Andrew Jaeger, president and CEO of the Credit Union of New Jersey and chairman of the CUNJ Foundation with Sarah Twiggs, foundation coordinator.
The Credit Union on New Jersey forms foundation to increase charitable giving
The Credit Union of New Jersey, a Ewing-based business that’s celebrating its 70th anniversary this year, has stepped up its efforts to give back to the towns it serves.
Earlier this year, the company founded the Credit Union of New Jersey Foundation as a way to increase the funds that it donates to local charitable organizations, said Andrew Jaeger, president and CEO of CUNJ. Jaeger also serves as the chairman of the foundation’s board of directors.
The credit union, Jaeger said, has supported area organizations, charities, and nonprofits for many years by making direct contributions to them on an annual basis. The decision was made to create the CUNJ Foundation to increase the company’s giving power.
According to Jaeger, the idea was to take the funds the credit union donates to charitable causes and funnel them instead into the foundation. The creation of the foundation also gives them the ability to raise funds, something that a credit union cannot do.
“The senior management’s idea was, ‘Why don’t we try to leverage our reputation and resources to raise money for those charities to supplement what the credit union directly gives,” Jaeger said.
The foundation, which was established at the beginning of 2013, was in the works for about two years. It was certified by the IRS as a 501c3 non-profit organization in late 2012. That was important, Jaeger pointed out, because it makes contributions to the foundation tax deductible.
Running the day-to-day operations of the foundation is coordinator Sarah Twiggs, who has worked at CUNJ as a marketing assistant since she graduated in 2011 from Saint Joseph’s University. Before coming to CUNJ, she worked as a marketing intern for the Philadelphia Eagles football team.
“She handles events and lines up sponsors and does all the things a foundation director would do,” Jaeger said. “We’re not doing true financial development at this point, though. Some foundations that are more mature will have an executive director and have financial development goals. We’re not quite there.”
One of Twiggs’ initial projects is organizing the foundation’s first fund raising event on Oct. 12 — a 5K run/walk at Rosedale Park in Pennington to benefit Anchor House.
Twiggs said that she is excited to be given the opportunity to be coordinator of the fledgling foundation.
“To be involved with a foundation that gives back to the community and is able to make a difference in people’s lives is amazing,” she said. “The opportunity has definitely given me a great deal of experience at such a young age as well as confidence in my field of study. I feel fortunate to have been given the chance to work with CUNJ Foundation especially because I always wanted to do work where I could help others.”
Jaeger said that right now Twiggs maintains a dual role, continuing to work in the credit union’s marketing department, and part-time as foundation coordinator. No one else works on the foundation other than Twiggs.
“It is taking hours away from an existing role, so it’s chewing up a little bit of her time, but she’s been able to manage that,” Jaeger said. “We’ve just shifted her priorities, because this is something we wanted to have done.”
In creating the foundation, CUNJ took the budget that it used to spend on charitable donations — about $25,000 — and used it as seed money for the foundation.
“The goal is to raise at least that amount each year [in addition to the credit union’s contribution to the foundation],” Jaeger said. “This year we’re not going to raise that because we’re doing a lot of the groundwork in getting things ready and establishing the foundation. We are looking to raise and distribute between $25,000 and $30,000 in 2014.”
Jaeger added that CUNJ plans to continue to make its annual contribution, it will just be funneling it through the foundation.
“We’ll have an annual number that the credit union will contribute to the foundation,” said Jaeger. “It was $25,000 this year, and I suspect it will be somewhere around that number again next year. Plus we want the foundation to also raise that level of money eventually. That way we’ll be doubling what we’re giving to the community.”
Jaeger said CUNJ also wants to “use the foundation to promote giving in the community and getting our employees involved through foundation activities. The foundation is tied very closely to our mission of people helping people, but we think we can leverage the foundation structure to have more impact.”
