A TIP must be constructed narrow enough to pass regulatory requirements but broad enough to do the credit union good.
Relatively new to the credit union industry (Introduced in 2003), TIP charters allow single-sponsor credit unions to serve all employees in a specific trade, industry, or profession within a defined geographic area. The chart below reflects the growing nature of this charter type within the credit union industry.
Even though significant efforts have been made in recent years to streamline the rules and regulations pertaining to field of membership expansion requests, the relatively new process to convert to a TIP charter can, in many cases, become complex and cumbersome without clear direction and guidance. A number of key considerations must be taken into account whenever a credit union decides to pursue the option of a TIP charter.
Specifically, the credit union must be able to clearly establish and document three critical components in order to obtain a TIP charter from NCUA. First, the TIP to be served must be clearly and definitively identified, including any geographic limitations. Second, the credit union must be able to provide sufficient evidence to show it has the ability to serve the TIP. Third, the credit union must be able to demonstrate through a detailed business and marketing plan how it will serve the entire TIP. In addition to these legal requirements, there are also practical and political considerations that must be factored into any application to convert to a TIP charter.