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I think the actual point is to deliver much-needed financial education to youth. The concert is really a device to attract and sustain the attention of Gen Yers, who otherwise may tune-out the message. A similar strategy was used a couple of years ago by hip hop mogul, Russell Simmons to teach financial literacy to inner-city youth. His "Hip Hop Summit" was sponsored by Chrysler Financial, and was successful in bringing life to a topic typically ignored by youth. BTW, I don't represent the credit union, nor the agency that puts on the concerts, but I think your post doesn't cover the full story.
ReplyDeleteIt is true that CU's are non profit, they do not pay taxes... But isn't the new cost of the 'De'-Stabilization to natural person CU's just like a tax?
ReplyDeleteCU's are non-profit but at least they don't get bailed out every 10 or 20 years... the bailout dollars over time far outweigh any taxes actually paid... do the math.
I have nothing against financial literacy concerts, but this one is not billed as such. The credit union's promo says it is to "promote their Guitar Hero contest... [and] explain their credit union goals and mission." That sounds more like new membership.
ReplyDeleteIt appears the concert promotion is part of a bigger push to attract Gen Y members as part of the visionsfcurocks.org campaign. Good for them. Financial literacy is very low amoung today's youth and any efforts to educate young consumers how to manage their money should be applauded. Note, I do not work for Visions FCU.
ReplyDeleteThis one is a stretch. It's one thing to rip into a credit union who may be recklessly lending money on $200K+ cars, but you are calling into question how an organization spends its marketing dollars. As long as the manner in which an organization (in ANY industry) markets itself is legal and ethical, who's to say what is wise or productive?
ReplyDeleteYou may think a concert is foolish, extravagant or wasteful marketing, but where do you want this to go? What do you want to see change? Do you think there should be legislation outlawing credit unions from hosting concerts? Do you think marketing should be so tightly regulated that it gets down to this level? Are you saying that all not-for-profits should have their marketing constrained? No. You're asserting that tax exemptions for credit unions are unfair, but how does this example prove that assertion?
From a logical perspective, this example presents a fallacy of logic. You are drawing a straight line between a tax exemption and this concert, essentially saying that this credit union used its tax break to finance a rock concert. Using this same logic (manipulative accounting), why can't we say the credit union is using its tax break to fund its educational programs, while the concert was paid for with other money from a different (and equally imaginary) bucket?
The fallacy is the muddling of issues. "If you think concerts are silly, then you MUST be against credit union tax exemptions." One can be for- or against either issue. From an emotional perspective, the two issues may feel like one and the same, but from a rational, logical perspective, they are two separate issues:
1. Do you think credit union tax exemptions are fair?
2. Do you think hosting concerts is a wise marketing investment?
Each issue really has nothing to do with the other.
This is the same quagmire banks taking TARP money had. It's a cheap shot to pick out the things you don't like and say, "That's what my tax dollars are going for!?!" That's not fair. It wasn't fair for the public and the media to take that slant on banks+TARP anymore than it is with this concert+CU. It's ridiculous for people to say, "I think TARP was necessary, but banks shouldn't use it to host golf tournaments because I think those are silly." If a bank thinks it can generate an ROI with golf tournaments, that's their choice. Same thing for credit unions and concerts.
It's certainly fair to call into question credit unions' not-for-profit status, but this example feels petty and trivial. This kind of attack probably undermines the ABA's agenda more than it helps. The ABA's issue is with credit unions' tax status, isn't it, not what they do with their tax breaks? How would the ABA feel if credit unions didn't spend their tax breaks on concerts and fancy HQs? Would the ABA be okay with their tax exemption then? Doubtful.
Please, keep in mind, I'm not asserting any position here on whether or not credit unions should or should not be taxed.
Doesn't Citibank (with multiple taxpayer bailouts) get a tax deduction for its sponsorship of the NY Mets new stadium? Isn't the same true for Bank of America and Wells Fargo with their multiple sponsorship of stadia and arenas? Those are legitimate tax-deductible expenses which are subsidized by taxpayers at the federal and state level. Even IF credit unions were taxed, they would get the same benefit as banks. This is a non-issue.
ReplyDelete