Principle #7: Cooperation Among Cooperatives

The last of the 7 Cooperative Principles for Credit Unions is the principle of cooperation among cooperatives.
Not sure what exactly a cooperative is?  You’re not alone, and you might be surprised how many organizations you interact with are actually cooperatives.

A cooperative (or co-op for short) is a business that belongs to the people who have organized to provide themselves with the goods and services they need. For example, a farmers’ market is considered an agricultural cooperative: farmers organize a place where they can share the cost of making their produce available for public sale, and each participant benefits from the opportunity. In the case of a credit union, each member participates by putting money into the credit union so that they can also have the opportunity to take additional money out in loans or use other financial services.

Some cooperatives you might be familiar with include Dairy Farmers of America, Ace Hardware, and Ocean Spray.  Many electric power providers are also cooperatives.
As cooperative organizations, credit unions look for opportunities to partner with other cooperatives to better serve members.   Does your credit union partner with other credit unions (such as shared branching) or other cooperatives?  Spread the word!

Throughout this series, we’ve discussed each of the 7 Cooperative Principles for Credit Unions in order to help you identify opportunities to strengthen your credit union’s unique internal culture. Help your employees understand all seven principles and how your individual credit union supports them both internally and externally.  You may just find that suddenly your members are becoming more knowledgeable as well.

Principle #6: Concern for Community

The sixth of the 7 Cooperative Principles for Credit Unions is the principle of concern for community.
In addition to focusing on member needs, credit unions are committed to the sustainable development of their local communities.  This not only means providing a stable local financial resource, it also means undertaking non-financial initiatives to help the community.  Examples include holding fundraisers for a local charity, supporting literacy efforts in neighborhood schools, sponsoring teams to participate in races or other events that support various types of medical research or support, and pitching in to clean up the local community.

Many credit unions are already good at getting employees involved. Is concern for community already part of your internal culture? Then look for ways to get members involved too for a common sense of pride.

It seems like a lot of credit unions are hesitant to talk much to members or the public about their community involvement.  Credit unions by nature tend to be humble.  While humility is an excellent quality, so is sharing – particularly if you share what your credit union is doing in such a way that it inspires others to get involved too.  This presents a twofold benefit: increasing support for the charitable effort, and solidifying your credit union’s brand identity within your community. People tend to do more business with organizations they like, so encourage your employees to share all the likeable things your credit union is doing.

Principle #5: Education, Training and Information

The fifth of the 7 Cooperative Principles for Credit Unions is the principle of education, training, and information.

Credit unions are committed to providing financial education and training for members and employees for the betterment of the whole cooperative.  This is a great selling point!  Finances can be intimidating for many people, and in some ways banks seem to reinforce this feeling.  Providing education is a way for credit unions to help members overcome any trepidation, understand their finances, make better decisions, and become more financially secure – something that benefits everybody thanks to the principle of member participation. Many credit unions provide financial literacy training for children and special interest groups such as immigrants or veterans.

In keeping with the idea that people from all walks of life deserve reliable financial service, credit unions around the world also continue to make a difference by offering financial education and opportunities for underserved populations in places like Africa, India, and Afghanistan. The Credit Union National Association (CUNA) devotes a small percentage of every dollar collected in dues from affiliated credit unions to assist with the international credit union development activities of the World Council of Credit Unions.

This is a great principle to both reinforce within your internal culture and communicate externally, because everyone benefits when both employees and members are well-educated on financial topics.  When your employees truly feel like they are part of a learning organization, they are more likely to seek opportunities to educate your members as well.

Principle #3: Member's Economic Participation

The third of the 7 Cooperative Principles for Credit Unions is the principle of members’ economic participation.

“Economic participation” might sound like a mouthful, but it’s pretty simple. Basically, a credit union gets money from its members and then loans the money out to other members.  The more members participate, the more there is to go around.  It’s kind of like the idea that the whole is greater than the sum of its individual parts, or like how the chemistry of a team can make it even better than the skill level of the players individually. Credit unions follow a “people helping people” philosophy from the way they treat members to the way rates are decided.

Member participation leads to better rates and fees than a bank typically offers.  Plus, when there’s a surplus it often gets returned to member in the form of a dividend after appropriate reserves have been set aside - because members are owners rather than just customers. Credit unions don’t have any outside stockholders; they exist because of and for the benefit of their members. That’s a unique position in the financial industry, and a story your employees should know how to tell.

Most credit unions are pretty good at communicating about their rates and service, but it may help your employees do their jobs more effectively if they understand the “why” as well.

Principle #1: Voluntary Membership

The first of the 7 Cooperative Principles for Credit Unions is the principle of voluntary membership.
Credit unions are not-for-profit institutions that offer services to all people willing to accept the responsibilities and benefits of membership, without gender, social, racial, political, or religious discrimination.  That sounds pretty simple, and not too different from the disclaimers you see from most businesses.

What’s different about how credit unions apply this idea?

Credit unions serve members from all walks of life, including people of modest means.  In fact, the first credit unions were established specifically to serve the financial interests of people in rural communities whose small, seasonal cash flow didn’t earn them the attention of big banks. Credit unions have established a reputation of willingness to help those with no credit history, poor credit history, or unique personal situations that have impacted their finances.  However, that doesn’t mean credit unions only serve people with limited incomes or financial problems.  Credit unions offer a full array of products and services for any income level, often at better rates and with fewer fees than banks.

Another thing that’s unique about credit unions is that even though credit unions serve people from all walks of life, they don’t just serve the public in general. Every credit union has a special field of membership, which can be as narrow as a specific select employer group (SEG) or as broad as a community charter. Designated fields of membership help credit unions maintain their not-for-profit status.

One way to ensure your credit union’s culture reflects the principle of voluntary membership is to focus on customer service and the member experience – making each member (regardless of income) feel as though he or she is the most important person in your world. Do your employees understand the history of the credit union movement and its legacy of truly caring about every member? Look for opportunities to celebrate this legacy through communication and events that are consistent with your credit union’s unique brand identity and culture.