Podcasts

Inspiration and Resources for Your Corporate Social Responsibility Program Launch

The 17 sustainable development goals of the United Nations are central to the corporate social responsibility program for $7.5 billion United Nations Federal Credit Union, New York.

These goals such things as living wages, clean water, and empowering women and girls, explains Yma Gordon in this episode of the CUES Podcast. Gordon is VP/corporate social responsibility and impact for seven and a half billion-dollar United Nations Federal Credit Union based in New York and the executive director of the UNFCU Foundation. 

“Credit unions are known to have purpose,” Gordon says. “And so for us, it's about really living that value to put people, planet and prosperity ahead of profit.”

Gordon makes an important distinction between “CSR” and another common buzzword, “ESG”—or environmental, social, governance. 

To Gordon, CSR has to do with the work of delivering on the mission of its members—employees of the United Nations—to leave the world a better place. So that includes “our collective action, our policy, our investments,” work done both internally and externally.

“Corporate social responsibility is an extension for us of our mission to serve the people who serve the world, and that we first of all hold up sustainability, for example, as a value,” she explains. “And so for us, that means really conducting business as a good corporate citizen. That's important to us.”

In contrast, Gordon says, ESG is more about measuring the work of CSR. 

“It is how we see that our stakeholders can understand, rate and score our risk and value of the work … that we're doing in terms of CSR,” she says. “Increasing in our ESG journey makes total sense in terms of the (overall) journey that we're on.”

The show also gets into:

• the history of UNFCU’s CSR program
• the work of the UNFCU Foundation
• how the United in Sustainability Network supports other credit unions in their efforts
• UNFCU’s sustainability-minded product offerings
• what’s next for UNFCU’s CSR work

Links for this show:

• United Nations Sustainable Development Goals
• UN Global Compact Action Manager (free assessment tool)
• United in Sustainability Network
• United in Sustainability Summit
• Get added to the United in Sustainability email list or ask a question about UIS 
• United in Sustainability on LinkedIn

 

Podcast 142 Alex Johnson Fintech

March 2023

By Alex Johnson

Lisa Hochgraf  00:04

Welcome to the CUES Podcast where leaders and experts discuss the top topics in credit unions today. 

 

Lisa Hochgraf  00:10

Our conversation with Alex Johnson will give you lots of inspiration and ideas for how to track and take action on fintech developments. Alex is the creator and author of the Fintech Takes newsletter. My name is Lisa Hochgraf, and I'm CUES' senior editor, as well as your host for this episode. 

 

Lisa Hochgraf  00:31

In today's show, Alex provides some solid tips about how credit union leaders can best track key trends and developments in the fintech arena. Perhaps even more importantly, he provides useful perspective on making sure any actions your credit union takes with fintech are strategic and supportive of member service, not just reactive and trying to keep up with another financial institution in your market. 

 

Lisa Hochgraf  00:56

In this show, Alex also talks about 

 

Lisa Hochgraf  00:58

his favorite reading materials related to fintech in addition to his own Fintech Takes newsletter

 

Lisa Hochgraf  01:04

how to discern hype in the fintech market

 

Lisa Hochgraf  01:07

potential impact of chatbots like chat GPT on financial services and 

 

Lisa Hochgraf  01:13

why fintechs are not credit unions' enemies. 

 

Lisa Hochgraf  01:17

I think you're going to be really heartened by this down-to-earth conversation about the realities of fintech. 

 

Lisa Hochgraf  01:23

So let's get started. 

 

Lisa Hochgraf  01:27

Hey, welcome to the show. Alex. 

 

Alex Johnson  01:29

Thank you so much for having me. 

 

Lisa Hochgraf  01:32

Now, before we jump into talking about fintech, I'd like to help our listeners get to know you a little bit. Would you happen to have a professional mantra or quote that you live by that you'd be game to share with our listeners?

 

Alex Johnson  01:44

That's such a good question. Um, yeah, I mean, I think there's a quote, I really like that I think it was Emerson maybe who said, "There is no knowledge that's not power." And I that's always stuck with me for some reason. And I think it's been maybe the mantra that's kind of guided my professional career just in that I've jumped around a lot of different roles in different areas within fintech and financial services. But, you know, I've always tried to indulge my own curiosity, even if there wasn't like an obvious reason to do it. Or maybe sometimes even if my bosses would wish I would just sort of buckle down and focus on my core job and not go get distracted by this other thing. But I've always sort of viewed learning about financial services or fintech or technology to be a good use of my time because you know, there is no knowledge that's not power. So.

 

Lisa Hochgraf  02:35

No knowledge that's not power. As an employee of CUES, which is a talent development organization. I also love your mantra. Great idea to get more knowledge will make you more powerful, help you grow your career. 

 

Alex Johnson  02:46

Yeah. 

 

Lisa Hochgraf  02:47

Cool. So I noticed a recent tweet of yours was kind of a rundown of things that had happened in the fintech space like the previous week. And there were a lot of things on that list. It seems like things are happening all the time in the fintech space. How do you keep up? 

 

Alex Johnson  03:05

Well, it's funny you ask. The reason I wrote my newsletter originally, I started my newsletter, probably three months before the COVID-19 pandemic started so it was very end of 2019. And I started it really as a forcing function to solve that exact problem, right. I was at the time responsible for helping the company that I was working at keep up with everything that was happening in fintech. And it was really hard because, you know, depending on the day or the hour, there was always some new news announcement or some new company getting funding or some new bank fintech partnership, or credit unions were jumping into you know fintech and doing something interesting. And I just had a really hard time sort of digesting it all. 

 

Alex Johnson  03:47

And so for me, the thing that proved to be really useful was basically committing myself to "Okay, every" at the time was every other week. So "every other week, I'm gonna write a summary of what I think were some of the most important, interesting things to happen in fintech over the last span of time. I'm gonna force myself to not only sort of regurgitate the headlines, which is kind of what I had been doing, but to actually have a take on it. That's why I called it fintech takes. And so I wanted to force myself to have an opinion on a particular sort of week or a couple of weeks' worth of news. And in order to have an opinion and to write about it, I really had to synthesize that information and sort of understand it deeply, right. I think anyone who's listening would know that if you've done a podcast or you've written something, the act of like creating content about something really forces you to understand it well, right. Like, a lot of times I'll approach writing about a topic and fintech in the newsletter, and kind of think I have a pretty good understanding of it. And then as they start to write it, I'm like, "Oh, God, like, there's a gap here. I don't understand this. That sentence made no sense at all." And so it forces you to go back and learn more and dig deeper. And so for me you writing about fintech has been the way that I've been able to keep up with it. And you know, the more than I've done it and now I do two newsletters a week and a podcast every week. So it's a lot more frequent than I used to do. But that seems sort of rhythm of on a regular basis, I'm going to look at what's happening in the fintech space, and then try to do that synthesizing and writing about it, that really helps sort of crystallize the most important things, and it just sort of puts everything in context for me.

 

Lisa Hochgraf  05:27

Wow, well, I love that I'm a writer, I do the same thing, right. I do a lot of research. And then I think about it. I don't typically take an opinion on it but it helps me maybe ask questions that are useful. What would you say credit union leaders who you know, are also managing the lending group and the C-suite and helping the board with their decision-making and strategic planning? What should credit unions be doing to keep up with the fintech space?

 

Alex Johnson  05:53

Yeah, that's a great question. Um, you know, I mean, I think that at a minimum, just making sure that you're staying up with all of the news and analysis that's done on it. I won't plug my own newsletter, but I will say that there are many, many other newsletters and podcasts and great resources in the space ... almost too many to keep up with. And so I think, you know, gorging yourself on fintech news and analysis is something that you can do. You can do it for free. A lot of these resources don't require a subscription or anything. And so there's a lot of really great content out there that I would definitely consume. 

