By William A. Foster, IV
“Find a need and fill it. Successful businesses are founded on the needs of people.” – A.G. Gaston
Imagine a financial institution whose branches span from coast to coast and in every major city in the United States that has a large African American population. A full service financial institution that provides affordable mortgages, insurance, student loans, small business loans, commercial loans, investments, lines of credit, manages over 100 institutional endowments, provides financial literacy, employment for thousands, and even conducts financial research as a de facto Federal Reserve. Now imagine that it is controlled by, operated by, and serves African America. That financial institution would be the HBCU Credit Union and its scope, reach, and impact for African America and even the African Diaspora if the vision is aggressive would be unrivaled in the world of finance.
A credit union is a cooperative financial institution that is owned and managed by its members, and is regulated by National Credit Union Administration. Typically, a credit union is formed around a shared interest. Some examples are teacher’s credit unions, firefighters, and in the case of the Navy Federal Credit Union any member, family member, or employee of the entire Department of Defense. Currently, there are a number of credit unions that are located in HBCU towns, like Prairie View A&M University Credit Union and Virginia State University Credit Union just to name a few. Usually, each has a single branch and provides very limited products and services to students, faculty, and the respected HBCU that bears its name.
We’ve all heard the numbers. African America has over $1 trillion in buying power annually and yet less than 1% of that money sits in financial institutions owned or controlled by us. HBCUs and many African American organizations, like UNCF and Thurgood Marshall Fund, bank with European American owned banks. In fact, the only HBCU, albeit a non-traditional HBCU, that I know of that had an African American banking presence on its campus was Medgar Evers College in New York who had Carver Bank, one of African America’s top 3 largest banks, with a presence on its campus. Controversy would follow at MEC when the administration decided to replace Carver’s ATMs with ones from a European American owned bank. It is actions like this that are an enormous strategic failure on our part. You’re giving all of your economic and financial power to other communities who do not have your same economic interest. These types of actions are also cutting off our ability to circulate the dollar which, if a financial institution is operating properly is its real purpose. Financial institutions also protect the economic and financial interest of the community or group of people that owns it. Unfortunately, we give up that institutional control (see desegregation) and then we are surprised when our neighborhoods are gentrified because we can’t get access to capital to build them up, we are burdened with absorbent fees, our HBCUs can’t find funding for renovations or buildings, students can’t get financing for school, or we’re given an abnormal amount of subprime toxic mortgage loans even if we qualify for traditional ones. At some point we need to take control of our own financial destiny.
Moving to an economy of scale with any of our business industries has plagued African America’s economic growth time and time again particularly because we have too many generals and not enough soldiers. As mentioned, we have a number of singular credit unions with reach typically not beyond their locale. They are not full service institutions and the desire to use them becomes more and more limited as students or faculty members financial needs mature. In some cases they are even lacking basic products like debit cards and services like online banking. These credit unions are of virtually no use to the HBCUs themselves who have far more complex financial needs than simple checking and savings. The lack of size and capital of a singular unit simply does not provide the depth of scale that is needed.
From the very outset the HBCU Credit Union would have access to 180,000 full and part-time employees, approximately 400,000 current students, well over a million alumni, national accounts of the Divine 9, city and town accounts of which the HBCU is located, HBCU endowments worth over $1.5 billion, $400 million in HBCU research expenditures, $10 billion in short term economic impact annually, countless number of HBCU owned businesses, and a pipeline of the brightest African American business minds in the country to run it.
I envision this project being led by Dr. William Harvey, President of Hampton University. His foresight on financial matters as they pertain to HBCU economic development has been nothing short of genius in my humble opinion. I also believe it is Dr. Harvey who has the clout that could bring all of the stakeholders to the table because his commitment to the mission of HBCUs is unheralded. All HBCUs would move their financial assets into the HBCU Credit Union as well as the UNCF and Thurgood Marshall Fund. Non-traditional HBCUs like Chicago State, Medgar Evers in New York, Roxbury Community College in Boston, and Charles Drew Medical University in Los Angeles and others would all be invited to form the credit union. This would give the credit union a truly national reach as alumni graduate and move to different areas of the country. If they are feeling really bold (and I’d pray that they were) they would include the University of West Indies and some strategic alliances with colleges and universities in Africa that would give the HBCU Credit Union a global reach.
There is something to be said for a quote by Albert Einstein who once famously said “Imagination is more important than knowledge.” It is the knowledge of what we know that helps us look at our situation critically but it is the imagination that with ideas, such as the HBCU Credit Union that will give us the keys to control and build our destiny.
Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK Companies, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.