CCEC Credit Union
Date of Incorporation: February 1976
Location: Commercial Drive, in Vancouver’s East End
Editor’s Note: The following study is a combination of a case study, CCEC Lends Support, written by Jill Kelly in 1995 for Simon Fraser University’s Community Economic Development Centre, published in “Sharing Stories—Community Economic Development in British Columbia” and updates that are the outcome of a study conducted by the British Columbia Institute for Co-operative Studies. Researchers were Jenny Ferris and Nicole Chaland.
Material added by BCICS is identified by navy text.
In some cases, the order of presentation has been changed to suit the goals of the project this case study is a part of. Jill Kelly has authorized all changes.
When CCEC celebrated its 20th anniversary in 1996, members were able to cheer the power of their collective commitment to developing their community with their own resources. Six years later, the credit union continues to innovate, to keep money working in its community and to remain focused on community economic development (CED). On June 4th 1995, CCEC Credit Union adopted the following mission and statement of purpose:
The mission of CCEC is to fulfill its Statement of Purpose by:
- Meeting the financial needs of members;
- Enhancing the capacity of the non-profit, co-operative and small business sector of the community we serve; and
- Providing leadership in fostering economic democracy in our community and the credit union system.
Our Statement of Purpose
- To promote group solutions to individuals’ problems through the development and maintenance of co-operatives and self-help groups responding to basic human needs and community needs, and supporting one another.
- To support and promote responsible action in the areas of social justice, racial and sexual equality, worker democracy, and conservation.
- To develop, support, and promote models for economic organizations that foster and further community, consumer, and worker control, and membership.
- To provide ourselves with needed financial services at reasonable costs.
- To educate ourselves and the larger community in the areas of finance, economics, and politics, toward the end of obtaining a more equal distribution of wealth.
- To maintain a workplace open to worker participation in determining responsibilities, accountability for work performed, and the quality of worklife.2
CCEC Credit Union received its charter in February 1976 after several years of hard work. The original organisers were active in Vancouver’s fledgling self-help movement and they had often lamented the lack of capital available to their enterprises. No financial institution would give them a loan even though their member organisations represented a great deal of money. But once they realized the potential of their collective wealth, the idea of starting a credit union wasn’t far behind.
The co-operative structure of a credit union seemed a natural choice since it mirrored the organisational structures of the self-help community it would serve. Members would have the financial security of deposit insurance, and depositors and borrowers alike would be the member/owners of the organization. Unlike banks, credit unions are set up to serve their members/owners, not to generate profits based on shareholdings.
The local focus of the credit union would see the money reinvested within the community it served. Loans would be made to member organisations and individuals who were not well served by existing financial institutions. Women, low-income people, and workers in community organizations were of particular interest. Loans would be available for meeting basic human needs, and for community enterprises and community action.
At first, CCEC did not pay interest on deposits. Instead, loans were available to community groups at below-market rates of interest. Depositors enjoyed lower-cost goods and services from the groups rather than benefiting directly through interest payments. For example, if the food co-op received a loan at rates below market, the savings were passed along to credit union members through lower prices at the food co-op. The founding members of CCEC described the process as “group solutions to individual problems.”
All credit unions are required to define their membership, and for many, membership includes any person who lives or works within a certain geographic community. At CCEC, a different kind of community— a community of interest—was contemplated. Organizers identified the community of interest by targeting the self-help organizations which shaped it.
As a result, the core of CCEC’s membership is co-operative and non-profit community groups. Groups do not have to be incorporated, but unincorporated groups must have five or more members, be democratically controlled, and have a purpose which reflects a community focus. Individual members of community groups may also join. “In terms of membership of the credit union, the greatest change over the years has been in the growth of the small business membership as opposed to the co-operative sectors and non-profit organizations” (Interview, Jill Kelly, July 2000).