 

Alex Johnson  06:28

I think the next step beyond content is to try to involve yourself somehow in the fintech ecosystem, right. And I think that from what I've noticed, the most sort of successful credit union executives when it comes to keeping up with fintech and staying ahead of fintech and not being disrupted by fintech, they don't sit on the sidelines, right, they actively get involved in some aspect of fintech. And there's lots of different ways to do that, right. There are organizations that will take investment from credit unions as as investors and then go invest in the fintech space. I think participating in those investment firms can be a really great way to get involved in fintech. And if you're actually writing a check, it just forces you to be more sort of involved and to pay more attention. You, we talked a lot about partnerships as it relates to credit unions and fintech companies. And I think a lot of times credit unions will have sort of a "Oh yeah, we partner with fintech companies when it makes sense," but it's really more just a thing that you say not a thing that you do. But if you're really involved in in fintech and trying to find good partners, you know, you go to fintech trade shows and conferences, you set up a lot of meetings with fintech companies, you just get to know all of the companies in the space. And one thing I tell people a lot about fintech is even though it's a massive industry, and it's moving really fast, and there's a lot of money going into it, it's also a weirdly small industry, right? It's the same thing as credit unions. It's a small space. And once you get to know a lot of the key people and companies in the space, it gets a lot easier to keep up with and to not feel like you're behind on. So I think taking the plunge and learning a lot about fintech and getting to know people in fintech, whether it's through partnerships or going to conferences or invest in whatever the mechanism is, you have to sort of force yourself to get off the sidelines and actually get to know people in the space.

 

Lisa Hochgraf  08:22

I love that idea of not only reading and maybe looking for some things that aggregate a little bit like you do you read a whole bunch and then you try to synthesize it every so often. But also getting to know people and doing some networking because those, those may be the thought leaders that you can get the next thing to focus on from. Thank you for that. 

 

Alex Johnson  08:42

Yeah. 

 

Alex Johnson  08:43

So CUES recently reprinted your article about what you've called wildly optimistic visions of P2P. And thank you for that. listeners. Check it out at CUmanagement.com/0123p2p. Alex, in addition to P2P, what are some other areas of fintech that you think are overhyped at the moment? 

 

Alex Johnson  09:07

Yeah, that's a great, great question. There was a sure lots of people who listen to this are familiar with Cornerstone Advisors, a company I used to work for, and they they publish a great report every year called "What's Going on in Banking?" where they survey a lot of bank and credit union executives. And I'm always interested in the results of that survey because it really they've been doing it for a few years so they can show sort of what the results are and how they've changed over time. And a lot of the technology things that banks and credit unions are interested in and are focused on are things that they've been working on for a while now. Right? So like to give another example, digital account opening is one that comes up right whenever you ask credit union executives, you know, what's your sort of top technology priorities for the year, digital account opening almost always comes up at or near the top and it has been for the last four or five, six years consecutively. And what I've sort of come to realize about that is that if it's coming up that often, every single year like clockwork, you probably have some problem, right? It's kind of the definition of insanity is doing the same thing over and over again and expecting different results right? I mean that's if you're constantly focused on digitization, or digital transformation, or, or sort of these key sort of points in the customer lifecycle, like, "Oh, we have to have digital account opening," I worry that you're maybe spending a little bit too much time focused on the technology and not focused on understanding the needs of your customers or members, right? And so this was kind of my critique of P2P payments as well. P2P payments is fine, right? It's fine to offer Zelle or some other P2P payments functionality; can make a lot of sense for customers. But what I've noticed is that a lot of financial institutions will offer P2P not because they think it's absolutely critical for their customers or members, but rather because they see all of their other peers doing it. And they get a sense of FOMO, fear of missing out, and they decide they really want to offer it and they make it a priority, sort of regardless of any other considerations. Regardless of how much customers are asking for it. Regardless of how good or bad the thing is that it's replacing, regardless of how much it costs. All of those considerations kind of just get tossed out the window. And these organizations will say, you know, fintech, we have to keep up with fintech, and they'll just sort of go crazy and kind of just run in all of these directions. I think that's where financial institutions get into a lot of trouble. 

 

Alex Johnson  11:43

And so you know, I think when you're trying to decide sort of what's hyped or overhyped or maybe not hyped up enough, I think it needs to be done through the lens of what, who are members or customers and what problems are we trying to solve for them? And how does this technology contribute to that goal? 

 

Alex Johnson  12:01

And, you know, Lisa, you and I were talking about ChatGPT, and chatbots as another thing before we started recording. I think that's another good example, right? I think ChatGPT has really become a very hot topic within financial services within banks and credit unions, largely because I think it's broken through mainstream consciousness. And we all are aware of it. You were saying that your son and husband are like really liking to kind of tinker with this.

 

Lisa Hochgraf  12:31

They are! Oh, yes. 

 

Alex Johnson  12:32

And I think that's true for a lot of people, right? And so I think what happens is bank and credit union executives see this technology breakthrough, and they think, "Okay, well, this clearly is the next like, cool thing in technology, we need to have a chatbot strategy; we need to have a large language model; we need to, you know, leverage ChatGPT or one of these other tools in order to do something for our customers." They don't know exactly what that something is, though. And they're just like, oh, we just we have to do it, we have to do it. And, again, I think that's a mistake, I think you're gonna see a lot of credit unions really jump with both feet into "chatbots," with quotes around it, not necessarily understanding what the different types of chatbots are, or what they're best suited to solve for. 

 

Alex Johnson  13:18

And I think in the case of ChatGPT, as amazing as the technology is, it still has a lot of errors, right? It still makes a lot of mistakes. And quite frankly, it makes the mistakes very confidently, right? It'll do things where it's like, I got into an argument with ChatGPT, where it's like, "No, no, this is true. And I knew for a fact that wasn't true. And I was like, arguing and yelling at the chatbot, which probably isn't the right thing to do. But I couldn't help myself. That doesn't sound like a super great fit at the moment with financial services, right? If you're making a credit decision, or you're, you know, resolving some important customer service issue, or you're giving investment advice. These are things where we have a very low fault tolerance, right, we can't make mistakes, maybe large language models and ChatGPT will get to a point where its error rate goes down, and it'll be a better fit for some of those use cases. But I would actually be kind of nervous about deploying that right now, despite all of the hype, because of some of those sort of fundamental problems.

 

Lisa Hochgraf  14:15

So knowledge is power, track it, know what's going on, learn the different types of chatbots. Sounds like that's something I need to study because I don't know what I would say in answer to that. But don't just jump in willy-nilly. Go strategic, see how it fits the need, see how it feels in your member experience? Yes?

 

14:34

Yeah, that's exactly right. I mean, I and I think, you know, this is something that is something that will resonate very much with most credit unions out there. We don't have unlimited resources to throw at this stuff, right? We don't have an unlimitedly large technology staff or sometimes any technology staff at all. You know, we don't have a huge budget for this stuff. And so you do have to pick your spots very carefully. And I think if you ever find yourself making a decision around technology or fintech that is in any way motivated by a feeling of, you know, "We're missing out," "Oh, it's embarrassing that we don't have this and our peers do." That's just a terrible motivation. And I would try almost to sort of train your brain to recognize that motivation, because it's very natural and it creeps in that drives all of our decision-making all the time. But to the degree you can identify and sort of stamp out that motivation when making these decisions, I think that'll help in focusing on the things that really are strategically the most important.

 

Lisa Hochgraf  15:33

I love that. It was making me think of my parents asking me when I was a teenager, "So if all of your friends drove off a cliff, would ya follow 'em?" So 

 

Alex Johnson  15:41

Yeah

 

Lisa Hochgraf  15:41

There's there's wisdom in in looking internally at your strategy and who you're serving and then making your choices. 

