Facts
The essay is a critique of the case study “Community Credit Union” by Robert, Jennifer, and Woodruff. The study examines the lending policies of a credit union targeted at low-income households. The scholars are interested in determining whether it is the responsibility of the public financial institutions to help low-income customers to take responsibility for their financial status. Specifically, the study scrutinizes the credit unions lending policies aimed at low-income households. To maintain a competitive edge with rival credit unions and for-profit banks, CCU strives to offer a wide variety of specialized services to its membership. However, Courtesy Pay (C-Pay), one of the vital services provided by CCU, has been questioned. C-Pay as a product was created to help the customers avoid accruing and solving the problem of overdrawing their accounts either by bouncing a check or using their debit card ( Li, 2018) . C-Pay does not charge any penalties. It does not limit the number of times a member can take a loan through C-Pay. Provided the member can repay their debt, the system continues lending to them. This is seen as abusing the system and, as a result, has faced criticism from industry authorities and competitors.
A case of a customer has been presented. Cortez McDuffy describes her experiences with one member, Alma Murphy, who is representative of others who abuse the C-Pay privilege. “Alma always has a meager account balance, if any at all. Also, any loans she has are usually late in being paid. She is a nice lady, so I let her come in and do this. She uses the program a couple of times a month on average.” CCU President Molly Salamone echoed these sentiments and added, “The financial situation for members like Alma isn’t good. They don’t seem to have their priorities straight when it comes to their finances.” If an essential part of CCU’s mission is to help its members to become more financially responsible truly, then it should be asking Alma and other people. They overuse C-Pay to seek financial counseling. However, taking this course of action poses some significant challenges to the organization. Branch Manager Lucinda Tassels, for example, said that the community does not possess the infrastructure and tools needed to help members better understand the long-term financial repercussions of using C-pay frequently.
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Decisions
The former bank president, Woodbine, suggests a solution that would entail an evaluation of the credit union’s C-Pay policy. In this way, CCU could rationally weigh the pros and cons of retaining C-Pay. A simple benefit-cost analysis would look at measuring the benefits and costs of C-Pay in dollars. The decision rule would then be straightforward and easy to apply: if C-Pay’s profits exceed its costs in terms of dollars, then the program should be retained.
Opinion About the Decisions
The suggestions by the former president are not ideal for this situation, at least a significant part of it. There indeed is a need to introduce policies to regulate the C-Pay internally. However, the idea that the plan is used to say whether C-Pay should go or stay does not make much sense. This is a program designed to help the community, but the organization has changed its core mission and interest in helping solve community problems and resolved to make money. There are needs for policy, but the plan should not be about doing away with the program. Instead, the policy’s aim should be targeted at keeping the organization stick to its mission, to support the community and not to make profits at the expense of the public.
Alternative Solutions
The most appropriate solution for the CCU problem is to begin focusing on helping the community and not making profits. A non-profit organization should be interested in fulfilling its needs to the society and not making profits. Therefore, every solution must look to help the CCU get back on track.
In this spirit, Geary (1994) proposes that a non-profit organization needs to hire quality staff who upholds the organization’s mission, vision, principles, and core values. The approach begins from the top, Board of Directors, senior managers to the managers, tellers, and junior employees. Emanuele & Higgins (2000), in their study, advises that non-profit organizations need to create a culture of a non-profit organization, inculcate the spirit of helping and not the sense of making money. By developing a culture of helping solve a specific problem, the organization fulfills its needs. Most importantly, regarding C-Pay, the management needs to do away with the high interest charged in principle issued to borrowers. The only charges on the money lent to the community should be charges to cater for fees and expenses in processing the loan. Removal of unnecessary costs will, as a result, give more value to the members.
Conclusions
Community Credit Union is a non-profit organization that was born to help the members solve their financial problems. However, with time, the organization lost its initial mandate and began making money from the members through C-Pay. The higher interest charge is a result of the organization led by individuals who do not recognize the importance of and the reasons for establishing a community-based organization. The CCU employees have failed to develop a culture of helping, but instead have chosen to make money. This paper has proposed hiring new employees that values organization mission and vision, create a culture of solving community problems, and to do away with the interests charged on C-Pay and review the product a fresh to be tailored to meet the community needs.
References
Emanuele, R., & Higgins, S. H. (2000). Corporate culture in the non-profit sector: A
comparison of fringe benefits with the for-profit sector. Journal of Business Ethics , 24 (1), 87-93.
Geary, V. (1994). Building communities: the importance of participatory management in
non-profit housing (Doctoral dissertation, University of British Columbia).
Li, S. (2018, August). The Obstacles of Providing Community Pension Service with Private
Capital: Taking Dadukou District of Chongqing City as An Example. In Proceedings of the 2nd International Conference on E-Society, E-Education, and E-Technology (pp. 171-174).