Co-operatives and non-profits must hold $100 in membership equity shares, while junior members (those who are 19 years of age and under) must hold five dollars’ worth of equity shares. All others must hold $50 in equity shares. In the Winter 2002 issue of Common Interest (CCEC’s newsletter), members were presented with a special resolution, which introduced the new category of ‘youth member’ as a response to the financial difficulties that many young people face. Previously, a junior member’s equity would jump to $50.00 when the member turned 19. The proposed ‘youth member’ category enables 19 to 25 year olds to be members of CCEC with $25 in membership shares. Members will vote on this at
the 2002 Annual General Meeting.3
The Lower Mainland Community Congress for Economic Change Society was incorporated to organize the credit union. The Society used a federal government employment program to hire staff to do community outreach. Various community groups were contacted by mail and through face-to-face meetings. Volunteers were recruited to work on a steering committee which eventually formed the credit union’s first Board of Directors. Study sessions on how to run a credit union were held and the steering committee debated how the new credit union would meet its community economic development mandate. Community meetings were held to discuss rules which would govern the new financial institution and the strategies needed for its successful operation.
CCEC member and former director Melanie Conn recalls learning about CCEC when she was involved with organizing the Women’s Health Collective:
In the late 1960s the Company of Young Canadians (CYC) were the Canadian knock-off of the Peace Corp doing domestic work The CYC provided a $60 per week stipend and it enabled people to pursue fulltime activism. The CYC evolved into the federal job creation program—and several funding programs such as Local Initiatives Projects (LIP). The founders of many co-op’s and non-profit organized at the time—such as the Women’s Health Collective and East End Food Co-op—were able to pursue activism fulltime as a result of these funding programs.
Two guys who wanted to start a community credit union—it evolved into CCEC— persistently tried to approach WHC to participate, but were refused repeatedly. The WHC had no time for men or money! When they finally managed to be invited to a meeting, the WHC was interested in what they were doing. Before that time, the WHC had never imagined becoming involved with finances on that scale.
At that time, many people doing political work did not know what the formal co-op model entailed; however, they shared everything: money, cars, parenting… They realized they could apply the co-op model to anything: radio, food, and of course housing. So they did. (Interview with Melanie Conn, June 22, 2001)
The charter application was eventually submitted to government regulators and serious negotiations began. The provincial regulators had to be convinced that a credit union for low-income people and community organizations, which paid no interest on deposits, would not drain on the deposit insurance fund. Would-be credit union members responded to this challenge by pledging deposits and contributing membership shares before the credit union received its charter. The regulators were won over by the support of the community and the dedication and knowledge of the organizers.
At the first general meeting, the membership determined loan categories (including food, shelter and land, transportation and recreation, research, culture, education and communications, finance, legal services, debt consolidation, childcare, industry, and health), discussed lending policies, and elected the directors and credit committee.
The newly-chartered credit union opened its doors as CCEC, using the initials of the Society that spawned it (although not the full name!). With the assistance of 11 directors, nine credit committee members, a treasurer/manager, and three tellers, CCEC was in business. For most of the first year, not a single person was paid. The treasurer, along with the tellers, ran the office. The directors made policy and planning decisions for the credit union, and the credit committee interviewed loan applicants and made loan decisions. The volunteer staff and the fact that no interest was paid on deposits likely made the difference between sinking and swimming in the early days.
After ten months of operation, CCEC received a grant from BC Central Credit Union which provided a part-time salary to the treasurer/manager. By the time this grant ran out, CCEC was able to cover the salary. One year later a paid loans officer was added to staff. Tellers remained unpaid volunteers for another year.
CCEC focused on getting deposits so there would be a pool of money from which to make loans. Since many of the people involved didn’t have a lot of surplus funds to keep on deposit, the importance of offering chequing accounts was recognized. The credit union needed the cash flow generated by chequing accounts, especially those of the larger groups, to be successful. CCEC decided it needed $250,000 on deposit before it could offer chequing services and 16 months after the doors opened, this milestone was reached.
More Challenges to Meet
Those first years were not all smooth sailing. But the board of directors was experienced and had already met the challenge of obtaining a charter. Another obstacle was presented when the Credit Union Reserve Board (CURB) disallowed a loan application from a daycare centre. (By legislation CURB was required to approve all business loans made by credit unions.) The fight was on!