 

Alex Johnson  15:48

Yep. 

 

Lisa Hochgraf  15:48

You mentioned Cornerstone advisors. And they happen to be a CUESsolutions provider, provides also a lot of great content to us. And their report that you mentioned just came out fairly recently. And it's the kind of thing that I can put in the links for listeners so that they can download that from the website. So in addition to the recent Cornerstone report, are there other publications or specific resources that you would direct the listeners of this podcast to?

 

Alex Johnson  16:15

Wow, that's a great question. 

 

Lisa Hochgraf  16:17

I mean, besides Fintech Takes, which you should all check out.

 

Alex Johnson  16:20

Yeah, FinTech Takes is great. But in addition to FinTech Takes, yeah, there's a lot of really great resources out there. Um, you know, I think that one of the ones I've been looking at recently that I've really liked actually is Andreessen Horowitz, which is an investor in fintech. They publish a lot of really great insights and research into the next areas in fintech that they're looking at. And I think they're really interesting because they give hints at other places where financial services, not just fintech, but banks and credit unions as well can potentially get some breakthrougs, right. So for example, they recently published a very long piece that was sort of outlining the opportunities for fintech as it relates to health care and the health care industry. And I thought that was really interesting because there, there are a lot of, and I think this is very relevant to credit unions that have been operating a lot of these, you know, kind of other industries for a long time, there are a lot of financial services or financial services-adjacent problems to be solved in industries like healthcare, right. And this piece does a really good job of explaining, you know, not only what some of those core problems are, but how you have to go about solving them with more than just your standard products that you offer, right. And so you can't look at a space like healthcare and go, "Well, we offer business checking accounts, we offer credit cards, we offer commercial loans, we'll just take those products and then go like sell them into this new vertical or this new area" like health care or construction is another one that comes up a lot. I think the secret to serving new niches or new verticals, or finding new ways to serve your members, is to sort of understand that you have to kind of transform the products that you're offering in order to just sort of better fit them into the workflows and the ways that those other industries or other customers do business. And so I thought this piece by Andreessen Horowitz was a really good example of the ways in which banks and credit unions need to almost transform themselves to serve customers or members that they maybe haven't been serving before that they haven't been serving enough. But to do it in a way that's not just falling back on sort of traditional bank products. So I think Andreessen Horowitz has a really good job of talking about that kind of stuff. 

 

Alex Johnson  18:39

There are plenty of other great newsletters in the fintech space that I would definitely recommend. This Week in Fintech is a great sort of summary of a lot of different news items. It's how I keep up with everything that's been happening in fintech. Fintech Business Weekly by Jason Mikula's great. It does more of a sort of deep dive into the regulatory side and kind of what's going on with all these different fintech companies and how they're doing in the market. And then FinTech Brain Food is the third one that I really enjoy. So tons of newsletters, but those are a few that I would I would definitely look at.

 

Lisa Hochgraf  19:11

Thank you for helping to narrow the field for our listeners. It can be really overwhelming to look and see what's out there

 

Alex Johnson  19:17

Of course. 

 

Lisa Hochgraf  19:18

So you were talking earlier about staying in tune with your strategy and paying attention to who you're serving as a way to frame your actions within fintech. So in that bigger picture sense, are there one or two fintech trends that you see right now that you would recommend credit union leaders track more closely than average?

 

Alex Johnson  19:36

Yeah, absolutely. So I think one that hopefully some credit union leaders have been noticing and kind of looking into but it's definitely what I would recommend is the trend in fintech towards what I call niche neobanks. So if you think about the sort of first-generation of these digital neobanks from fintech companies, like Chime or or Current or Cash App by Square those kinds of ones. Those ones were designed to really attack the market broadly, right. And so if you think about who Chime's customer base is, it's really any customer in the US. They specialize in serving younger consumers. They specialize in serving lower-income consumers, but there's nothing about their products that that wouldn't generally be applicable to everyone, right. Like they offer, you know, two-day early access to your paycheck. Everyone would want that, right. And so it's a very sort of almost-generic approach to serving the market. It's not segmented at all. 

 

Alex Johnson  20:38

However, there are a bunch of sort of newer fintech companies that are building neobanks that are focused on serving a much more specific niche of customers. And those niches can be defined in lots of different ways. Sometimes it's defined based on your profession. So there are neobanks out there now for doctors, dentists, nurses, musicians, architects, there's all of these different I actually recently went on a podcast and asked someone to create one for teachers, because I think teachers could use a better digital bank. So there are ones based around profession. 

 

Alex Johnson  21:14

They're also ones based around identity. So there are, you know, digital banks like Daylight for LGBTQ consumers. There are similar ones for Black consumers, for Asian consumers. There are neobanks specifically built for women. So there are all of these different sort of segmented approaches to neobanking. Some of them haven't worked as well as other ones have. But I would say the ones that have worked the best are ones that have homed in on a set of problems that that specific segment of customers has, and it's not like, "Oh, you know, my bank doesn't respect me enough" or "Like my bank, you know, I don't like my bank." That's not like a real problem. They're focused on like, actual tangible problems. 

 

Alex Johnson  21:59

For example, I mentioned Daylight before, they recently launched a new product that is never sort of existed before the financial services space, that's designed to help LGBTQ couples navigate the family planning and fertility process, which is generally much more sort of rigorous and onerous than it is for non-LGBTQ couples. And so that I think, is a really interesting example of honing in on a problem. It's financial services-adjacent, right, because it's expensive to have kids via surrogacy or adoption. But it's also frustrating and has a lot of other like workflows and information that need to be pulled together. So I think that's a really good example of this problem that can be solved for consumers when you hone in on what maybe makes that segment of consumers unique. And what are some of the financial services challenges that they may have. 

 

Alex Johnson  22:54

And the reason I bring it up is it reminds me a lot of credit unions, right? Credit unions, their whole thing is we have a field of membership, and we serve these members better than anyone else. I think a critique I would have of credit unions over the last, say, 10 years is that we've gotten a little flabby about how we define our membership base, right. And there are valid reasons for that. And there are valid reasons for expanding the field of membership to include more people. And I understand all of the sort of components that go into that. However, I think it's really important to never lose sight of who is the segment of consumers that you can serve better than anyone else, because you know them better, you can empathize with the problems they have better. And by focusing on just serving them, you can sort of concentrate your limited resources on solving problems for them, right. So it's not a, "We're gonna be everything to everyone" strategy, it's a "We're gonna be this one thing to this one set of customers, but they're going to be loyal to us for a long time because we know them and serve them better." 

 

Alex Johnson  23:54

You know, just doing that based on "Oh, you know," geography or doing it on some very loose affiliation with some field of membership but without any real sort of teeth in it, I think that misses an opportunity. And I think these fintech companies that are sort of coming out with these niche, neobanking strategies, they're sort of illustrating that there is more of an opportunity there. And so I think that would definitely be an area I would pay attention to, if I was a credit union executive is "What are some of these almost segments within our field of membership, that we could hone in on and serve better if we were sort of more focused on our strategy?"

 

Lisa Hochgraf  24:30

You know, some of the segments that you mentioned that the neobanks are ... you called for a neobank for educators. There are lots of educators credit unions across the country. So that may be an alarm, actually, for some credit unions, that their membership is being targeted by neobank right now.