The foundation will also give CUNJ the ability in its outreach to solicit funds from the business community, Jaeger said. “Right now the credit union can’t go to a vendor and ask them to donate funds. But the foundation can go to a vendor who has a lot of resources and say, ‘listen we’re supporting the education foundation in our local community, and we’re supporting Anchor House. Would you like to make a donation towards our foundation?’
“Most vendors have budgets, and they’re looking for places to give and support. We wanted to tap into that avenue of raising money that really isn’t available directly to the Credit Union. There’s so many great organizations just in our immediate area and they all have needs.”
Organizations that the CUNJ foundation has supported to date in 2013 include the CUNJ Foundation Annual Scholarship Program, ASAH, Child Care Connections, Ewing Public Education Foundation, Mercer ARC, Children’s Home Society, E-COPPS, Ewing Little League, Ewing Knights of Columbus, Ewing Police PBA, SERV, Sunshine Foundation, One Simple Wish, Next level Youth, and Kisses for Kyle Foundation.
“We want to connect to the community, the non-profits, and the charities,” Jaeger said. “We want to do something for them and we thought that the non-profit foundation structure was an appropriate way to do that rather than continue the direct giving from the credit union.”
Jaeger said the foundation will choose the recipients of donations based on several criteria. “One of the first things we look at are organizations that we have exiting relationships with. One example is SERV. The employees of SERV are eligible to be members of the credit union and we’ve had a strong relationship with them for many years. That’s an organization that we will support.”
The foundation will also help manage the process for requests for donations, Jaeger pointed out. “In the past, requests would come in to the marketing department, or directly to me and we’d all be making independent decisions. There was a lot of overlap and it wasn’t well-managed, so to speak, because there wasn’t a good process in place.”
Jaeger said the foundation helps them better manage the process. Now when an organization requests funds, it will go on the agenda of the foundation’s monthly meeting and the board of directors will evaluate the requests.
“We look for local first, then whether we have a relationship with them, and then what the cause is,” he said. “We ask three or four general questions and make a vote on whether we want to support them, based on our limited resources. We get a lot of requests both monthly and annually.”
Jaeger said that some of the requests for funding they get are from far outside their market, which is Mercer and northern Burlington counties.
“We get requests from up in north Jersey and way down in south Jersey,” Jaeger said. “Those we kinda put to the side and say, ‘It’s a great organization, but it’s not really touching our members or our community. We want to make sure that if we are supporting a group, that we can tie it back to our members.”
The 5K run/walk on Oct. 12 is the first of what the foundation hopes will be a number of fund raising events. “The foundation is planning on holding an annual fund raising event, the proceeds of which will go to benefit a charitable organization,” Jaeger said. “We’ve set the expectations relatively modest in our first year, and then as we get more experienced in running a foundation, we’ll start ratcheting up our expectations.”
Anyone interested in making a donation to the foundation can send a check payable to “CUNJ Foundation” to CUNJ Foundation, P.O. Box 7921, Ewing, N.J. 08628.
Those looking to make charitable requests should e-mail the foundation at foundation@cunj.org
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In addition to talking about the CUNJ Foundation, Jaeger also discussed with the Observer the differences between credit unions and banks, and the state of business in the current economy.
According to Jaeger, the biggest difference between a credit union and a bank is that a credit union is a not-for-profit financial cooperative that’s owned by its depositors/members.
“The mission of a credit union is to serve its members and provide financial benefits in the way of higher savings rates, lower loan rates, and lower fees,” he added.
Unlike a bank, not everyone is eligible to become a member of the Credit Union. In order to qualify, a customer has to be in the credit union’s “field of membership,” said Jaeger.
CUNJ’s field of membership includes: N.J. state employees; people who live, work, worship, or attend school in Ewing Township; employees of one of about 150 companies that the credit union does business with; and employees of businesses that are members of the MIDJersey or Burlington chambers of commerce.
Also unlike most banks, credit unions have no shareholders; the members own the institution and they elect a board of directors, which serves on a volunteer basis.
