A guide to measuring your credit union’s community impact
In the 21st century, it’s no longer sufficient to be known simply as a financial institution. Credit unions and other financial institutions must actively demonstrate how they give back to their local communities and why consumers should trust their financial business to them. That’s where impact measurements come in.
What is community impact?
For many, community impact is a vague and hard-to-quantify metric that can be tough to communicate. But for credit unions, community impact is critical to measure how much their work matters to individuals. Regardless of your credit union’s size or location, measuring community impact doesn’t have to be difficult or time consuming. If you already have a solid grasp on your mission and vision, as well as a strong understanding of what your members need, you will find that community impact comes naturally. With some extra planning and careful tracking, any credit union can successfully measure and communicate how much their work matters to the community – right down to the individual or family.
Existing Impact Measurements
AnalyzeCU started with the idea that we needed to develop a platform to help credit unions individually and as an industry quantify their impact on American’s lives. I pored over community impact reports created by credit unions, CDFIs, advocacy groups, and other lenders.
Several groups are doing amazing work and these reports provided me with the perfect starting point, but I honestly didn’t find many examples particularly compelling, and the best ones seemed to require incredible amounts of primary data collection. However, the process did help me learn some foundational concepts for measuring a lender’s impact.
Two categories must be measured: intermediate outcomes and long-term results.
Examples of intermediate outcomes include: (1) a credit union makes a loan to rehab a multi-family housing development and, as a result, X number of units are rehabbed and X number of units are deemed affordable; or (2) a credit union makes a loan to a small business and, as a result, the business is able to create and/or retain X number of jobs. Examples of intermediate outcome indicators include:
- Membership benefit in the community
- Contribution to GDP
- Jobs created or sustained
- Full-time “livable wage” jobs created
- Housing units developed
- Housing units rehabbed
- Housing units occupied by low-income people
- Businesses with improved access to financing
- Childcare slots created
Examples of long-term outcomes include: (1) a credit union makes loans to rehab single-family homes in a distressed neighborhood and, over time, this action plays a part in the stabilization of the community as measured by increased housing values, a drop in the crime rate, etc.; or (2) a credit union makes a loan to a small business and, over time, this intervention helps contribute to a rise in revenues, a growing equity base, and increased take-home pay for the business owner. Examples of end-outcome indicators include improvements in:
- Affordability of housing in a certain neighborhood
- Access to affordable housing has changed the lives of low-income families or helped stabilize communities
- Business revenue and equity
- Business owners’ take-home pay
- Poverty rates
- Unemployment rates
- Crime rates
Most lenders are only able to quantify intermediate outcomes like number of jobs created or sustained, full-time “livable wage” jobs created, childcare slots created, housing units developed or rehabbed, low-income housing, etc. Collecting the data necessary to quantify longer-term outcomes is incredibly labor intensive, requiring the lender to conduct extensive primary data collection. Accurately quantifying end outcomes like change in affordability of housing, poverty rate, unemployment rate or crime rate in a neighborhood is even more difficult.
So, I set out to try and determine how I could quantify a credit union’s influence on intermediate and end outcomes in the United States without onerous primary data collection.
How do you measure your credit union’s community impact?
To measure your credit union’s community impact, start by assessing your service offerings and determining your credit union’s current services, and then comparing those with services that could be provided. For a service offering to be classified as an impact-measurement data point, it must offer a direct benefit or an improved quality of life for members and their communities. From there, you can develop metrics against which you can track both your progress toward objectives and achievements of those objectives.
What if you don’t have time to measure?
If you don’t have time to measure, that might be a problem. However, if you understand that measuring your credit union’s community impact is important but don’t know where to start or are overwhelmed by the various options available, take a deep breath. Impact measurement can be done at any scale — whether it’s in your head or using fancy software tools. Here are three examples.
- Track your credit union’s charitable contributions
- Track your credit union’s employee volunteer hours
- Track how many scholarships your credit union provides
If you want to measure other factors, like how much your members have benefited from membership in your credit union, jobs created or sustained, or economic contribution you might need advanced technical skills or software. For the last few months, CUCollaborate has been working on a new data analysis platform for credit unions: AnalyzeCU. We have developed reports and analysis to help credit unions track how many members count toward low-income designation, or how many loans count toward achieving CDFI certification, or the demographics of their members and the people they aren’t serving within the credit union’s field of membership. However, the most fulfilling and I think potentially most useful analytics tool measures a credit union’s impact on their community and individual member’s lives.