 

Alex Johnson  24:45

Hopefully, you know, I think competition makes us all better. So I think there will probably be more but yeah, I think that teachers is a good example, right? Because there are lots of credit unions that serve teachers. But you know, some questions I would have for those credit unions would be things like, "What is it about your products, not just your marketing or your field of membership, but your products that is better designed to serve teachers than the average bank or credit union product, right?" So for example, most teachers, they get the summers off, obviously, and most of them in most school districts get paid for those summer months all up front as a lump-sum payment upfront. I don't know if most people knew tha but that is true. What happens when teachers get paid up front and a lump sum at the beginning of the summer is a lot of them, particularly newer, younger teachers will spend all of that money on vacations or on whatever, and they'll get to like September, and they actually won't have enough money for the things they need right? They will struggle to pay their rent, they'll struggle to pay their mortgage, not because they're not good for the money, but just because the unevenness of their cash flow over the summer left them a little short. Well, if I was a credit union serving teachers, I would have a checking account with a built in short-term lending capability that would allow us to give a payday advance to those teachers in the fall when they're coming back from summer and maybe a little shorter on cash or didn't save quite enough money that they're going to need for the next month or two. So there's lots of those little examples hiding in there. But I would tend to doubt that most credit unions working with teachers have products that are tuned in that way. And that's what's going to happen when fintech gets into these different verticals.

 

Lisa Hochgraf  26:32

Thank you for that example. It really pulls it out as concrete when you put it into the context of educators credit unions and how they might serve their members better in the light of the fintech space encroaching on it. 

 

Alex Johnson  26:46

Absolutely. 

 

Lisa Hochgraf  26:47

So thank you so much for all your time so far. I don't, I don't want to abuse your generosity there. But before we wrap up, I do want to ask you, what question didn't I raise that you would like to answer for our listeners?

 

Alex Johnson  27:00

That is a great question. Um, you know, I think probably the question that you didn't ask would be, from a credit union perspective, should we be partnering with fintech companies? I think is probably the the question that I get a lot of times from, from credit union executives that I speak to, and the worst thing that you can do when it comes to partnering with fintech companies is to do it halfway, right? Because again, going back to what I said before, we all have very limited time and limited resources. And so doing anything halfway, I think is a mistake. But in particular, fintech is one of those things that can suck up a lot of your time and attention without really producing a lot of benefits. And so, you know, approaching partnerships with fintech companies in a halfway point is really just a way to waste time and resources. And so I do think that credit unions should be partnering with fintech companies. I think that given the slowdown that's happened in fintech from a funding perspective and just sort of an overall valuation perspective, fintech companies are kind of struggling right now. And so I think there actually is a lot of appetite on the part of fintech companies to partner with credit unions to be better partners with credit unions. They they're a little less arrogant than they used to be. And so I think there are opportunities to have really productive partnerships. And so I think that, you know, credit unions should explore that. And if they decide to do that, they should jump into it with both feet and approach the task with a lot of seriousness. I would try to hire someone to sort of attack that problem full time. I wouldn't make it just sort of a part time responsibility for one or several people. And if you're going to do it, really try to do because I think there is an opportunity there right now.

 

Lisa Hochgraf  28:45

So knowledge is power, learn all you can. And then if you get in, get all the way in, otherwise, it'll not work out as well as it possibly could. 

 

Alex Johnson  28:54

Exactly, exactly. 

 

Lisa Hochgraf  28:56

Thank you so much for all this insight, Alex. Thanks for being on the show.

 

Alex Johnson  28:59

Yeah, thank you for having me.

 

Lisa Hochgraf  29:03

I would like to thank you, our listeners, for taking time out of your busy schedules to listen to today's episode of the CUES Podcast. And many thanks to Alex for sharing so many useful insights. 

 

Lisa Hochgraf  29:15

To sign up for his Fintech takes newsletter, visit workweek.com. Click fintech. And then FinTech Takes. 

 

Lisa Hochgraf  29:24

If you enjoyed the show, you might benefit from attending CEO Institute: Fintech, which begins this month. Learn more and register at cues.org slash ceo dash Institute dash fintech. 

 

Lisa Hochgraf  29:37

To act on Alex's suggestion of looking to adjacent industries for great ideas to apply to financial services, check out CUES' new offering, CEO Dialogue at cues.org/ceo-d i a l o g u e.

 

Lisa Hochgraf  29:56

Find a full transcript of this episode at CUmanagement dot com slash podcast 142. You could also find more great credit union-specific content at CUmanagement.com. 

 

Lisa Hochgraf  30:09

Thanks again for listening today. 

 

Lisa Hochgraf  30:12

CUES is an international credit union association that champions and delivers effective talent development solutions for executives, staff and boards to drive organizational success.

