Credit unions play an integral role in the economic success of the state of Tennessee. We’re uniquely positioned to offer accessible financial services to communities that otherwise wouldn’t have a local option, and we invest heavily in the communities we serve to support their long-term growth. As not-for-profit financial institutions, we’re afforded tax-exempt status to perform these essential functions. But today, that tax-exempt status is facing significant scrutiny. All Tennessee credit unions must come together now to advocate for the good of our industry and the financial well-being of our members.
Congress passed the Federal Credit Union Act (FCU Act) in 1934 to charter federal credit unions that were providing necessary financial services to working-class Americans during the Great Depression. Today, there are more than 142 million credit union members in the U.S., including more than 2.5 million right here in Tennessee, who benefit from having a local financial institution that’s looking out for their best interests.
However, the House Ways and Means Committee is currently evaluating tax policy changes to help offset the extension of current tax cuts, and their reforms could impact credit unions’ tax-exempt status. This could have a negative impact on our ability to return value to our members and communities in the form of financial benefits like low fees, higher rates on deposit products and important services like financial counseling.
Credit unions have a unique, cooperative, member-first model — one that doesn’t distribute profits to shareholders but reinvests them to benefit everyday people. This difference is often overlooked by those critics who mistakenly argue that credit unions operate like banks and should be taxed accordingly. Our mission-driven structure is exactly what justifies our tax-exempt status.
Tennessee’s credit unions must come together now to start the conversation about the negative impact removing credit unions’ tax-exempt status would have on our members, especially those in underserved communities who depend on us to be a safe, affordable financial partner. According to data from United Way’s ALICE program, 43% of Tennessee households have income that is less than their cost of living. Protecting the access, equity and the ability to serve those who need us most is foundational to the credit union mission.
We also must speak with a united voice. By supporting each other, educating our communities, and communicating with our legislators, we can make a powerful impact. Fortunately, we are not alone in this fight.
America’s Credit Unions has developed a host of valuable resources on americascreditunions.org regarding the tax-exempt issue and actions credit unions can take. In addition, anyone can go to donttaxmycreditunion.org to quickly and easily compose a message to your legislators. Let them know you stand with credit unions and you’re not in favor of removing our tax-exempt status.
Credit unions are a cornerstone of Tennessee communities. To keep it that way, it’s up to all of us to advocate for one another and stand in defense of what makes credit unions so special. We’re all in this effort together.
Ascend is federally insured by the NCUA.