The Mount Pleasant Child Care Society was operating on land leased from the City of Vancouver. However, to purchase their portable building, they had borrowed $18,000 at 17 percent from a private mortgage company. After 28 months, the Society had paid the mortgage company close to $8,400, but only managed to reduce the mortgage by $100! The new 8 percent mortgage CCEC wanted to make available to the Society would save the daycare $105 every month. At CCEC’s insistence, the Credit Union Reserve Board reconsidered its original decision and gave the go-ahead for the loan. At the same time, the Board granted CCEC their first “continuing exemption” which meant the credit union could now approve loans up to $2,000.
Debate and Change
In the early ’80s, some CCEC members began to question the policy of paying no interest on deposits. At the time, interest rates were high, with Canada Savings Bonds paying more than 19 percent. The debate raged for four and some half years. Special membership meetings were held to gain as much input as possible. Numerous articles appeared in Common Interest, with two issues devoted entirely to the discussion. The directors also surveyed the membership and assessed the financial implications of the options.
To alter the policy, the rules needed to be changed by resolution at a general meeting. The first time the resolution to pay interest on deposits was proposed, it was tabled for more research. When it came up again a year later, it received a simple majority but failed to receive the required two-thirds majority.
Further pressure came from outside the credit union. Canada Mortgage and Housing began to require housing co-ops, many of whom were CCEC members, to keep their funds in interest-bearing accounts. CCEC worried this requirement could pose a serious threat to the continued viability of the credit union. Finally, in June 1985, members passed the resolution allowing the credit union to pay interest on deposits.
CCEC has learned to create unique solutions to support community economic development, developing loan/service packages with member input. The credit union provides operating loans, term loans for equipment purchase, and interim financing to non-profit organizations when the loan is secured by a funder’s letter. And since the success of a loan proposal depends, at least in part, on the commitment and sweat equity of the people involved, the credit union always requires personal guarantees from board members or community enterprise owners.
CCEC’s lending has helped set up several long-standing, successful operations. The credit union provided some start-up funds for Isadora’s, a co-op restaurant organized by members of Community Alternatives, a housing co-operative. When a graphic design company was closing, CCEC helped the workers buy the business and form Baseline Type & Graphics Co-operative, a workers’ co-op. CCEC has also helped finance two workers’ co-ops operated by women - a print shop/publisher and an organic produce distributor. Glorious Garnish and Seasonal Salad, a group which grows salad greens to supply restaurants with local, organic products is also a CCEC member and borrower. CCEC provided the mortgage to develop a collective ownership model for a piece of property on the Gulf Islands. A housing co-op got financing to install a solar domestic hot water system. Tree planters, environmental organizations, cultural and arts groups have all worked with CCEC to meet their financial needs.
Keeping members in touch with one another is one more way that CCEC promotes local re-investment and CED in their community. A Member Fair in 1989 was among the more ambitious undertakings. To encourage mutual support of community enterprise, member groups and businesses were invited to “show their wares.” As part of the same event, a discount card to be used at participating co-ops was made available to credit union members. As well, a Member Directory listing all member groups and businesses was first published in 1983. CCEC will publish its 4th edition in 2002, and is developing an online directory.
To further promote contributions to local community economic development CCEC Credit Union introduced the Roger Inman Memorial Award for CED in 1993. The award, plus $1000.00 cash is presented annually “in recognition of a group, individual or project that has made a significant contribution to the economic development of the community.4 In 1994 Peer Assisted Lending received an award through the Cal Meadow Foundation.
Creative Use of Guarantee Funds
CCEC often uses loan guarantee funds to reduce a member’s cost of borrowing or to enable a loan which would not otherwise qualify. A loan guarantee fund is money on deposit at the credit union which can be used to secure a loan. When funds are pledged to secure the loan, the credit union doesn’t have to apply the same criteria as it would for unsecured loans. This means marginalized groups and individuals have the opportunity to improve their circumstances or carry on their work during lean times. These loans are fully secured by either the guarantee fund, or the credit union assumes some portion of the risk.
CCEC uses several kinds of guarantee funds. Simon Fraser Teaching Support Staff Union (TSSU) guarantees emergency loans to its members. Loans assisted by the fund have covered tuition shortfalls and trips back home (sometimes out of the country) for family emergencies. TSSU guarantees 100 percent of loans for members. Sometimes the credit union establishes a loan package where individuals guarantee loans for an organization. A few years ago, when a new women’s health clinic was starting up, members used their personal term deposits as security for the clinic’s loan. When the Co-op Housing Federation was just starting and wanted to upgrade its photocopier, ten housing co-ops each assigned $1000, at no interest, to secure the loan. This loan was given at a special low rate of 4 percent because it was a fully-secured group loan.