- 1 - Transcribed by https://otter.ai Transcript 141 Laurie Maddalena Culture and Well-being February 2023 By Laurie Maddalena Lisa Hochgraf 00:03 You're listening to the CUES Podcast, episode 141. Lisa Hochgraf 00:08 Welcome to the CUES Podcast where leaders and experts discuss the top topics in credit unions today. Lisa Hochgraf 00:15 Our conversation with Laurie Madalena will give you lots of inspiration and ideas for how great leadership will promote well being in your organization. Laurie is the CEO and chief leadership consultant for Envision Excellence, a leadership consulting firm and CUES Supplier member that has provided coaching services to CUES Emerge participants. Lisa Hochgraf 00:36 My name is Lisa Hochgraf, and I'm CUES' senior editor as well as your host for this episode. Lisa Hochgraf 00:42 In today's show, Laurie makes some key distinctions about the difference between well-being and wellness. She also speaks passionately about the importance of leadership to both well-being and wellness. She says credit unions need to stop promoting people into management and leadership because of their technical skills. Instead, they need to promote and hire managers and leaders who already are or can be trained to be really good at, well, managing and leading. Lisa Hochgraf 01:12 In the show, Laurie talks about the connections between individual and organizational well-being, the connection between great leadership and individual and organizational well-being, the importance of boundaries and psychological safety to a healthy and productive workplace, and the role of wellness programs in overall organizational well-being. Lisa Hochgraf 01:33 This is a really passionate conversation about leadership and its impact on people. So let's get started. Lisa Hochgraf 01:42 Welcome to the show, Laurie. - 2 - Transcribed by https://otter.ai Laurie Maddalena 01:44 Thanks, Lisa, always great talking with you. Lisa Hochgraf 01:47 It's so great to have you back. And this time, we're going to be talking about wellness and well-being and the differences between the two. But first, let's start with a little warm-up. At the beginning of the year, it's going to be February when this publishes, people are still thinking about what's coming in the year ahead. And I wondered, I know you're a big reader, would you have a book or two to recommend that our readers consider taking in in 2023? Laurie Maddalena 02:12 Always, I always have an answer to that question. And yes, I believe one of the best writers of our time is Ryan Holliday. And he has a lot of books. So I definitely recommend everyone read all of his books. But there's two that I've read recently that I would recommend. One is called Courage Is Calling, and the other is Discipline Is Destiny. And he writes a lot about stoicism. And it's very applicable to our personal lives and developing as human beings as well as definitely for leaders. Lisa Hochgraf 02:45 So good, my list just got longer, will have to go add those after we wrap up here today. Lisa Hochgraf 02:51 So let's jump into the topic at hand now by starting off with some key definitions to set the stage. Laurie, how do you define personal and organizational well-being? And how do you think they're the same? And how are they different from each other? Laurie Maddalena 03:07 So this conversation around well-being. You know, I believe well being is increasingly becoming important for organizations to focus on. And it's always been important to care about people's wellbeing but I think especially coming out of the pandemic and the shifting employee expectations, it's something that is emerging as really, I believe a key element that organizations and credit unions need to focus on. And so well-being is really about overall positive functioning, feeling fulfillment and contentment, a person feeling healthy and happy in their life. And so there's personal well-being which is there's many elements of that ... your social life, financial well-being mental and emotional well-being and of course that intersects with work because we're a whole person, and we bring ourselves to work every day. Laurie Maddalena 04:00 And people who have that fulfillment and that positive well-being personally are more likely to be engaged at work and, and really bring their best self to work every day. From an organizational wellbeing perspective. I see this as the culture of the credit union. And so do you have a positive culture where people can enjoy coming to work a positive environment, managers who are supportive, having meaningful work and fulfilling work, feeling like you're using your talents and your position is aligned with that, development opportunities for growth and feeling like you can be authentic at work and use your talents. And I think this also intersects with psychological safety, feeling that you your ideas can be - 3 - Transcribed by https://otter.ai heard, that you can speak up that when you're encouraged to speak up, you're really heard. Because some companies say they want to hear your opinions and then their actions don't really align with that. So ... people feeling like they have that psychological safety. Laurie Maddalena 05:01 And personally for an employee at work, I think this also means having that flexibility, whatever that means for them personally. And their the freedom to enjoy life outside of work. So healthy boundaries so that they can rejuvenate and rest, maybe spend time with their children and their families, and not a toxic, demanding manager who does not cultivate positive functioning. And I think that's something that a lot of companies really struggle with. Laurie Maddalena 05:31 So there is an overlap here, I believe, just as an example, boundaries. So at the organizational level, does the organization, does the executive team, do the leaders really cultivate and support people having healthy boundaries? Do they demonstrate that? And I think unfortunately, the answer to that, in many cases is no. I've talked with several people even over the past few months in credit unions who say, "I constantly have to be connected when I'm on vacation or on the weekends." And I understand there's some positions, maybe a specific IT position, you need someone to be available. That's understandable. But this is more of their overall practice that people have to be connected all the time. And they're feeling burnt out. Like they don't have that rest. I think now that people are working virtually even, they're working more in many cases. And so is the credit union promoting those healthy boundaries so that people can enjoy their work outside of or their life rather, outside of work? Laurie Maddalena 06:33 I really think people are looking for their work to contribute positively to their life now, and not be at the expense of their personal life. And it's beyond just financial security. I think, you know, maybe 30 years ago, a lot of people worked really, for financial security. Really, I think there's been this evolution. And people are really wanting more of that time outside of work to enjoy life. Lisa Hochgraf 06:58 It kind of sounds to me like the workplace and the organizational well-being is a part of a person's wellbeing right? If they work in a place that values well-being and has good management and has boundaries like you're describing, that may contribute to their overall self well-being. Laurie Maddalena 07:17 Absolutely, I mean, we spent so much time at work. And people, I think, really are connecting more with organizations now that recognize that that, you know, I'm bringing a lot to my work life and bringing a lot of energy effort, mental and physical energy and effort. And do you care about the fact that I have a whole nother life? Laurie Maddalena 07:36 I was just talking to somebody yesterday, who said, you know, especially for working parents, there's been a shift, right, there's a lot more dual, both parents working in the house. And that puts a lot of stress on the modern family now of how you do the household stuff, too. And that we often think that - 4 - Transcribed by https://otter.ai when you come to work, you've got to focus just on work, and you have no other responsibilities. And when you're home, you have all this stuff to do. And then you also have work competing, right? Laurie Maddalena 08:03 And I know, I personally struggle with this. Even today, for example, we're recording this podcast, and I'm thinking about I've got to make cupcakes for my son's birthday party tomorrow. And I have friends coming in town and we've got to do grocery shopping and like all those things don't go away. And particularly for professional women who there's research around, they do most of the invisible work still that isn't seen ... the camp forms and the doctor appointments and all these other things that aren't necessarily tangible. The stress is just mounting. And I think as organizations if we're going to compete and be relevant, I mean, you certainly it's a choice. I believe that if if credit unions are not talking about this at the strategic, executive level, they'll really struggle to compete for awesome talent. Lisa Hochgraf 08:50 So let's talk more about the tactics involved with organizational well-being that then feeds the personal well-being of employees. Some credit unions and other companies offer wellness programs. How do they fit in? Are they different from well-being in the big picture? Or are they part and parcel? Laurie Maddalena 09:07 I think, well, wellness programs are great, and they're a subset of well-being. So it's more of a like a program. It's a part of it and things like gym subsidies and health subsidies, I know some some credit unions do health fairs and a lot of organizations have been doing those things for a long time. I think those are great. That's promoting healthy living, and certainly that impacts the person's personal life as well as their family, you know, EAP programs, all of these things are excellent. They're really just tactics, as you said, they're the elements of well-being. Well-being to me is much more overarching. And it really intersects with a culture what how do people feel when they're coming to work every day? Laurie Maddalena 09:54 I know companies that do all those wellness programs and do a lot of these you know, kind of great benefits. Maybe they're even recognized as the best place to work. But really, the reality is, they're not cultivating a great culture where people feel like they can bring their best and also live their best life outside of work. I think that's a shift and an evolution that's been happening, I believe in a positive direction. Laurie Maddalena 10:20 But I think back to when I entered the workplace, I hate to say it was kind of like 30 years ago. Lisa Hochgraf 10:26 Me too, me too. You're not alone. Laurie Maddalena 10:28 When one day I woke up and was middle aged, I don't know how that happened. But I mean, it just was a different world. And at that point, I remember you just really, everything was about work. I had some great bosses but there wasn't much talk about engagement and coaching. And all of those things, I - 5 - Transcribed by https://otter.ai