Digital Federal Credit Union (DCU) paid an upfront fee of $4.8 million to renew its naming rights for ten years to the DCU Center in Worcester, Massachusetts.
In addition, the $5.6 billion credit union could pay annual incentive bonus payments up to a maximum of $1.75 million over the ten year term of the agreement.
However, buying the naming right to an arena is not the intended purpose of the credit union tax exemption.
Read the press release.
Was Citibank using TARP money to pay for naming the NY Mets new stadium a proper use of US Treasury funds?
ReplyDeleteGood Morning Keith.
ReplyDeleteI think advirtising has always been a part of the credit union mission-afteralll credit unions weren't authorized by Congress on the condition that no one find out about them. Times are change and naming rights are an increasingly important form of member outreach, ecspecially since sports is about the only form of live entertainment people watch these days.
I think the argument is that credit unions do not pay taxes.
ReplyDeleteI'm all for credit union's having the same rights as banks...but I am also all for them paying corporate income taxes
What do Digital FCU and Intrust Bank (Wichita, KS) have in common? Both pay ZERO in corporate income taxes as more than $4 billion financial institutions.
DeleteCiti pays taxes. Digital does not.
ReplyDeleteNo tickee, but credit unions still takers.
Citi. A joke, but a taxpaying joke.
I'm curious Keith, is the ABA a tax exempt organization?
ReplyDeleteYes, just like CUNA and NAFCU.
ReplyDeleteIs there something within ABA's tax exemption that precludes them from determining how they choose to market their organization? If not, how is that any different from the way a credit union chooses to market themselves? Where do you draw the line? Is a blog dedicated to bashing credit unions the intended purpose of the ABA's tax exemption?
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ReplyDeletePeople have the right to know how credit unions are using their tax exemption. If that is credit union bashing, then I am guilty as accused.
ReplyDeleteI agree; people have the right to know how credit unions are using their tax exemption. Do you agree that people also have a right to know credit unions exist? Both, the ABA and credit unions, are tax exempt organizations trying to get their message out. If credit union chooses to buy naming rights to help get that message out, where's the problem? Are billboards acceptable? Radio Spots? Television Ads? Websites? Direct Mail? As I've asked you in the past, where do you draw the line and whose job is it to determine what is and what is not acceptable?
DeleteKeith, I'm still waiting to hear what is and what isn't an acceptable marketing medium, and who should make that determination.
DeleteBy the way, as of March 30, 2014, there were 2193 SubS bank not paying federal corporate taxes.
ReplyDeleteThe arena is owned by the city of Worcester, which means the advertising dollars are being invested back into the community.
ReplyDeleteIntrust is a Subchapter S corporation. The shareholders of Subchapter S corporations pay the taxes on the income earned, unlike credit union members who do not pay taxes on income retained by the credit union. This is a big difference.
ReplyDeleteYou cannot have it both ways as you provide in your answer. Either federal corporate taxes are the issue or they are not.
DeleteIncome at a C corporations is taxed twice (once at the corporate level and once at the shareholder level, when dividends are paid), Sub S is taxed once at the shareholder level, and credit unions are not taxed at either level when income is retained.
ReplyDeleteCUs have the right to choose how they will market themselves.
ReplyDeleteBut as taxpayers, we have the right to point out that buying naming rights is not the proper use of the tax exemption. Remember when Rep. Frank beat up on Northern Trust for sponsoring a golf tournament after it took TARP funds. I think the same applies with CUs buying naming rights to arenas and a bowl game.
Yes, taxpayers have the right to know when a tax exempt organization has bought the naming rights; this fact is fully disclosed in DCU's press release. What I take exception to, is your statement that it's "not the proper use of the tax exemption." That is merely YOUR OPINION; it is not a fact. Thankfully, there is nothing that precludes ANY tax exempt organization from choosing this method of marketing. If it's the taxpayer you're truly concerned about, I would argue that the stadium or sponsored events, generate more tax revenue and benefits back to the tax payers than do the other marketing mediums available.
DeleteAs for Rep Frank, I don't recall the ABA holding him in much regard. In fact, wasn't it Rep. Frank who said, "we're in all-out war" when referring to the ABA's attacks on HR 4173? Ironic you'd choose Rep Frank to justify your argument, when you seem to be at odds with him the majority of the time.
