SYDNEY, Australia–Credit unions in the United States have been given some hard-earned advice on what’s necessary to protect and preserve the federal tax exemption from a CU in a country where the exemption has been lost.
Mark Worthington, CEO of Australian Mutual Bank, where many credit unions now operate using “bank” or “mutual” in their names, told a recent Underground Collision meeting hosted by Mitchell Stankovic & Associates credit unions in the U.S. should be constantly tallying how they give back to communities in other ways and what it would mean if all of that was lost.
“This is one of our great mistakes in Australia by the Australian credit union movement or industry,” said Worthington. “One of the great mistakes was to lose our tax exemption, which we lost back in 1992. The government approached our national association and said, ‘Justify your tax exemption. Tell us why we should continue it.’ Our national association then raced around trying to aggregate all the social responsibility activities that we do and measure them all up in dollar terms and so that we could go back to the government and say, ‘This is all that we do and this is why we deserve this exemption.’
‘We Couldn’t Show Them’
“And we couldn’t do it, we couldn’t show them,” Worthington continued. “We couldn’t show them we were acting in a socially responsible manner. My view is that in order to prevent the loss or (the U.S.) tax exemption and not follow our mistake, then an organization should be calculating what the federal tax liability would be, and then ensure that the social responsibility activities, the social responsibility expense or investment, is equal to what that liability would be. And then when your tax exemption is under pressure, whoever it is, for instance, CUNA, could turn around and say, ‘Well, look, if you take our tax exemption away, all of these activities, all of these investments, all of these outcomes, would go. You really need to be able to balance them in order to keep them.”