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WASHINGTON – The National Credit Union Foundation (NCUF) and a group of Ed Callahan’s friends have banded together to create a special fund established in Callahan’s honor within the NCUF. Approximately $100 million has already been invested in the fund. The Foundation and the friends hope the grants made by the Callahan Fund (which they are informally calling the Ed Fund) will provide what, they hope, will be a more meaningful and living memorial to the career of Ed Callahan, former NCUA Board member and long-time credit union leader. Callahan is the CEO of the $2.9 billion, San Francisco-based Patelco Credit Union and has worked in different aspects of the credit union movement for 25 years, said Wendell (Bucky) Sebastian, CEO of the Tampa based $1.1 billion GTE FCU and a long-time friend of Callahan’s and one of the organizers of the effort. Callahan retires from Patelco as of December 31 of this year. “We didn’t mean any disrespect to the folks who give gold watches,” Sebastian said, “but we didn’t want to send Ed off with a gold watch. He has never been especially motivated by money and possessions so we struck upon this cooperative effort with the NCUF as an appropriate way to honor him.” Sebastian was joined in this honoring effort by some Foundation board members and Tom Dorety, CEO of the $3.2 billion Tampa based Suncoast Schools FCU, and Tom Sargent, CEO of the $1 billion First Technology Credit Union based in Beaverton, Oregon. Once the trio and the NCUF had agreed upon the idea of the Fund, the three friends went to work calling other friends of Callahan’s who they thought would be interested in investing in the effort. Sebastian reported the three friends contacted about 25 credit unions and asked for investments commensurate with an institution’s size and ability to invest. The three friends’ CUs also invested and, as of press time, their fund-raising effort had yielded commitments for $103 million in investments, NCUF spokesman Bruce Wheeler said. The Ed Callahan Fund will be a donor directed fund within the NCUF and will operate along the same funding lines as the Foundation’s Community Investment Fund (CIF), its primary ongoing funding vehicle, according to Wheeler. Credit unions investing in CIF through their corporate credit union receive the first 2% dividend on the investment, Wheeler explained. Anything after that is distributed to the NCUF, half of which the Foundation returns, pro-rata, to the leagues or state credit union foundations in the states of investment origin. “Of course, the income generated for the Foundation projects will depend on interest rates, which are very low now,” Wheeler noted, adding, “but they won’t be that low forever.” Under the current interest rate a credit union investing in the Callahan Fund through their corporate credit union will get the first 2% of the interest return, Wheeler explained, but since interest rates are only 2.6% just now, the NCUF will split the remaining .6% with the state league, he added. Effectively, that means that even though the Fund will be donor directed within the NCUF, its investments will still increase the power to make grants and draw other funding, according to Gary Officer, executive director of the Foundation. Dorety stressed that the group believed that there are many people who will want to donate to the Fund, but that they decided to keep the initial effort small because they wanted the fund to be a surprise to Callahan. The trio will present Callahan with a faux-check for the Fund and the news of it at the CEO retirement party in San Francisco on October 19. “In no way did we mean to make this seem at all exclusive,” Dorety said. “If anything, we expect the Fund will be inclusive – that many institutions will want to show their appreciation to Ed through this fund.” Sebastian agreed, and said the trio and the NCUF will work to double the initial $100 million investment before Callahan receives the Herb Wegner award from the NCUF in late February of 2003. A career of service worth honoring One of the reasons Sebastian and the other close friends of Callahan thought the Callahan Fund would be especially appropriate is that it would allow Callahan’s emphasis on education and cooperation among credit unions to continue past his retirement, the friends explained. Since the Callahan Fund is a dedicated fund within the NCUF, the grants it makes will fund efforts that reflect Callahan’s twin themes of education and cooperation. The Callahan Fund will have an advisory committee, on which Callahan is expected to want to participate, although the actual number of committee members and whether Callahan will be chair have yet to be determined, Wheeler said. The Committee will advise the Foundation board on what projects applying to the Fund should be supported, Wheeler said, “and unless its something completely outlandish” he expected the Foundation Board would support the Committee’s recommendation. The existence of the Fund will help ameliorate one of the challenges any legacy faces in a growing movement, Sebastian pointed out, by having Callahan’s legacy grow with the movement. In any growing effort, the people coming in most recently will not remember the work done by their predecessors in that effort. People just coming into the credit union movement now, for example, will not remember the work Callahan did in putting the NCUSIF on a firm footing while at the NCUA, he explained, or in changing the old rules on common bond that allow credit unions to continue past the sale or demise of their original sponsors. “None of our five founding sponsors are still in existence,” Sebastian noted and, under the old rules, GTE FCU would have had to cease operations as well. “Ed led the way in changing that,” he said. He also called Callahan “the father of true shared branching” noting that having GTE members being able to walk into any one of hundreds of different credit union branches that are part of the shared branch network and get service as though they were home at their own credit union is an excellent example of the cooperation Callahan has always been about. Dorety called the Fund an appropriate gesture to a man who had made “huge contributions to the entire CU world.” He noted how Ed frequently “preached” cooperation and that he led the way for others in the credit union movement by practicing it, and insisting that they did too. “We are often big about talking cooperation, but sometimes.withdraw if it seems that cooperation is not going to be best for us,” Dorety noted. “But Ed would never let us get away with that. Everyone had to stay around the table until real cooperation that benefited everyone was achieved.” Sebastian commented on how Callahan’s career had included 25 years in education and how he had come to credit unions through heading Illinois financial regulatory department in 1977. One of the laws Callahan was charged with administering was the state’s credit union act and Callahan quickly became aware of the potential credit unions had for doing good for their members and for consumers generally, Sebastian said. Sargent, another one of the fundraisers, commented on how Callahan’s commitment to education showed during his career. “I think a lot of us [credit union CEOs and leaders] appreciate that Ed has been a teacher for us for a long time,” Sargent said. “It’s a real honor to be able to invest in something that will continue to further and build that educational legacy,” he said. What the Fund will mean to NCUF “For sure, in the Foundation world we are still pretty small,” Officer noted, “but going from a $50 million investment endowment to a $150 million definitely moves us down the road. It’s a fundraising result which is almost unparalleled in the Foundation community,” he added. The Foundation will provide the staff work and the due diligence required to help the committee of the Callahan Fund make its funding decisions, Officer said, and maintained that even though the number of grants the Foundation makes will increase, the organization will remain streamlined and efficient. Still, Wheeler reported that U.S. Central and several smaller credit unions had opted, in consideration of the low interest rate environment, to not invest in the memorial effort. Instead they had donated over $600,000 to the Foundation to specifically defray any administrative expenses that might arise because of the Callahan Fund. Officer said that one of the biggest advantages the additional investments will bring the fund will be the ability to “leverage” more, and bigger, donations from other foundations, other private sources and also government sources. “Money draws money,” Officer said, adding that the Foundation would be able, for example, to offer to match the donations of other organizations with the additional resources. Jim Blaine, CEO of the $9.1 billion Raleigh, North Carolina based State Employees Credit Unions, serves on the Foundation board and said he supported the Callahan Fund effort, both for honoring Callahan but also for the Foundation. “One thing I hope it does is draw attention to the Foundation and the great work this vehicle can offer the credit union movement,” he said. “I think too many people still wonder what the Foundation is and what is does. I hope the Callahan Fund will help put the Foundation on the credit union map,” he said. -

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