Principle #1: Voluntary Membership

Here we go with Voluntary Membership:

Credit unions are voluntary, cooperative organizations, offering services to people willing to accept the responsibilities and benefits of membership, without gender, social, racial, political or religious discrimination.

Many cooperatives, such as credit unions, operate as not-for-profit institutions with volunteer board of directors. In the case of credit unions, members are drawn from defined fields of membership.

We can learn a lot of the credit union basics from just these few sentences.

  • What is a credit union? A volunatary, cooperative, not-for-profit organization
  • What does it do? Offer services
  • To whom does it offer services? Anyone willing to accept the responsibilities and benefits of membership that fits within the credit union’s defined field of membership
  • What can the credit union base it’s field of membership on? Definitely not on the basis of gender, social (status), race, politics or religion
  • Who oversees the credit union? A volunteer board of directors

This credit union sounds like a pretty decent place. Volunteerism, responsibility, benefits, and limited discrimination. It sounds nice, but I still have some unanswered questions from the text of principle #1:

  • What kind of services does a credit union offer?
  • What are the “responsibilities” of membership?
  • What are the “benefits” of membership?
  • On what basis can a credit union define it’s field of membership?

I hope to tackle each of these questions with a kind of “wide eyed” naivety in later posts. But first, let’s answer based on where we’re at.

Credit unions offer financial services. Responsibility of membership is usually limited to small financial obligation upon joining. Benefits of membership vary greatly from credit union to credit union. Probably the most consistent is lower rates on loans. Fields of membership are defined by geographical areas in which a person lives, works, or worships.

Does that sound about right? Does this description match the mental image you get when reading principle #1? Not so much for me. The biggest disparities I see between philosophy and practice are in member responsibility and fields of membership.

Member Responsibility

A $20 requirement for deposit is hardly what I have in mind when I read principle #1. I think of an ongoing commitment. I almost think of chores. Would I join a financial institution that had a list of chores for me to do? I don’t know if I would. I do know that if I did, I’d make sure I did them, and I’d make sure the others in my cooperative were doing them as well. (That’s the way momma raised me!)

What would cooperative chores even look like? Maybe general meeting attendance. Maybe community involvement. Maybe completed training sessions. Would I consider the benefits of membership worth taking on these responsibilities? If I didn’t, would you really want me in your coop?

Fields of Membership

Now I can’t say geography is a bad place start with field of membership. It makes sense. It’s easier to coop with people you are geographically close to. But I believe this is rapidly changing. Our world is getting smaller and geography is becoming less and less relevant.

If fields aren’t based solely on geography, what could we base them on? It’s no secret that I am a fan of Tim McAlpine’s affinity model. I think this a great direction and I would love to coop with a group of like minded pseudonyms.

“But we’ve got laws and regulations!” Ok. I get that. Here’s some thoughts.

  • Create an “affinity charter” process. That’s right. CU Skeptic is talking about NCUA and Washington. This would give some oversight to the process, to ensure it does not infringe on discrimination, all while making a huge stride towards making credit unions more relevant.
  • Incorporate affinity into your community charter. Try satisfying NCUA’s “local community” requirement and then go the extra mile by throwing in some affinity. Which is a more community based institution: a cu that serves all of Los Angeles or one that serves the bloggers of that same area?

I have no idea if the above are feasible, but why shouldn’t they be?

Wrapping Up

So there you have it. My not so brief take on Voluntary Membership. What do you think? Feel free to comment, or if you respond on your own blog, leave a link in the comments so we can all keep up.

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4 comments so far

  1. Credit Union Warrior on

    I love your perspective on member responsibility, but riddle me this: how, in a time that many credit unions are struggling with flat or negative membership growth, can a credit union reasonably ask a member to do more? Competition is fierce, people are lazy (me included); why would they want to be affiliated with a financial institution that requires any significant level of effort?

    I ask this question because I sincerely would like to discover a way to get members more involved. A credit union shouldn’t be COSTCO or Sam’s Club, where your membership gives you the ability to walk through the doors. It should be a place where a community of people help each other save, borrow, and make their financial lives better.

    From what little I know about Vancity Credit Union, they have sort of done this. Their members seem to grasp the social significance of credit union membership. This, of course, is due in large part to the social causes the credit union supports and the associated appeal of said cause to the CU’s field of membership. Is that it? Is picking a social cause enough?

    Of course it’s not. First, the social cause must be local, and involve much more than financial support. Otherwise, any bank can trump your efforts. They simply have too much money and power.

    Second, people still want a financial institution to meet their personal finance needs. If an FI is not doing that, no amount of community service will overcome a basic misunderstanding of purpose.

    Last, in a time of extremely polarized political/social views from person-to-person, it’s rare that a common social cause in most credit unions’ geographic areas appeals to more than 50% of the local population. In Vancouver, that doesn’t sound like it’s the case – as an outsider, they seem to be largely homogeneous. In most of America, however, most social views seem to have an equal amount of supporters as they do detractors. Most execs, and I’d argue rightly so, don’t want to cut their potential piece of the market share pie even smaller by picking a side.

    So how do we do it? How do we pull off a Vancity-like “we’re in this together to make a difference” mentality in the USA 2008? How do we do it without alienating a large portion of our field of membership? Aligning the benefits of a given CU with the needs of their field of membership seems to be a tall task with ever-diversifying FOM’s.

  2. CU Skeptic on

    @Credit Union Warrior: Great questions. Here’s my take. For a present day cu that already has a bloated geographical field of membership, I would not be afraid to alienate a large portion of your FOM.

    It’s interesting that the charge of principle #1 is not to offer services to everyone in your field of membership, it’s to offer services to those in your FOM that choose to take on the responsibilities and benefits of membership.

    I know that not trying to serve everyone in your FOM may represent a sort of paradigm shift.

    Here’s a fishing analogy that I hope helps clarify what I’m saying to those of you stuck in a big FOM.

    Your current FOM is a good sized lake. Lots of fish. Lots of different kind of fish. You can probably catch some fish with the ol hook and worm. But, if you knew what kind of fish you wanted to catch, you could pick out a lure designed to attract that specific fish. It would have the right colors, spin the right direction, and stay at the right depth. You would forfeit chances at all other types of fish to catch this one kind.

    “But won’t that leave us with less fish members?” I think what you would experience is more of a member turnover. You would lose some people, but you would also attract some. In the end, the ones who stay, and the new ones you attract, will most likely be stronger members of your cooperative.

    It should also be mentioned that alienating a group does not mean you offend them. If you are at a cool party and start talking about HR 1151, you are going to alienate a lot of people quickly, but I doubt you are going to offend anyone.

    In affinity marketing and membership, you would say things that a good chunk of your FOM may not know or care about. However to those that do care and understand, it will be more relevant than any other signal they are getting on their FI radar.

  3. […] kind of services does a credit union offer? Posted March 11, 2008 I brushed by this in my post on Principle #1. It’s a stupid question, right? A credit union offers financial […]

  4. […] principle gets us a better understanding of how this “volunatary, cooperative, not-for-profit organization” is setup. It’s a democracy. (Yahoo for […]


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