When Congress granted credit unions federal income tax exemption 80 years ago, they did not intend the tax savings to be squandered on marketing expenses, aggressive growth, and big-name sport and entertainment sponsorships. Unfortunately, that’s what is happening at the largest credit unions today.
Here’s where many of the tax-exempt dollars are going instead of benefiting members:
Sponsorships and Marketing:
The marketing tactics used by large credit unions, such as sponsoring professional sports teams, stadiums, concert venues, and convention centers, are the types of marketing efforts employed by Fortune 50 companies, not nonprofits.
Mergers and Acquisitions:
Larger, tax-exempt credit unions are increasingly and brashly buying out smaller credit unions and community banks, which raises significant tax policy questions.
Large credit union CEOs can make up to $11 million annually. Congress intended the tax subsidy of these nonprofits to be used to benefit consumers, not to reward CEOs.
Instead of focusing on the financial needs of low and moderate income individuals, the purpose for which credit unions were created, many credit unions are using their federal income tax exemption to subsidize financial services for massive corporations and wealthy individuals.
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Credit unions were granted federal income tax exemption for a reason, but they abuse the system with no oversight.
American taxpayers will have to pick up the credit unions’ tab to the tune of more than $20 billion over the next 10 years.