think, really evolved over the past 25-30 years. And so we're talking about something different now. It's, it's definitely much more complex to be a leader today. And this is really what we need to focus on, though, as leaders and as organizations is how do we support the well-being of our cultures and create cultures that cultivate well-being and also wellbeing for our employees in their personal lives? Lisa Hochgraf 11:11 So how do leaders do that? How do they cultivate a culture that supports well-being? Laurie Maddalena 11:17 Well, I'd like to start with some things that they should not do, because I think some of these Lisa Hochgraf 11:20 Okay Laurie Maddalena 11:21 thinsg are common. And then I'll move to some things that we should do. Because, you know, for example, expecting employees to be responsive and available constantly, is insisting employees being in the office all the time. Now, I'll caveat that by saying, I really think this, this conversation around flexible work environments, and particularly work-from-home depends on your business model, and depends on the position, because I think sometimes, you know, we have this kind of paint brushstroke of, well, now everybody needs to be able to work from home. And I know that's not necessarily going to happen in some organizations. So for example, if you have a model in your credit union where you have branches and you have member service representatives. They may not have the opportunity to work virtually in their positions. And that's okay. Laurie Maddalena 12:12 So I think the first step is knowing your model. And there are other creative ways you can be flexible, you know, even with PTO and supporting people with things that are important to them, maybe to take time off with. So yeah, expecting people to be consistently connected all the time, I just, unless you're a doctor, and you're in a position in that kind of where it's the expectation, and that's just kind of how it is. I don't think that's realistic. Laurie Maddalena 12:39 The traditional practices like, you know, micromanaging, no feedback, reprimanding rather than coaching, no development and coaching, not investing in a person, that's very common still. Laurie Maddalena 12:52 So I really think it really comes down to leadership quality and management quality. So making sure we're assessing are managers in the right, right spots? Do we have the right people who really understand this concept of well-being and how important it is? Laurie Maddalena 13:08 I really encourage CEOs and executives to look at, maybe even do sort of an audit of their culture, and really get on the ground and understand what people's experiences are. Because I think sometimes we - 6 - Transcribed by https://otter.ai can promote organizations of, "Oh, we care about you and we want to hear your ideas and we're a great place to work." But the practices that our managers are implementing aren't necessarily aligned with that. And so we need to be able to take a step back, and are your leadership, are your leaders demonstrating that people need to be constantly connected? Are they constantly working and setting this example, and not setting those healthy boundaries? Laurie Maddalena 13:48 So and I really think that management quality is a huge piece of this. So stopping the practice of promoting people for technical expertise and tenure. And I think I said this in one of our other conversations, and I'm so passionate about this, that the way we start to shift cultures is to make sure we're promoting people into leadership positions who belong there and who are capable of that type of skill. And if they are skills, and not everyone is meant to be a leader. Laurie Maddalena 14:23 I think back to when I was an executive at a credit union. My best employee who I worked with, was fantastic, technically. And my CEO came to me and said, "You really should promote her. She's so great. She should be a manager of HR." And this employee said to me, "Don't ever promote me. I never want to be in that management role. I don't enjoy tough conversations. I don't want to have to deal with the people issues. That's not my sweet spot and my talent." And I so appreciated that about her because she was very self-aware. She was fantastic in the role she was in, and it was aligned to her skills, her talents and her passion. Laurie Maddalena 14:59 And, and I think we start to to shift people into these roles and we don't prepare them. So making sure that we're also preparing people before they get there. You know, most of us didn't have leadership training or coaching or development before we moved into that type of role. And that's something that will really make a difference. Lisa Hochgraf 15:23 This is kind of a sidebar, or a new question to advance your what you're saying, maybe? So, do you have tools that you use in your practice of consulting to help organizations figure out who those people are that are likely to do well if you promote them to management? Or likely if they're already in management to do well with leadership training or coaching? Laurie Maddalena 15:47 Uh huh. Lisa Hochgraf 15:48 How do you know? Laurie Maddalena 15:49 Yeah, we use a talent assessment of really defining the competencies that are necessary in that type of role, and then realistically evaluating someone where they are now. And you know, I was just doing a session a couple of days ago. And we were talking about what happens when you have this employee - 7 - Transcribed by https://otter.ai who is constantly asking to be promoted, and they want to be a manager, but you feel like they're not ready. And I said, this is a really awesome opportunity. And sometimes I think, especially newer people or younger people, they when they're showing signs of wanting to be promoted, from my generation, we think, "Gosh, I had to work 10 years to get to that place, you know, how to work so hard to earn and pay my dues." I see that as an opportunity for a conversation. And so another way that we can do this is when someone is asking for that promotion, and we feel like they're not ready, is to open up the conversation, say, you know, "What, is it that entices you about a management role? What do you what makes you interested in that? What do you see that you like? And maybe they say, "Well, I think I'd be in charge, and I can make more money." And yeah, those things happen. And it's also these things, tough conversations. You know, really having to create clarity for your employees all the time, caretaking the culture, and sitting down and sharing with people feedback, even constructive, but also positive, and really lay out for them what it looks like, giving them that peek behind the curtain so that then you can assess where they are. "Okay, so tell me how you feel like you do with tough conversations. That's probably something you haven't done much of so how can we develop your skills to there?" So I think part of it is assessing where they are, you know what that gap is. And as a leader, the best leaders I feel are coaching people to build those skills before they move into that role. Laurie Maddalena 17:45 Netflix, I know uses a question of if I would I promote this person knowing what I know now, I think it was Netflix that does that, I think that's a great question of someone who's already in a management role. Knowing what I know now, would I still promote that person. Lisa Hochgraf 18:01 That is is a great question. Yes. Yes. Laurie Maddalena 18:04 Yes. It's kind of a truth teller question, right of it's not easy. But if you realize they're, they're not aligned in the right position. Certainly, I think the best time to do that as before, is to make sure that people know what they're getting into, I really didn't know what I was getting into. Now, I love it. I've learned to I've learned the skills and in many ways had to go out and learn that on my own because I didn't receive formal training in the beginning. But I know people who were in those roles who were like, "I, gosh, if I could choose now, I wouldn't choose this. I don't enjoy this. I don't enjoy people." There's some days, I think all of us maybe don't enjoy people. But if you really don't enjoy people, it's not a position you should be in. Lisa Hochgraf 18:46 This so interesting because we started off talking about well-being. And then we talked about creating a culture for well-being and now we're talking about something much more foundational, which is how to choose the leaders for your organization that will even make well-being possible for your organization. Is that a fair summary? Laurie Maddalena 19:05 Absolutely fair and foundational, and yet, not always prioritized in a lot of organizations in the work I do. I think if we surprise people to know and maybe not surprise people because I think this is a fairly - 8 - Transcribed by https://otter.ai universal challenge is there are still leaders in roles who should not be there. We're still promoting people for the wrong reasons. We see that they have credit union experience, and we they rise to the top of the pile from, you know, when we're recruiting from outside the credit union, and instead of looking at leadership qualities and competencies. So, this is a place I believe that executives and CEOs can really shift your culture. It doesn't happen overnight, obviously, and it's really a slow shift, but can accelerate it if you make sure that you're evaluating your management quality. That is the biggest piece in my mind of creating a great culture, keeping your employees engaged, keeping your talent and creating this sense of well-being. Lisa Hochgraf 20:12 So it sounds to me like you're saying that if your leadership has been well-chosen and well-developed, then you are way more likely to have a culture of well-being. Laurie Maddalena 20:23 Absolutely. And all of these challenges and the complexities that come with leadership will become easier because you have people in place who, who really understand it at the fundamental level of why this is important. So you don't have to convince people why they should be coaching or spending their time creating connection. They get it. And when the people who are in those roles get it, it's really helping them to align the practices of how they're spending their time and making sure they're prioritizing it, less about having to convince people. And so really, it accelerates is so much when you have the right people who understand I call it caretaking the culture, the importance of caretaking the culture. Lisa Hochgraf 21:09 And it also sounds to me like you're saying that there are definitely people that are aligned to be ready to learn the tools they need to lead a culture into a place of well being, but that it is a teachable thing. So that people that are primed for that can learn to do it even better than maybe they do it innately. Is that fair too? Laurie Maddalena 21:28 I think that's very true. In many ways. I do believe we can teach a lot of these skills. I do think there are people who have some innate qualities that align very well to leadership roles. If you're naturally empathetic, if you're a great listener, if you are