Self-Help Credit Union, which revolutionized financial services for the under-served, might just be the most influential nonprofit ever launched with the proceeds of a bake sale.
The Durham organization started with $77 – the proceeds of a fund-raiser at Greensboro’s Guilford College in the early 1980s. Driven by its vision of helping families and communities build wealth through ownership, Self-Help has evolved into the nation’s biggest lender for low-income borrowers, a powerful supporter of community revitalization, and a staunch opponent of unscrupulous lenders. Its assets now total nearly $2 billion, and its impact is felt from coast to coast.
Self-Help partnered with Duke University to transform nearby neighborhoods in the Bull City and played a crucial role in financing Durham’s American Tobacco campus. It rescued a community bank in Chicago that is vital to the city’s Latino population and runs 18 credit union branches in California for customers who lack access to conventional banking services. In Washington, D.C., the Center for Responsible Lending, Self-Help’s policy and advocacy arm, battles predatory lenders across the country, building on its groundbreaking efforts in the 1990s to protect borrowers in North Carolina.
Never miss a local story.
It’s a fascinating story being told for the first time in “Lending Power: How Self-Help Credit Union Turned Small-Time Loans into Big-Time Change” by Greensboro freelance journalist and historian Howard E. Covington Jr. Released this month by Duke University Press, the book continues Covington’s efforts to chronicle some of our state’s most influential leaders and organizations, including the late Gov. Terry Sanford and Henry Frye, the first black chief justice in North Carolina.
Beyond taking us inside the lives of Martin Eakes and Bonnie Wright, the idealistic Davidson College graduates who founded Self-Help in 1980 and initially ran it from Eakes’ VW Bug, the book “is really a primer on how to run a nonprofit and make sure it thrives beyond its first days,” Covington says.
Three lessons are particularly relevant for today’s nonprofits – the importance of talent, adaptability and fiscal sustainability.
From its earliest days, Self-Help excelled at stockpiling smart, creative people committed to social change. Salaries are modest relative to the size of the organization, with the highest pay grade for North Carolina employees in recent years capped at slightly more than $80,000 annually. But talent is attracted by Self-Help’s can-do culture and the opportunity to lead projects that would normally be reserved for senior executives in most organizations. The $40 million financing deal that jump-started the American Tobacco campus, for instance, was spearheaded by an intern on Self-Help’s commercial real estate team.
When employees do move on from Self-Help, they often spread its innovative approaches throughout the nation’s nonprofit and government sectors. One example is Eric Stein, brother of N.C. Attorney General Josh Stein, who served as Self-Help’s chief operating officer before becoming a deputy secretary in the U.S. Department of Treasury, where he helped form the Consumer Financial Protection Bureau to fight illegal financial practices.
All the talent in the world won’t help, however, if a nonprofit can’t adapt to changing conditions. Self-Help’s original aim was to help laid-off manufacturing workers create worker-owned businesses. It pursued this strategy for nearly a decade before realizing that market conditions, management issues, and lack of capital worked against this model – and that Self-Help needed to reinvent itself. Still committed to helping people on the margins of the economy, Self-Help concluded that offering financial services to low-income home buyers and entrepreneurs who were overlooked by traditional financial institutions would help communities flourish and also prove scalable. “Opportunity lay in the space between the feet of the big elephants in the marketplace,” Covington says.
Self-Help Credit Union was formed by idealists. But it also demonstrated great fiscal savviness in keeping its books clean and developing multiple streams of revenue so that it never became overly dependent on government agencies, foundations or wealthy donors – the kinds of problems that have sunk many a nonprofit. Since its inception, 80 percent of Self-Help’s loans have gone to low-income borrowers who pay them back nearly 100 percent of the time. As a result, in 2016, Self-Help reported net income of nearly $30 million on revenues about $140 million – a bottom-line margin that many for-profit business would envy and that enables Self-Help to reinvest in its mission and talent, creating a virtuous cycle.
Most nonprofit founders, Covington says, “fail to learn as they work and eventually come to a dead-end. Self-Help adjusted to meet reality” – and, in doing so, has transformed it.
Christopher Gergen is CEO of Forward Impact, a founding partner of HQ Community, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin is deputy chief of staff at the nonprofit Center for Creative Leadership in Greensboro. They can be reached at email@example.com and followed on Twitter through @cgergen.