“It’s one member one vote,” he said. “So whether you have $25 or $25,000 at the credit union, you get the same one vote in the election for the board.”
According to Jaeger, there are approximately 7,000 credit unions in the United States. “They provide a great alternative to the for-profit banking system. It gives consumers a real choice. For that, Congress has exempted credit unions from income tax, which really gets the ire of banks, because they believe we have an unfair advantage.”
He points out, though, that credit unions also suffer from a number of restrictions that don’t apply to banks. They can’t raise capital, and the only way to increase capital is through retained earnings, for example.
“That means we’re limited in our growth potential,” he said. “If a bank wants to expand or grow or they need capital, they can have a stock offering and raise equity. We can’t.”
CUNJ’s primary focus and basic business model is to make consumer loans, including auto, home, mortgage, equities, personal, and also credit cards. “That’s our bread and butter,” Jaeger said. “We also do small business loans for our members that own businesses, but we don’t do commercial lending.”
About 83 percent of the credit union’s assets — $280 million out of $325 million — are in loans to members, and by regulation, credit unions can only invest surplus funds into government-backed instruments.
“We can’t put our money into equities or real estate trusts or anything like that. We can buy treasury bonds,” Jaeger said. “We don’t want to be in a position where we’re making a lot of investments anyway. We want to lend money, and we’ve done a pretty good job of doing that.”
CUNJ, like all financial institutions, did suffer from the economic downturn, but fared better than most, Jaeger said.
“As our members go, we go,” he said. “During the financial crisis we did see a rise in loan defaults. Our loan delinquencies also increased, as well as charge-offs. Those were the major ramifications, but as the economy improved, we’ve been seeing those improve as well.”
Mitigating the damage was the fact that about half of CUNJ’s members are state employees,” said Jaeger. “State government employees have some level stability that maybe others don’t.”
“We weathered the storm,” he said. “We never had a year when we lost money and we continued to be positive in our earnings, and not all credit unions in New Jersey were. A large percentage experienced negative earnings.”
One factor that hurt CUNJ and all lending institutions in New Jersey is the fact that New Jersey ranks second in the country at having the longest time to foreclose on a home at 1,000 days. New York state is number one at about 1,200 days, said Jaeger. That’s compared to a state like Texas where the turnaround on a foreclosure is only 100 days.
“Not that we want to foreclose and go to sheriff’s sale on someone’s real estate, but 75 percent of our past due loans are in real estate,” Jaeger said. “When someone can’t pay, we need to resolve that situation, but it takes three years to get your collateral back.”
Jaeger said, from his perspective, the economy is improving, though. “We’re seeing loan applications increasing, and there’s an appetite for borrowing.”
One area where there’s been a surge in activity is in auto lending, Jaeger said. “The average age of an automobile on the road now has gone over 10 years, so there’s a lot of pent up demand with consumers.
“People have been putting off large ticket purchases for a long time, and it was only a matter of time before that pent up demand was going to explode. We’re started seeing that happen the last half of last year and the first half of this year.”
There was also big increase in refinancing due to low interest rates, but that has slowed as interest rates have gone up, Jaeger said. “Refinancings are waning, but we’re seeing a surge in home equity business now that housing values have settled.”
Plummeting housing values were a big problem for a lot of CUNJ’s members right after the meltdown of the real estate market in 2010 and 2011, Jaeger said. “A lot of people would put down what they thought their home was worth, and [when the assessments came back] they were in shock. Some of the homes were down 20 or 30 percent in the local area.”
Fortunately, Jaeger said, housing values have stabilized and that has increased people’s ability to borrow.
Ultimately, the bottom line is that CUNJ is looking to serve its communities in the best way possible. “We were chartered in 1943 as the department of transportation credit union, and we’ve been in Ewing ever since,” Jaeger said. “We have deep roots in Ewing, and we’re very committed to the town, and we see the foundation as a logical extension for that commitment and look forward to working with community leaders, community organizations, and nonprofits to help better the lives of people in Ewing and the surrounding area.”
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