? So quit playing to hatred, don’t take advantage of folks, and listen and bring them the things that they need.

We’re in a blessed situation. I have a nice, stable, upper middle class job, and so pay it forward would be the thing that I would ask folks in credit unions. Credit unions aren’t entities, credit unions are made up of people. So as for the folks inside of credit unions, think about how do we pay it forward? And I think credit unions do an amazing job, lucky to get a job at a credit union right out of graduate school, and I’ve been savvy enough to not do something that would get them to fire me, and so I consider myself really privileged to work in a credit union and to have met amazing folks around the country and, in some cases, around the world over the last 26 years. So I love working with, and for, credit unions. And so if we could continue to use those tools to strengthen our communities, thinking about every day, what have we done to make the world a better place for our members, our neighbors, and our community, that would be a life well lived.

Kerala Taylor:
I love it. It sounds like a lot can be distilled down to the cooperative principle, people helping people.

Randy Chambers:
Yeah, indeed.

Kerala Taylor:
Yeah. Well, thank you so much, Randy. We really enjoyed this conversation, and thanks for joining us today.

Randy Chambers:
Oh, it was great. Thanks for having me.

Kerala Taylor:
So thinking about three key takeaways, I’d start with this theme of ownership, which is something that I think about a lot, both as a co-owner and a co-owner of a worker cooperative. Ownership is obviously important because it can help families achieve financial stability, but really, it’s about so much more. It’s about taking pride in something, it’s about investing in something you can control, and on a much broader scale, about closing the racial wealth gap. Almost all of us start out as renters, but there are so many systems that are built around ownership, and historically, these have excluded so many Americans.

Secondly, I loved what Randy said about how a credit union is a means, not an end. So let’s just remember that a financial institution is one of many tools a community can leverage to do things like supporting small businesses, to supporting affordable housing initiatives, and pursuing other community development projects. In Self-Help’s case, it’s CDFI designation helps the credit union better invest in and serve its communities. And it also works with its non-credit union affiliate to support projects in ways the credit union can’t because of regulatory restrictions. As Randy says, a responsible financial institution is not the most important thing in a community. That honor belongs to local leaders, to parents, to teachers and others, but also, a community can’t thrive without one.

And lastly, a good reminder to all of us, marketing is as much about listening as it is about messaging. Now in Self-Help’s case, they aim to be present, reliable, and responsive, which entails truly listening to their members’ needs, and that includes being intentional about ensuring that their board represents their members. Member needs can be very different, depending on the community, and so marketing efforts should be targeted accordingly.

Well, thanks for joining us today for another great episode. The Remarkable Credit Union is brought to you by PixelSpoke, a digital marketing agency that works with credit unions to create user-friendly, high converting, award-winning websites. As a B Corp and worker-owned cooperative, we believe that business can, and should be, a force for good. You can learn more and check out our work at PixelSpoke.coop, that’s PixelSpoke, all one word, .coop. Until the next time, I wish you the best of luck in making your credit union remarkable.

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