I guess the one thing we'll have to agree on is the fact that we'll probably never agree on this topic.
Cheers
just gotta love the circlular logic of cu bloggers here.
ReplyDeleteaba as compared to credit unions?
why?
one is a trade association (like cuna/nafcu). they dont really compete for attention. the banks either belong or they dont. same with cuna (cu not accountable). a credit union sees value or it doesnt and joins nafcu. or sees no value in either and does not join.
a credit union COMPETES with banks for the same households with the SAME products, but has a tax exemption.
sometimes i read or hear cu comments and it sounds like a 5 year old making an argument.
lets just put it where it is... some of you bought the cuna (cu not accountable) line and simply repeat it. some of you have stopped thinking. aba as compare to credit unions- stupid.
sub s banks dont pay taxes-stupid. its been documenting a half dozen times that sub-s DO PAY TAXES.
Your first step to a better future..STOP listening to cuna and start thinking again. you can do it!
First of all, not all credit union folks believe the trade associations.
DeleteSecond, Sub S banks do NOT pay federal corporate income taxes. Other taxes yes. Credit unions do NOT pay federal corporate income taxes. Other taxes yes.
And banks have lots of tax credit programs available to them that help reduce the taxes they do pay. They have many additional powers and authorities that credit unions do not have.
Funny how the for-profit hospitals do not go after their non-for-profit brothers/sisters the way banks go after credit unions. Same basic products. Same markets. Different focuses.
It appears your hatred for CUNA has disrupted your ability to understand logic, so I’ll try to simplify my argument for you. Is a credit union tax exempt? Yes. Is the ABA tax exempt? Yes. So, they do in fact have something in common. Are you still with me? Now, is there anything tied to either one of their tax exemptions that precludes them from having the authority to choose their marketing mediums? Remember, this blog post is regarding Keith’s belief that “buying the naming right to an arena is not the intended purpose of the credit union TAX EXEMPTION”, even though he later says, “CUs have the right to choose how they will market themselves.” Now, without going into your standard, “I hate CUNA” rant, please explain why credit union websites, billboards, television/radio spots, print ads, etc. are NOT an improper use of the tax exemption, but sponsorships and naming rights are? Also, please show me the verbiage that prohibits a tax exempt organization from having the authority to choose their marketing mediums, and if you can do this respectfully and without mentioning CUNA, it would be greatly appreciated.
DeleteI want everything banks have and i want access to all the households in America.mi want capital treatment the same as banks. In short, I want to be able to do everything a banks does, wherever it does it, however it does it. No field of membership, same business lending authority, same ability to access supplemental capital, market to all Americans not just the under served.
DeleteI just don't want to pay taxes.
But the net income of the credit union is not taxed at the credit union level or at the member level. A SubChapter S bank shareholders pay the tax on the bank's earnings.
ReplyDeleteKeith.
DeleteHow many times does it take before it sinks in that sub-s banks owners pay taxes?
Some cu people are simply brainwashed. As a cu director I find it embarrassing.
Nobody has disputed the fact that stockholders of banks pay taxes. Either Sub S (taxed similar to a partnership) or C (dividends - if paid - after the corporation pays taxes [if applicable]) shareholders may be subject to taxes in accordance with tax law.
DeleteI am disappointed that as a director of a multi-million dollar corporation you do not understand the difference taxes imposed upon the corporation and taxes imposed upon individuals. SubS corporations (banks or not banks) do NOT pay federal CORPORATE income taxes. The owners of such get the tax break of only one set of taxes - individual.
Owners of BofA, Wells, Chase and the like have their money taxed twice. Once at the corporate level and again at the personal level.
I am not brainwashed "Mr. Director." I understand the differences and have no problems with benefiting from the tax code that allows SubS banks to escape corporate taxes. Those owners must pay individual taxes on any profits earned by their tax-advantaged corporation.
Unless Keith is a member of DCU, this is a pointless post.
ReplyDeletePerhaps DCU is wasting its members' money on naming rights. This is nothing new. There are plenty of arrogant CU CEOs and Directors who fancy their institutions as something more than they are.
But policing that is the job of the credit union's member-owners, not the ABA's Chief Internet Troll.