GLASGOW, Scotland–A once-struggling credit union in Ireland that was on the brink of failure has completely turned itself around, and it’s crediting its strong focus on sustainable finance and an emphasis on “local” as the reasons.
In fact, Donore Credit Union CEO David McAuley described his CU’s current state as “thriving,” and he said other credit unions would benefit from following its lead as would the movement as a whole.
Addressing the topic “Sustainable Finance: Opportunity or Regulatory Burden?” McAuley told the World Credit Union Conference his €40-million credit union has a tight common bond limited to Dublin’s inner city. Donore CU has 5,100 members.
And like many credit unions in Ireland, it has a low loan-to-share ratio, especially by U.S. standards, with a loan portfolio of approximately €13 million. As was noted elsewhere during the meeting, Ireland’s CUs in total have a 26% average loan-to-share ratio.
“We have no interest in being the biggest credit union in Ireland or even Dublin,” McCauley told the meeting. “We want to be the best credit union for our members, and to do that we have (pursued strategies) based on sustainable finance.”
A First for the Oldest
In 2020 McCauley said Donore Credit Union, which is the oldest CU in Ireland, became the first in the country to publish a detailed social impact study.
“Why did we do that? We fundamentally know we make an impact, but we had difficulty in determining how much that impact was actually worth. So, we used a methodology to determine how much our credit union is worth to our community and our members. And our members deserve that information. They need to know how worthwhile the credit union is and why it is needed.”
The effort has had another benefit, according to McCauley, noting regulations are coming around sustainable finance and DCU is now ahead of those future requirements.
“Is it going to be a burden or an opportunity? We have very much come down on the side of opportunity,” said McCauley.
Back to Basics
In the course of putting together its social impact report, McCauley said Donore Credit Union went “back to the basics,” including asking “What are we? What sets us apart? How are we different? What are our values? Do we have a unique set of values, a value proposition different from our competitors?”
He said Donore CU has learned that its community appreciates that a credit union is different as a member-owned cooperative, which has become its competitive advantage.
“That helped us to shape and recognize where we stood, what our values are,” he said of the effort.
What Was Learned
What did Donore Credit Union learn from the process of assembling its social impact report?
“What we found that for every one euro of input there was a 10 euro output,” he said. “That was huge for a 5,000-member credit union. It allowed our board and myself as CEO to move from the notion that we are just a balance sheet. We found we have a huge social dividend, not just a financial one. We did not find that out from what we decided, we found it from our members and stakeholders. They told us they were not with the credit union for the dividends or insurance benefits, they wanted a local credit union they could walk into and talk to at any point.
“That got us thinking,” he continued. “We have this massive benefit, this report, and it was apparent to us we needed to look at it as a strategic objective. Our members want engagement, so it was up to us to generate that engagement. When you have engagement, you have significant increase in member activation.”
McCauley said its 2022 social impact report is available on the credit union’s website.
‘Even More Responsive’
“Two years later we saw we could be even more responsive to our members and our community,” said McCauley, explaining the credit union has expanded its charitable efforts to “make sure we were recirculating our members’ money through the community.”
“Social impact is now a strategic goal of the credit union. That in turn creates financial sustainability,” he added.
McCauley said Donore CU has now created a social impact fund for larger projects, including community projects such as green energy. With 67% of its funds in investments that are earning little and going to projects in other countries, McCauley said his credit union felt strongly members’ money should remain local. That includes having started to offer mortgages.
True to its new focus, Donore Credit Union is using the tagline, “Stay Local, Shop Local, Borrow Local.”
“We are seeing a lot more member loyalty as we have a clear identity and purpose. That has created a massive competitive advantage for us,” McCauley said.
A Massive Failure
All of that is a long way from 2016 when McCauley was brought in by Ireland’s regulator to close down the credit union. “Thankfully, I massively failed at that,” he joked.
The credit union also uses the tagline, “Do More With Donore.”
“When we use that message is it means you are actually recirculating your money back into your community. That has really helped us to differentiate,” he said.
McCauley said he has seen a lot more collaboration with fellow credit unions in Ireland, and he is hopeful the concept of social impact will spread to every credit union in the Emerald Isle.
“We want to get to the point where we say Ireland’s credit unions are worth X to the country,” McCauley said.