authentic, and these are just natural type of qualities you have, that piece will be easier. Maybe it won't take as much energy and effort yet that it's so complex. Now leadership is so complex, I'm constantly learning and shifting approaches. The the way that I lead now is different than the way I lead 20 years ago, even in my business of almost 15 years, there are some things I've shifted because our world, our culture, overall culture is constantly evolving and changing. Laurie Maddalena 21:44 You know, the pandemic, the past few years has shifted employee expectations even beyond what we already had. And so and I expect that five years from now, there might be other shifts. So we need people who are able to adapt and align their practices and are committed to that and enjoy that. So there will always be things to teach and maybe new skills or approaches or ways to learn things. I do - 9 - Transcribed by https://otter.ai think the desire and the ability to build self-awareness, know yourself, your strengths and your limitations, and be able to adjust your style with different employees are really important elements of being effective. Lisa Hochgraf 23:02 Indeed. So based on this premise that leaders can develop their innate skills to be even better at the things they need to do to lead well in general and to promote the cultural well-being, what would you say ... whether that person is just a born leader or whether they're learning their way through ... what would you say is the single most important thing for a leader to do to support organizational well-being? Laurie Maddalena 23:28 Well, I think beyond what I've mentioned, I think you know, as a leader or a middle manager, let's say in an organization, really creating those connections, getting to know your employees, caring about them as individuals, not just an employee, you know, showing empathy, I call this the frontstage versus the backstage, You know, we see the front stage of people come to work, whether it's in person or, or virtually, at least from the waist up, they look professional right there. They look like they've got it together. They pulled it together today, and they bringing it you know, they're coming in and ready to work. Yet on the back end, the backstage, they have a whole life that we don't see. And I'm not suggesting that we as leaders need to know all the details, personal details of our employees' lives, because that's not true. And yet, I do think we need to build connection so that people know we care. You know, you and I were talking before about our own personal things going on, right? And I certainly have some things going on in my life behind the scenes that no one sees. And I've shared that with with some clients and others, and I think sometimes we can have this facade not even just in leadership, but in in our world. Like right we see social media and all these vacations and wonderful things people are doing. And we don't see the backstage of the realities of life. Life is still happening. Someone could have a struggling kid in school or lost a parent or a sibling or someone's sick and I've talked with clients over the past few weeks where I'm hearing more and more of these stories. Laurie Maddalena 25:02 And so, as a leader, I think it you know, again, you don't need to know all the details, but if people share it of supporting and being empathetic. But from an organizational executive CEO perspective, again I would say, getting to know what's really happening in your credit union. And this may sound like, "Well, of course, I know what's happening." But I'm not so sure a lot of times, we as leaders know the ground truth. We may know what the official truth of what we say, but what's the ground truth of people's experiences? Laurie Maddalena 25:36 So understanding how the the management quality, again, of how people are experiencing their managers, maybe doing a survey of engagement. I also think capacity, you know, I've been talking with a couple clients recently about when we set goals for our organizations, in my opinion, most companies set way too many organizational goals, and we don't take into consideration capacity and resources. For example, IT is involved in almost every project, and we get halfway through the year and then we realize, "Oh, IT can't possibly do all these things. And then we spent a whole bunch of energy on things that we don't make movement on, and we don't meet our goals. - 10 - Transcribed by https://otter.ai Laurie Maddalena 26:19 This is something personally, I even work on in my own company. And I'm a pretty small company. But we consistently talk about quality of life and about capacity and being realistic about what we can accomplish as an organization. And we may have lofty goals, but let's really map this out and look at what's possible, and not expecting people to do more with less. I think that we've kind of really snowballed this thinking of when we don't hire and we cut back and then we throw more on more people and really assessing that and looking at the capacity. Laurie Maddalena 26:55 Business results are very important. So I think, you know, we definitely need to make sure that we're prioritizing those results, but also, how are we doing that? It's with our people. Lisa Hochgraf 27:05 So it sounds to me, like the single most important things for leaders to do to support organizational wellbeing is to keep people in mind. Yeah, your results are great; yeah, your processes can get better and better. But if you don't know what the people read is when people are working in their cubes or at the teller station or in the drive thru every single day, then you're missing a big piece of the puzzle. Laurie Maddalena 27:30 Absolutely. And I think this seems common sense to a lot of leaders who get that. Yet again, I'll go back to I think it's not always common practice. And it's interesting, because I've had a few conversations lately, where some CEOs have said to me, "You know, I feel like the pendulum though, is going all the way over to this other side. We've gone from this, you know, more traditional environment where we're results-oriented and maybe transactional and getting things done. And now we're all the way over here to where everyone wants to work from home, and everyone wants what they want, and, you know, pet insurance and all these different, you know, benefits and you know, where where is it too much? And I think that's a really valid point of, yes, we are in business. Every business is in business to get results, right, to serve whomever, you know, serve our members in this case. And results are important. So we're not saying that it's people at the expense of results now. It's yes, results are important. How can we best support the organizational goals, mission, vision and accomplish and provide exceptional member service and also care about the human beings who are behind that, and who are bringing their energy and effort to work every day? Laurie Maddalena 28:48 So it's that balance in the middle? It doesn't necessarily mean everyone's working from home, you have to make decisions as leaders, and I know some of my clients have had to make some of those tough decisions. And maybe you don't make everyone happy. But this is our philosophy as our organization. This is what we're doing. And really making sure that your leaders understand that. So what is your philosophy of how you work? Are you expecting people to be connected constantly? Are you expecting people to have phones and be available at 10 p.m. every night? Answer emails? Or are you going to create some of those boundaries so that people can rest and rejuvenate and bring their best to work every day? - 11 - Transcribed by https://otter.ai Lisa Hochgraf 29:28 So Laurie, what question didn't I ask that you would rather like to answer for our listeners before we close up today? Laurie Maddalena 29:35 Well, I think I was just, you know, thinking about that pendulum question was one that's been coming up a lot about the measuring results. I think, you know, the last comments I'll just make are that, as I mentioned, leadership is becoming more and more complex. It's definitely harder to be a leader today in my opinion than it was 25-30 years ago. We have five generations in the workplace. People have different values, different experiences, grew up at different times, different backgrounds. And so it's not easy. And it requires even higher level skill. Laurie Maddalena 30:09 And so while I think 25 years ago when I entered the workplace, being a leader wasn't easy. But I think we could get away with having people in leadership roles or management roles who are a little more task-oriented and transactional and, and to be clear, that worked maybe even for a long time. People weren't expecting to necessarily get coaching. We weren't talking about these things or not that people didn't want fulfillment. But I just think it was a different time. And now, as society has evolved, and we have more women in the workplace, both parents working, and you know, we don't have someone at home, taking care of everything. I just said to my husband the other day, "We need an Alice from The Brady Bunch." Because some days, I feel like I'm a rock star for all the things I'm doing of, you know, getting the camp stuff, oh, I got those cupcakes made. And I'm, you know, I'm getting my client, doing all the things I need to do. And sometimes I feel like I'm hanging by a thread. And this is the reality of people's experience, especially I think women, and so we need to make sure again, I'll just go back to that management quality. I think the manager, the direct manager has the biggest impact on an employee's experience at work. And so if we want to continue as an industry and also as organizations to be relevant, to be attractive, not only to our members and grow our membership, but also to employees, and really start to accelerate the progress we can make in our organizations and our credit unions and as an industry, it really comes down to how are we treating our people. Lisa Hochgraf 31:47 I love that. Laurie. Thank you so much for sharing your perspective and your passion for what you do on the show today. Laurie Maddalena 31:54 Thank you Lisa, great talking with you. Lisa Hochgraf 31:58 I would like to thank you, our listeners for taking time out of your busy schedules to listen to today's episode of the CUES Podcast. Lisa Hochgraf 32:06 And many thanks to Laurie for sharing so many useful insights. To get more information about Laurie's firm visit Lauriemaddalena.com. That's L-A-U-R-I-E-M-A-D-D-A-L-E-N-A.com. You can also connect - 12 - Transcribed by https://otter.ai with Laurie on LinkedIn, where she shares leadership resources. Learn more about the CUES merge program at CUES emerge.com Find a full transcript of this episode at CU management.com/podcast one for one. You can also find more great credit union specific content at CEU management.com. Thanks again for listening today. CUES is an international credit union association that champions and delivers effective talent development solutions for executives, staff and boards to drive organizational success.

