When Ervin Gardner joined other Black bankers a couple of weeks ago to strategize ways to make credit union services appealing to a younger generation, he was encouraged when the conversation turned to building unity and economic empowerment in Black communities.
“The bottom line is economics,” said Gardner, board member of the Chicago Post Office Employee Credit Union. People in leadership, those making decisions—policy, financial, and otherwise—respect unity and money.
“If African American financial institutions can grow, our issues and grievances can be addressed,” Gardner said, citing lack of investment and inequities in resources for Black communities as well as police abuse.
Gardner and more than a hundred African American credit union professionals and volunteers were attending the annual African American Credit Union Coalition convention, which coincided with a renewed national campaign to #BankBlack as a constructive response to frustrations over discrimination and disempowerment in Black communities.
While the number of Black-owned banks is down to only 22, there are 318 Black credit unions uniquely positioned to invest in their communities. The goal of the convention was to determine how to reach younger customers and increase membership and deposits to credit unions, both of which have been falling in recent years.
In July alone over a million dollars shifted to Black banking institutions—and therefore Black communities.
Black buying power is over a trillion dollars and projected to be $1.4 trillion by 2020. Neilsen reported earlier this year that the rate of “Black people making more than $75,000 a year [is] growing faster in size and influence than Whites in all income groups above $60,000. And as African American incomes increase, their spending surpasses that of the total population in areas such as insurance policies, pensions, and retirement savings.”
Impressive numbers that have big marketers paying attention. But here’s the problem:
Not many of the current $1.2 trillion in spending dollars circulate in Black communities for long. And if money doesn’t stay in a community, it’s not going to benefit that community. In fact, according to Brook Stephens’ book Talking Dollars and Making Sense: A Wealth Building Guide for African-Americans, the lifespan of the dollar in Black communities is about six hours, compared to 28 days in Asian communities, 20 days in Jewish communities, and 17 days in White communities.
So Gardner’s sine qua non for respect—unity and money—is lacking in the Black community. That’s why the current #BankBlack movement is critical. And why credit unions—small community financial cooperatives owned by the folks who have accounts—can be powerful.
A recent study by the Corporation for Economic Development and Institute for Policy Studies on the U.S. wealth gap found that if the average Black family wealth continues to grow at the same pace it has over the past 30 years, it would take 228 years to amass the same amount of wealth as White families have today.
Interventions suggested in the study include auditing federal polices, fixing unfair tax incentives, and addressing the “distorting influence” of cent-rationed wealth at the top through expanding progressive taxes and exploring a wealth tax. What wasn’t mentioned was a more direct approach: supporting African American institutions and businesses, particularly credit unions. A similar movement several years ago led by the Occupy movement to transfer funds from large national banks to community banks and credit unions reportedly moved millions into local communities.
Many in the African American community are banking on a similar if not greater response.
African American credit unions make up half of all 651 minority depository institutions (MDIs)—those with a majority ethnic membership and board. The 4.5 million members who own these MDIs represent 4 percent of the total members of all federally insured credit unions.
Compared to Asian American and Hispanic American institutions, African American credit union members tend to have less money in their accounts, and therefore those institutions have below-average assets. African American institutions had an average member share deposit of $5,646, compared to averages of $10,983 in Asian American institutions and $6,959 in Hispanic American institutions, according to the National Credit Union Administration MDI 2015 Annual Report to Congress.
The movement can help people understand the importance of keeping their dollars in their community.
These numbers are what drive members of the coalition and bring them together each year.
Any time a credit union does well, a community does well, said Jim Nussle, head of the Credit Union National Association.
So it goes without saying that African Americans would want institutions led by African Americans to succeed. “The greatest significance [in MDIs] is ownership, and who has control of the resources,” Nussle said. “Ownership stays with your community. You can select your own board and those members help the [credit union] members. It’s the original and safest way to do peer-to-peer lending.”
But small, community banking has struggled. Credit unions in general, along with Black-owned banks, have been shrinking in number. Partly that has to do with resource-rich big banks and, most recently, the convenience of online financial lending institutions.
And that’s where #BankBlack comes in. In July alone over a million dollars shifted to Black banking institutions—and therefore into Black communities.
“I do think that #BankBlack has its importance,” said Daniel Caldwell, president of 1st Choice Credit Union in Atlanta. “Economic power is the best motivator.”
The movement can help people understand the importance of keeping their dollars in their community. “There are too many other businesses in our community using dollars that don’t give back to the community,” he said. “If you can circulate your money inside that community, it will build it.”
To find a Black credit union, the financial website for Historical Black Colleges and Universities lists them by state.