Why Buy the Cow When You Can Get the Milk for Free?



When I was in college, the country was going through a social and sexual revolution. For the first time, unmarried couples started openly living together.

When a grandmother learned that her grandchildwas “living in sin,” she routinely clucked (you know, that noise of disapproval created by repeatedly sucking your tongue downward off of your palate) and asked disapprovingly, “Why buy the cow when you can get the milk for free?”

Historians have traced that expression back to the mid-1600s, when farming and livestock were the most common pursuits.

The original expression is believed to have been, “It is better to buy a quart of milk by the penny then keep a cow.”

In Australia, they say it in an oddly civilized way: “Why buy a book when you can join a library?”

The fact is, that rhetorical question can be applied to virtually every circumstance where someone is trying to get something for nothing. But I’m not writing about trying to get a free hamburger from McDonalds.
I am writing about association membership — in particular, the conundrum that non-members get to enjoy the fruits of the association’s work, without paying dues.

National Associations

Membership at the national level is mandatory. According to the Oxforddictionaries.com, mandatory means “required by law or rules; compulsory.” According to me, it means you have to join.
When it comes to national associations, FiSCA and CFSA attract the lion’s share of the financial services industry. Here’s how they each describe themselves:
Financial Service Centers of America, established in 1987, is the oldest national trade association representing more than half of the nation’s financial service centers providers, with member locations in communities across the country.

Financial service centers offer a wide array of basic financial services to millions of Americans including check cashing, money transfers, money orders, bill payments and small dollar, short-term loans.
Visit fisca.org for more information.

The Community Financial Services Association of America was established in 1999 as the national organization for small dollar, short-term lending or payday advances.

CFSA member companies represent more than half of all payday advance stores and are located in neighborhoods across the country [32 states] providing a valued service to those communities.

Visit cfsaa.com for more information.

What They Do

Both organizations meet frequently with regulators, conduct annual events that are attended by members, vendors, and regulators, commission surveys and studies, foster best practices, keep their members updated on news and events, respond to unfounded attacks on the industry and generally communicate the need and value of the services you provide.

Through my companies, I have been a FiSCA member and attending its conferences since the organization was founded.

Over that time FiSCA has grown to become a broad representative presence for the entire financial services industry, recently moving its headquarters to Washington.

CFSA has grown rapidly and is focused on short-term credit, featuring many corporate members, and is headquartered in Virginia.

If you can somehow come up with an excuse for not joining a national association, at the very least, attend a national association event.

They are reasonably priced, located in great venues, and you’ll get the chance to see and meet with the vendors who serve the industry, be exposed to the latest products, get updated on regulatory and legislative directions, attend workshops, and develop relationships with other industry members.

State Associations

When it comes to your state association, most folks fall in to one of three groups: MIWD (Member In Words and Deeds); MINO (Member In Name Only) or NAM (Not A Member).

MIWDs attend every meeting and event, join committees, support association efforts, serve as officers and board members, promote the industry and more.

They are the farmers: they take care of the farm and cows, and do what it takes to produce the milk.

MINOs make up the vast majority of every organization. They pay their dues (which pay the bills), and generally support association efforts.

These are the financiers of the farm — they may not work there, but they put their money where their mouth is. And that’s very important.

NAMs have their reasons for not joining. But at the end of the day, they need to put those aside (whether politics, philosophical disagreements, an argument at a meeting in 1988, or something else). State associations need their help and participation.

All Shapes, Sizes

There are more than 30 state associations listed on the FiSCA website and in Cheklist magazine.

Granted, some are larger, better established and more organized than others. In most cases that’s a function of math: (number of members) x (dues) = money to do things.

Regardless of size or depth, in each and every instance, they represent your only opportunity for formal representation within your state.

I believe in supporting your state association, so you need to join yours, even if you are a member of a national association.

State and national associations have common but very different roles in your future, especially in regulated states.

National organizations cannot monitor legislation and industry-impacting activity in each and every state — they often depend on state associations to identify pending storm fronts.

Similarly, national organizations cannot meet and work with regulators and legislators in every state in order to improve communication and relationships, protect licensees and achieve positive change. Both levels are necessary.

If you don’t bite the bullet and join, it becomes a “chicken and egg” problem. The organization needs members, some people won’t join unless they see activity (meetings, events, legislative progress), and activity cannot be funded without members.

In many cases, only a handful of folks fund and run the entire state association — at their own cost in time and money and to the benefit of all licensees in that state.

In many states, the association’s efforts have produced an ongoing and open dialog with regulators and legislators, rate adjustments that help absorb increasing costs and risks, amendments to regulations that assist both consumers and licensees and revenue growth opportunities (see below).

Grade A, Ultra-Pasteurized and Homogenized

Like milk, some associations are deserving of Grade A ratings for their ongoing efforts. Many thanks to Ed D’Alessio (FSCNY), Scott McClain (NJFSC), Abby Hans (CCEA), Bill Staderman (RIAFSC), Amy Cantu (CFSA) and the FiSCA team for their insights into the activities and accomplishments of their respective organizations during 2013. Here’s a “Golden Globe” style take on what these organizations have collectively achieved in the past year, for which they are all “winners.” Most important accomplishment: Opening and maintaining ongoing communication with regulators and legislators. Most important ongoing service: Monitoring legislation and regulation at the earliest levels of consideration – and responding on the industry’s behalf. Most offered services: AML/policymanual training and member guidance. Best industry-sustaining activity: Working with regulators to have permitted rates track CPI, minimum wage, risk and other cost increases. Best immediate service: Sending alerts to members of crisis level issues. Most time-saving effort: Working to eliminate filing CTRs and SARs with state agencies (since they are already filed and accessible on-line at FinCEN). Most consumer-oriented achievements: Supporting consumer protection, choice and awareness through (1) effective rate and terms disclosure and financial literacy, (2) opposing legislation that would limit consumer choice, (3) working to stop unlicensed/unregulated activities and (4) endorsing “Best Practices.” Most effective community support: Scholarship and disaster relief programs. Best process accomplishments: Working with regulators to improve on-line applications, and to conduct audits at main offices, rather than store-by-store. Promoting esprit de corps: Running effective, informative and well-attended meetings.

You Can Do Something

Obviously, join one or both national associations. If you have a state association, and you are not a member, join now.

Put aside your reasons for not joining, whatever they may be, for the common good of the industry in your state.

Without a state association you have absolutely no local voice — especially with regulators and legislators — and no place to exchange ideas, directions, and opportunities. Put “Join my state association” on your calendar today.

As they say in Australia, “Don’t just sit there like a stunned mullet,” join up and participate. You and the entire industry will be better for it.

Richard Kelsky is president of TellerMetrix, Inc. a provider of POS transaction, compliance, interface, electronic deposit and marketing software to check cashers, payday lenders and retail banks. He is also a New York and Connecticut Bar member, a Polytechnic Institute of NYU and NY Law School grad, a Certified Anti-Money Laundering Specialist and a frequent lecturer on business, legal, compliance and technology issues. He can be reached at: rkelsky@tellermetrix.com. This article does not constitute legal advice and is an expression of opinion by the author and not of any entity or organization.

Posted in Spring 2014.