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Islanders work to create a credit union on Vashon
A group of Islanders has been working since January to bring a credit union to Vashon, a move they say will give Vashon more control over its financial resources and an ability to invest in people and projects in a meaningful way.
The group’s motto — Our Community, Our Money — speaks to the group’s aspirations and the merits of credit unions, which are experiencing an increase in membership as people have grown less enchanted with large commercial banks and some of their practices.
Credit unions — owned by their members who elect volunteer boards to steer the institution’s course — typically offer lower interest rates on loans, higher interest on savings and fewer fees for services than a bank. Credit unions can also provide innovative financial programs and services banks often don’t offer.
Organizers believe a credit union on Vashon would benefit the Island’s social, fiscal and environmental fabric.
“We could do the right thing for the environment, stimulate the local economy and invest in our community,” said Bill Moyer, the executive director of the Backbone Campaign and one of the main organizers of the credit union project. “We could be taking control of our money.”
Over the last several months, four people have served as the coordinators of this endeavor: Moyer; Rob Harmon, a green business innovator; Amy Herbig, a credit union marketing expert; and Rex Stratton, a lawyer with roots in the financial industry.
Calling themselves “the wheels on the bus,” they’ve led a diverse group of about 15 people who have been learning just how to begin a credit union from the bottom up. Nearly every Tuesday afternoon they gather to move this vision further along, and now, after hundreds of hours of work, including consultations with the head of the state’s Division of Credit Unions in Olympia, the group expects it is weeks away from bringing a survey to the community. They’ve been testing it out on small numbers of people to fine tune it and hope to have it out by May 1.
“We’re trying to figure out what the community actually wants,” said Harmon. “And we’re trying to provide more information so people understand how the credit union would address the specific needs of Vashon — needs that are a deep representation of our values.”
The state requires this survey — with at least 500 responses indicating support — before it will consider issuing a charter for a credit union. Noting that many people have already expressed interest, Harmon said, “I fully expect to get 1,000.”
In true Northwest fashion, the idea of forming a credit union on Vashon began over coffee. Harmon and Moyer were at The Hardware Store Restaurant last November, talking about the Backbone Campaign’s Coal-Free Zone initiative and other potential green Island projects when Harmon said he thought those projects would likely never happen because of lack of capital.
“Until Vashon controls its own financial resources, we will be severely limited in what we can accomplish,” he recalled telling Moyer. “We need our own bank or our own credit union.”
The two then left the Hardware Store and went to consult with Emma Amiad, a real estate agent and community activist, who believed the idea worth exploring and suggested some people for them to seek out.
Before the holidays, Moyer and Mark Graham, who was also interested in the idea, took the concept to Island Green Tech, a business incubator on Vashon. The group, which meets weekly at the Vashon Island Coffee Roasterie, liked the notion, according to Stratton, a member of Green Tech.
One of Green Tech’s tenets, Stratton said, is “if you think it is worth doing, take ownership.”
Stratton did just that, Moyer said, completing a “heroic” amount of work over the holidays so that interested people were able to begin work in earnest in January. Stratton said he was helped considerably in the process by Islander Jerry Henley, a retired banker who used to live in a small town in California, where he began a bank that became quite successful.
Stratton is also quick to acknowledge considerable assistance from Washington’s director of credit unions in Olympia, but that assistance has only gone so far.
“They’ve been a lot of help,” he said. “Starting a credit union is really difficult. She has not been, like, ‘This is going to be the easiest thing you have ever done.’”
Indeed, it is a tall order. There are numerous state and federal regulations to contend with as well as a plethora of details inherent in creating a sound financial institution from scratch. Should it come to fruition, it will be an institution that fits they Island, organizers say, noting that the services that credit unions offer vary and are based on assets, regulatory requirements and available resources.
A basic credit union, for example, might have one employee, have $2 million to $4 million dollars in assets and offer savings accounts and a few loan options. On the other end of the spectrum would be a credit union with more than $25 million in assets, considerable staff and a full range of services.
Regardless of the size, organizers say a credit union would open up possibilities on Vashon.
Residents, for instance, who want to lessen their home’s energy consumption might not be eligible for loans because of a lack of equity, Stratton explained. But a nonprofit group could form on the Island and appeal to an environmental foundation for grants that would provide collateral for those loans. That money would be deposited in the credit union, making those environmental improvements possible, furthering the work of the foundation and meeting the needs of the community.
This kind of arrangement, called program-related investment, is becoming more and more common, said Harmon. It is a kind of partnership that could be used for a variety of purposes, Harmon added, including solar energy systems or the long-time Island problem of improving faltering septic systems.
Like at all credit unions, policies would be determined by an elected board of directors, so it is impossible to say exactly what a Vashon credit union would do. But regardless, organizers say, how it would do business would be much different than at a large bank — and would be a practical solution for many problems.
Once the survey phase has been completed in May, Stratton said, the group will create a business plan and secure pledges for capital. State regulators say credit union organizers would need to have $200,000 in hand before the state would issue a charter — funds that would serve as the operating budget for the first two years. The money would need to come in the form of non-tax-deductible gifts from Island individuals or businesses.
The survey will provide a lot of information, organizers say, adding they’re optimistic they’ll find a plenty of support on the Island.
“Everyone would like to have more control over how their money is used,” Harmon said. “It is more or less universal, regardless of where they are on the political spectrum.”
Though there is much information to gather and work to do, organizers hope that come next January, a Vashon credit union will be opening, ready to welcome people who live and work on the Island.
“This could really be exciting for Vashon,” Stratton said. “If we can be successful at this, we will have created something of real value to the community.”