By William A. Foster, IV
Capacity never lacks opportunity. It cannot remain undiscovered because it is sought by too many anxious to use it. — Bourke Cockran
The recent release of HBCU Money’s inaugural African American Credit Union Directory gave us some very unexpected information. There are nine HBCU-based credit unions that control a combined $82.2 million in assets and 15 885 in members. For comparison, Navy Federal Credit Union, America’s largest has $56 billion in assets and 4 million members. Some time ago, I wrote on what forming a national HBCU credit union would look like and why it should be a reality. As it turns out, much of the infrastructure for this reality is already in place.
- Southern Teachers & Parents (LA) – $29.0 million
- Florida A&M University (FL) – $20.6 million
- Howard University Employees (DC) – $11.4 million
- Virginia State University (VA) – $10.6 million
- Prairie View (TX) – $5.0 million
- Savastate Teachers (GA) – $3.6 million
- Tennessee State University (TN) – $1.4 million
- Shaw University (NC) – $0.5 million
- Langston (OK) – $0.1 million
If the HBCU Credit Union became a reality and the nine merged, then instantly it becomes the eleventh largest African American credit union in the United States by both assets and membership. This is before Prairie View’s credit union even opens its doors to taking on student accounts, which it is set to do in the next year or two and could potentially push the deposit base close to a combined $90 million. Even more important, the HBCU Credit Union would be the only African American deposit financial institution with a multi-state footprint other than One United Bank. With a solid deposit base underneath it, product expansion could be felt across all nine credit unions and done so at a cheaper cost than going at it alone. The lack of products at HBCU-based credit unions has been a chief complaint of why so little deposits seem to remain in them. Everything from better web-presence, mobile banking, investment products, and small business loans could be rolled out in scale.
The most important part of the formation of this credit union remains the HBCUs themselves. Not one HBCU currently banks with an African American financial institution to the best of my knowledge. If the institutions themselves were to come on board, then the deposit base could easily be in the billions. Especially, if one includes the possibility of bringing in organizational accounts like the Divine 9, UNCF, Thurgood Marshall Fund, and other HBCU-related organizations. For HBCUs, this would have the benefit of actually increasing its ability to maintain a financial connection with their alumni and increase alumni giving. The alumni giving platform could be connected with their account. A move such as this would also create opportunities for graduates, internships, and HBCUs becoming more integrated into the African American institutional ecosystem, and not continuing to act independent of it.
Economies of scale. Economies of scale. Economies of scale. Maybe, if I repeat it three times it will take root. This is something that the African American economy has lacked and continues to lack with any of its businesses or organizations. Scale allows you to drive down repetitive cost while being able to offer more because you are no longer paying for nine CEOs just one. And there in lies the hurdle that must be overcome. Many in African American organizations, because opportunities are so limited outside of our ecosystem hold on tightly anytime they achieve a position of prominence within our ecosystem. We are more than excited to stroke our ego to be a big fish in a little pond, when we could be a part of building something that could put us in the middle of an ocean of opportunities for everyone. Despite its aborting impact on the development of our community’s economic health it seems willingness to take such a bold and courageous step is hard to find. The dream of a national HBCU credit union will march on because the need and opportunities it could create are perpetual. However, like a dream deferred I hope it will not dry up like a raisin in the sun.