CCEC has also helped groups to set up formal guarantee funds for specific purposes. The WomenFutures Loan Guarantee Fund accepts investments and donations which are used to back loans to individual and group enterprises run by women. WomenFutures has worked closely with CCEC to develop the mechanics of the fund and to implement it. In 2001, CRS Workers’ Co-operative (demutualised) donated $100 000 to be used as a loan guarantee fund for commercial loans at the credit union.
CCEC also offers a slight variation on the loan guarantee fund to individuals who need capital to invest in their co-ops. CCEC works with housing co-ops to assist low-income residents who need to borrow money for an initial share purchase in their co-op. Members of workers’ co-ops may also borrow for their required share capital investment. In both of these situations, the co-op agrees to repay the credit union from their member’s shares if the borrowing member leaves the co-op before the loan is repaid.
In addition to providing special share purchase loans to enable people to become members of housing and worker co-ops, CCEC assists co-ops in increasing their saving through the Co-op Housing Investment Pool (CHIP). CHIP accounts are beneficial to all three participants: the housing co-op, the Co-operative Housing Federation of BC (CHF/BC) and the credit union. “CHIP is a special deposit account in which the interest rate increases as the number of co-op participants and the size of the total CHIP deposits increases. In addition, CHF/BC receives an interest payment based on the entire CHIP pool”5 (from the CCEC website, http://www.ccec.bc.ca/ccec/products/coop.html). In 2001, the Co-op Housing Investment
Pool had almost $2.8 million in deposits.
There can be no doubt that CCEC Credit Union knows how to balance social and fiscal responsibilities. Its financial statements and its activities indicate the credit union is on solid financial ground. In its 2001 Annual Report the treasurer writes:
Financially, we had a good year. Assets grew by almost 5%, compared to 3.6% the previous year … Our financial margin remained strong … [and] while net income was still somewhat below the Board’s target, we did increase our capital adequacy ratio, which is very strong … A strong capital base provides us with greater flexibility in our operations and a cushion to help us through difficult times (CCEC Annual Report, 2001).
There is plenty of evidence that CCEC has responded in a judicious and responsible manner to its memberships’ requests for changes in policy (for example, offering interest to members’ deposits); it also remains committed to its co-operative mission.
Although its primary CED activity is making loans, the credit union also plays a role in educating its members, providing networking opportunities, offering financial consulting services, and sponsoring youth programs. Educating staff and members in co-op business principles and in alternative economics has always been a priority for CCEC. CCEC tends to hire from within the community, rather than from other credit unions (Interview: Jill Kelly, July 2000). One of CCEC’s main educational objectives is the demystification of economics. Since the credit union opened its doors, every issue of Common Interest has highlighted these educational activities; many issues include also analyses of economic problems.
In the late 70s, CCEC organized an economic planning conference called Our Money, Ourselves. Following that conference, CCEC’s directors firmed up the credit union’s focus. CCEC would support financially-sound economic activity which provides for people’s needs, benefits the community, and is ecologically responsible.
In the early ’80s, CCEC supported this focus by offering three Community Business Training seminars. These well-attended conferences included sessions on democratic management, planning for co-ops, and financial management for co-ops. Unfortunately, such business training seminars are not often put on. Services which are not a direct activity of the credit union require a tremendous amount of staff and volunteer time and resources. CCEC would like to offer more of these educational opportunities; however, it doesn’t have the resources to do this. For this reason, CCEC Credit Union set up a society, to accomplish some of the activities that are beyond the capacity of the credit union (Interview: Jill
Kelly: July 2000).
CCEC Development Society
In 1998 CCEC Credit Union set up a non-profit society, the CCEC Development Society, as an arm that would be able to do fund raising for community business training, and enable the credit union to engage in riskier lending through its loan guarantee program. The CCEC Development Society is a means for CCEC to be eligible for other forms of funding—mainly charitable—so that it may carry out some of the support activities that the credit union cannot currently carry out. One of the first projects of the society is to help with the social review (a precursor to a social audit) of the credit union.
