Hobbled by funding problems, the effort to establish a credit union on South Whidbey has taken a new direction.

Instead of opening its own branch, the organizing committee is now working to drum up enough support in the community to sway Bellingham-based North Coast Credit Union into opening a branch of its own.

The new direction is largely the result of funding headaches. Before it could get the green light from the National Credit Union Administration, the group had to secure at least $200,000 in donated capital, or pledged cash, as start up money.

The effort was not going well, according to Beverly Rose, a founding member of the organizing committee.

“We hadn’t raised nearly as much as we needed,” Rose said.

“What I came to realize was not a one of us are fundraisers,” she said.

The effort to start a credit union on South Whidbey — Oak Harbor presently has two — began in early 2011 when the late Duke LeBaron of Bayview approached his friend Rose with the possibility.

Rose didn’t take much convincing. Not only did the two share a strong belief in the importance and value of the shop-local concept, but Rose had past experience in the business.

In the 1970s, she founded the Chicago Land Women’s Federal Credit Union and ran the organization out of her home before it was grew to the point where it could move to a commercial location.

Establishing a charter committee, the group went on to hold meetings from Clinton to Oak Harbor and ultimately gathered enough support to exceed the National Credit Union Administration’s requirement for 358 interested parties.

“We have over 400,” said Rose, proudly.

However, raising the needed capital proved a bigger headache than first thought. After sixth months of effort, the committee had less than $50,000 in pledges, Rose said. It also became clear that even if it did meet the requirement, any prospective branch would be severely handicapped with limited services.

Until it established itself as a financially stable institution, the credit union would be restricted from offering checking accounts. Only savings accounts would be permitted, and it could not approve loans greater than $5,000.

The committee needed help and turned to North Coast. Initially, the nonprofit cooperative was just providing consultation but committee members soon decided that it would rather the bank open its own branch because it would operate without all the limitations of a new organization.

Terry Belcoe, CEO and president of North Coast, said both he and the bank’s board of directors warmed to the idea immediately. They once had a branch in Oak Harbor but it failed due to competition with the two existing credit unions, Alaska USA Federal Credit Union and Navy Federal Credit Union.

Because they differ from normal banks in their model — they are nonprofits and are owned by members rather than shareholders or private parties — credit union customers tend to be pretty loyal and it proved a difficult market to crack, Belcoe said.

“They own the place so we try and take care of them,” he said.

South Whidbey, however, does not have any credit unions so setting up there makes a lot of sense. Also, as a mid-sized organization, North Coast appears as if it would fit well into the mid-sized community, Belcoe said.

But, the credit union won’t commit to opening a branch until it’s more certain that it would be successful.

“Our number one responsibility is to look out for our existing members,” Belcoe said.

“We have to make sure it makes business-sense,” he said.

Members of the organizing committee have been tasked with doing yet another survey to gauge public interest. But, this time the purpose isn’t just to hunt for prospective members. They are looking to get a measure on the lending environment.

Belcoe said the current economy has people reigning in spending, which translates to a dry lending market. To survive, credit unions need a balance of both bank accounts and healthy lending.

According to Belcoe, there is no hard and fast number that North Coast is looking for. The purpose is simply to get a better idea about public interest for a branch and the lending environment on South Whidbey.

Rose began handing out surveys this week at the Thursday Clinton Market and at the Senior Center. Surveys are being mailed to those who expressed early interest and they are also available online at www.whidbeycreditunion.org.

Although Rose said the process has been long and is personally getting a little tired (she laughed that her energy depends on the day) she believes the effort to establish a credit union on South Whidbey will eventually succeed, with or without North Coast.

“We are pretty committed to getting the job done one way or another,” she said.

Belcoe said he expects to know before the end of the year, at the very latest, if North Coast is interested in setting up a branch on the South End.