 

Transcript Podcast 140 CDAs Bruce Bauer

January 2023

 

By Bruce Bauer

 

Tony Covington  00:03

You're listening to the CUES Podcast, episode 140.

 

Tony Covington  00:07

Thank you CUES Podcast listeners for tuning in. Today's conversation with Bruce Bauer will provide some great details about a way your credit union can make the most of its charitable giving. And that is by setting up a charitable donation account. Bauer is an executive benefits specialist with CUESolutions provider Cuna Mutual Group.

 

Tony Covington  00:26

My name is Tony Covington and I'm the vice president of business development for TalentED, powered by CUES. TalentED helps nonprofits develop mission-driven, passionate and talented leaders, backed by CUES and its 60 years of experience, vast professional development resources and partnerships with esteemed business schools. TalentED offers eCornell certificate in nonprofit leadership; TalentED Consulting, helping nonprofits identify areas of opportunity through customized action plans; custom learning packages that feature asynchronous courses and group coaching sessions,;and finally, the Real Estate Governance Leadership program with the Rotman School of Management from the University of Toronto. Visit TalentED.org now and discover how you can help support the nonprofits you are passionate about.

 

Tony Covington  01:21

I was really excited when Bruce and I first started talking about charitable donation accounts, known as CDAs. That's because CDAs align beautifully with TalentED's aim to help credit unions support their nonprofits of choice with the kind of professional development that will help them more effectively achieve their goals. Investing in professional development through TalentED is good for the nonprofit, the credit union and the communities they serve.

 

Tony Covington  01:47

In the show. Bruce will define what these charitable donation accounts are, describe how to set one up for success, and also tell us a few stories about how credit unions have leveraged a CDA to assist nonprofit organizations with fulfilling their missions.

 

Tony Covington  02:03

So let's get started.

 

Tony Covington  02:07

Welcome to the show, Bruce, really excited to have you on.

 

Bruce Bauer  02:10

Thank you, Tony. Great to talk with you again and and hope all is well with you.

 

Tony Covington  02:15

Yeah, hanging in there, man. We are really chomping at the bit to talk to you today about charitable donation accounts. To get started, let me ask you, how would you define a CDA?

 

Bruce Bauer  02:19

The definition of the CDA was really defined by the NCAA when they established the regulation in 2013, which allows credit unions to use other investments that were would otherwise not be allowed by section 703 and 704 to fund donations to a 501 c3 charity. So basically, what we're looking at here is the the credit union is allowed to use other investments to put into investment, earn some initial revenue and have additional dollars that they can have additional revenue that they can steer towards their charities or their foundation.

 

Tony Covington  03:03

Wow, that's amazing. So what are some ground rules for setting up and maintaining a CDA at a credit union?

 

Bruce Bauer  03:09

Yeah, the ground rules are first a credit union can only invest up to 5% of their net worth into the charitable donation account, and then 51% of whatever investment they use. So 51% of the earnings on that investment have to be given to a 501 c3 charity or a foundation. Distributions of those earnings need to be at least every five years. But it's mostly recommended for them to do that on an annual basis. And the board needs to sign an approval on it. There's a document or policy statement attached to it, and it's a separate investment they would have on their books.

 

Tony Covington  03:47

Okay. Can a credit union donate to any nonprofit organization through a CDA?

 

Tony Covington  03:52

Yeah, as long as it's a 501 c3, charity, really a couple of ways they can they can, they can directly send the money to that charity, or they can put it in their own foundation and then distribute it accordingly, how they feel necessary to direct their funds.

 

Tony Covington  04:09

That's very helpful. Who can authorize investment decisions for credit union CDA?

 

Bruce Bauer  04:16

Credit unions themselves have the opportunity to do examine all the investments out there for for funding a charitable donation account. They can look at, you know, some very attractive fixed rates, they can look at investments in indexed and indexed accounts. They could have managed portfolios. So however they want to, you know, from a risk tolerance standpoint, however, they want to fund their charitable donation account, they can do that. And then the account generally has several authorized credit union executives that are named to oversee the plan and look on on a regular basis.

 

Tony Covington  04:48

How often can a credit union contribute?

 

Bruce Bauer  04:52

They can, well, you revolve around that 5% of net worth. So they can they could do it in a one lump sum to start and just have that 5%. You know, as long as they stay within that 5% of their net worth, they can put it all at once or they can do it on an annual basis as long as they don't exceed that 5% of their net worth.

 

Tony Covington  05:12

Okay. And how often does a credit union need to make a donation through a CDA?

 

Bruce Bauer  05:18

It is it is recommended that the CDA be done on an annual basis, but they do have five, they do have that five-year window if they want to if they want to do that. I mean, most credit unions have an expense budget for charitable donations on an annual basis. I mean, that's, that's a regular budget item for them. And if we can come in and build a CDA that earns them some additional revenue, it may take that expense off of their budget and free up some expense for other things. Or, it may give them additional revenue to exceed that budgeted amount and give additional dollars to the to the foundation or charitable donation, they would like.

 

Tony Covington  05:55

Man, I tell you, I having come from that nonprofit world myself 20-plus years, this is tremendous information. You know, I mean, I know, having that nonprofit background, man, it was always a challenge trying to find creative ways to be able to bring in donations from various donors. So this is a great opportunity for credit unions to be able to really put their dollars towards the impacting the community.

 

Tony Covington  06:21

What do you love about working on charitable donation accounts with credit unions? And can you tell me a story that illustrates why you're passionate about the aspect of your work?

 

Bruce Bauer  06:30

I just think from, you know, from being in the credit union marketplace, for as long as I have, it's just, it's just an unbelievable opportunity for credit unions to to build their brand in their community and build their image as they desire, you know, for their, for their credit union to be looked at. I mean, credit unions have have used CDAs to build facilities that provide free-of-charge financial literacy classes. They've actually built library branches with with CDA dollars. Credit Union for Kids is a is a big part of donations. I mean, one credit union, even on their 70th anniversary, provided 70 different wishes to their, to their memberships based on applications and their needs that that they read. So I thought that was pretty good. It's just exciting to hear how a credit union can take these ideas and build plans. And you know, the CEO loves it because they can build their plan with a credit union vision. CFOs love it because they got additional investment options they can work with. And then the marketing team loves it because it gives them the ability to build ways to help their community and and make their credit unions a place to trust for the for the whole membership.

 

Tony Covington  07:49

Yeah, I mean, this is just awesome. And what I found, amazing, I say is, when you and I were talking to the folks and at Symposium last February, and a lot of people don't, a lot of credit unions aren't familiar with it, or at least some of the folks that were in the stands, they weren't familiar with what a CDA is. Some that did referenced some of the things that that how they're impacting the community. But I was really astounded when I saw that not a lot of credit unions really know the power of what a CDA can do for them.

 

Bruce Bauer  08:24

Yeah, it's, I mean, once you listen to and you look at the numbers, I mean, if you can, if you can get additional revenue from the same amount of dollars that they have in an investment right now and earn, you know, some additional basis points. I mean, that's just dollars, that's free money that's sitting there for him that that they can use and, and build, you know, build their community and build their build their credit union brand. So, it sometimes seems to get pushed down the list of things. I know liquidity is, is a big issue for credit unions right now. So, you know, it's probably pushed down a little bit farther there. But as I said before, it's always going to be an expense. And if we can find a way to offset that expense or get that expense off your off the credit union books, I think it's a win-win for everybody.

 

Tony Covington  09:09

Wow, truly amazing. All right. Before we get you out of here, we use, we usually end our segment with something called a message in a bottle. That is if you could put a message in a bottle and send it to your younger self. What would you say?

 

Bruce Bauer  09:26

That's a that's a that's an interesting question. It would make it a lot easier to help the credit unions pick the right investment from the past. So that would be the first thing I'd write in there. But I'm not I'm not really a backwards thinker. I think that message that I have now and moving forward to understand what the NCUA has provided them. And let's, let's just keep, you know, keep educating credit unions on what the CDA can do. And let's just help them build a creative way to to help charities in their communities, help the credit union brand and in and help the credit unions dominate the community banking space.

 

Tony Covington  10:08

That sounds like a drop the mic moment for me. Bruce, thank you so much for being on the show.

 

Bruce Bauer  10:14

It was great talking to you Tony and look forward to seeing you again.

 

Tony Covington  10:19

I would like to thank you, our listeners, for taking time out of your busy schedules to listen to today's episode of the CUES Podcast.

 

Tony Covington  10:27

And many thanks to Bruce for sharing so many useful insights.

 

Tony Covington  10:31

To get more information about Cuna Mutual's CDA products visit tinyurl.com/cunamutualCDAs. To get more information about TalentED, visit talented.org Find a full transcript of this episode at CUmanagement.com/podcast 140. You can also find more credit union-specific content at CUmanagement.com.

 

Tony Covington  10:56

Thanks again for listening.

 

Tony Covington  10:58

CUES is an international credit union association that champions and delivers effective talent development solutions for executives, staff and boards to drive organizational success.