The Dividend Difference01.09.2019
Patronage dividends—distributions a cooperative pays members based on a proportion of its profits—are common among cooperatives overall, but not as widely among credit unions.
Credit unions give back to their members and communities in many ways, including lower rates and fees, and higher dividends. But some see the addition of a clear-cut patronage dividend as a powerful marketing tool for cooperative financial institutions.
Dupaco Credit Union, a $1.7 million asset credit union in Dubuque, Iowa, has shared nearly $9 million in patronage dividends with members during the last three years, including $2.6 million in 2018.
“Plenty of players are innovating around consumer finance, so we decided to leverage our unique strength as a cooperative,” says David Klavitter, Dupaco’s chief marketing officer.
Communicating the “why” is just as important as having a strategy behind the patronage dividend.
“Market and communicate it appropriately because it is a big deal,” says Tracy Szarzi-Fors, vice president of marketing and business development at $4.3 billion asset Wright-Patt Credit Union in Beavercreek, Ohio. “Banks don’t put money into the pockets of those living on Main Street. Let members know they get a share of the profits and why. It reinforces the point of a cooperative credit union—it’s about people helping people.”
Wright-Patt has rewarded members with $56 million in patronage dividends during the past 10 years, including $8 million in both 2016 and 2017.
The credit union has a comprehensive marketing and communications plan around its patronage dividends. It explains why it happens, how the credit union model is different, and why members gain more because of being a member, Szarzi-Fors says.
(via Credit Union Magazine)
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