In 2000, the Society completed a study on Co-operative Community Development Loan Funds. “The project researched models of community-based development loan funds, determined best practices, and then outlined a proposed model for a Co-operative Community Development Loan Fund, one that would be used in part to fund development of co-operatives” (Winter, Common Interest 2002, p.1).
Focus on Youth
The majority of CCEC’s members range in age from about twenty to the late thirties. It rarely has members over the age of sixty. This is different from most credit unions, which usually have many older members in their fifties, sixties, seventies, and up.
[Teen-aged] youth have been targeted through two initiatives. Since 1983, yearly scholarships have been offered so that youth aged 14 to 16 can attend the co-op youth leadership training camp. At Camp Rainbow, youth are provided with an incredible opportunity for personal growth and a chance to learn more about co-op principles.6
CCEC’s support for Camp Rainbow has expanded over the years. Financial support for the scholarship fund is widely solicited. Because individuals also contribute to the fund, the credit union is now able to offer a 75 percent scholarship. Youth who have attended Camp Rainbow contribute to the credit union, too. For a small honorarium, they have assisted with the newsletter mailings.
For two summers, CCEC sponsored TeenWorks, a program designed to give youth an opportunity to learn about co-ops and some experience in running a business. The program was discontinued after the federal government employment grant, which helped finance TeenWorks, left unincorporated groups ineligible for funding. CCEC unionized workers are uncomfortable with low paid workers or volunteers working at the credit union. The Liaison Committee is currently working on a policy to provide training opportunities without exploiting the people involved or replacing regular staff.
A Full Service Credit Union
The credit union also offers technical expertise to its members. At one point, the business loan’s officer provided consulting services for a small fee. Although the service was clearly useful, a conflict of interest arose when the consultant subsequently analyzed the loan application. Now the technical assistance offered is of a more general nature, included as part of the whole lending process. CCEC takes an educational approach by helping members put together effective business plans.
Today CCEC is a full-service credit union, enjoying steady growth in membership services and assets.7 In addition to chequing account, RRSPs and term deposits are offered. Members can access their money through the ATM machines, pay their bills at the credit union, and have their pay cheques electronically deposited to their accounts. The credit union also sells bus passes, travelers cheques, and money orders in both Canadian and U.S. funds.
In 1999 CCEC Credit Union made significant investments in technology, partly to prepare for anticipated computer glitches in the year 2000 (Y2K). Technological advances such as 24-hour telephone banking through MemberLink, and Internet banking through MemberDirect, have enabled members such as Rainforest Kayak Adventure in Tofino to maintain active memberships with CCEC Credit Union. CCEC also has a comprehensive website which enables members and non-members to learn all about the Credit Union and its activities. CCEC’s 2002 annual report is included on the website, as are back issues of Common Interest, the history of the credit union, and a description of services.
A Leadership Role
In contrast to its early days, when regulators had to be convinced that the new credit union would be viable, CCEC now takes a leadership role on numerous credit union and co-op sector committees, including BC Central’s board of directors. Credit union directors and management have also participated in exchanges with novice credit unions in other countries. In South Africa and China, where credit union organizers are very much in touch with their communities, CCEC’s grassroots structure is of special interest and value.
It is interesting to note that issues CCEC has been dealing with for years have become central to discussions in Canada’s larger co-operative movement. The following excerpt from the CCEC website demonstrates this:
At the Canadian Co-operative Association national congress held in Calgary three years ago, CCEC president Melanie Conn expected to feel she was on the fringe of a cooperative movement that in many sectors has embraced a corporate culture and is far from its early roots. She was pleasantly surprised to find herself in discussion about many of CCEC’s central issues—community economic development, sustainable development, workplace equity, social justice—with the highly paid executives who run some of Canada’s biggest co-operatives.
Many of the issues CCEC has been dealing with at the grassroots level for years are now top priorities for credit unions and co-operatives across the country. CCEC’s mandate is to promote local economic development, and serve groups that have been excluded from the economic mainstream because they don’t fit a banker’s idea of a good credit risk. That includes arts groups, immigrant organizations, housing co-operatives, and similar organizations (Eggertson, 1994, Cash with a Conscience—Credit Union Way published in 1994 on CCEC’s website: www.ccec.bc.ca).
Keeping In Touch With Its Members
CCEC ensures community input into the lending process by maintaining a credit committee which is elected from the membership. The credit committee still meets weekly to consider loan applications, a rare practice in the credit union sector. The credit committee and board of directors continue to meet jointly to consider changes to lending policy and practice. Many directors, credit committee members, and staff are active in community groups that make up the credit union’s membership.
General meetings are held twice a year. While the Annual General Meeting is mostly taken up with reports, the Semi-Annual General Meeting (which is now optional, and has not been held for several years) provides a forum for in-depth discussion of issues facing the credit union and the community.
Keeping In Touch With Its Roots
The principles that guided the formation of CCEC almost two decades ago have served the organization well. CCEC remains a great example of what can be accomplished when people collectively pool resources.
Recent research, conducted by BCICS researchers and included in this updated case study, suggests that CCEC is keeping in touch with its social justice roots and is fulfilling its statement of purpose. In order to more accurately measure how well the co-op is meeting its social and ethical goals, the CCEC Development Society is undertaking the awesome task of completing a Social Review. Once completed, the review will be made available to all of CCEC’s members.
The trend in BC, and worldwide, is towards fewer but larger credit unions. This trend puts increased pressure on Credit Union Central BC to offer services that are relevant to both the very small (such as CCEC Credit Union) and very large credit unions. BC Central will vote in April 2002 on whether or not to merge with their Ontario counterpart. These changes have affected CCEC in a variety of ways. CCEC had shared data processing with Allied Savings Credit Union, which merged in 2001. Separating data processing systems resulted in increased costs for CCEC, and at the same time allowed for greater flexibility.
In order to deal with the increased pressures that arise from the trend towards larger credit unions, CCEC has banded together with five small credit unions. This group has hired one person who will work on common projects; currently the focus is on compliance issues. Jill Kelly elaborates, “It is our hope that this alliance will enable us to continue to thrive as small, independent credit unions” (CCEC Annual Report 2001, p. 7).
Kelly, Jill, CCEC Lends Support -from “Sharing Stories - Community Economic Development in British
Columbia” - September 1995 published on www.sfu.ca/cedc and in print format
Eggertson, Eric.1994 Cash with a Conscience -Credit Union Way - December/January 1994. Available
Internet: CCEC’s website: www.ccec.bc.ca
CCEC Annual Report 2001
Kelly, Jill, July 2000. Interview conducted by BCICS researcher, Jenny Ferris.
Conn, Melanie June 2001. Interview conducted by BCICS researcher Nicole Chaland. Common Interest.
- Membership number taken from Eggertson, Eric Cash with a Conscience -Credit Union Way - December/January 1994
- On January 29th, 2002 the members voted and accepted the new youth membership.
- Past recipients for the years 1995 to 2002 include; Teaching Support Staff Union of Simon Fraser University; WomenFutures Loan Guarantee Fund; Philippine Women Centre; East End Food Co-operative; Watari Research Association; Vancouver Co-operative Radio; your Local Farmers’ Market; Hebrew Assistance Association of Vancouver.
- Quoted from http://www.ccec.bc.ca/ccec/products/coop.html
- Originally stated in 1995 and remains true in 2002.
Case Study Information Researcher: Nicole Chaland and Jenny Ferris
This case study was developed for a report entitled Situating Co-operatives in British Columbia – 2000 - 2001, which was prepared for the Province of B.C. (Ministry of Community Development, Co-operatives and Volunteers) by the British Columbia Institute for Co-operative Studies, University of Victoria. To obtain the information for the case study BCICS and the co-op entered into a partnership agreement. BCICS is grateful to the co-op members for their contributions and time. The case study is published with the approval of the co-operative. Further information regarding this study includes the following:
Date of Research: 2001
Author: Nicole Chaland
Date of writing: 1995 (Kelly), 2001 (BCICS additions)
Editing: BCICS editorial group
Supervision: Kathleen Gabelmann, BCICS Research Co-ordinator
Case Study Information
Researcher: Nicole Chaland and Jenny Ferris