Principle #3: Members’ Economic Participation

Members are the owners. As such they contribute to, and democratically control, the capital of the cooperative. This benefits members in proportion to the transactions with the cooperative rather than on the capital invested.

For credit unions, which typically offer better rates, fees and service than for-profit financial institutions, members recognize benefits in proportion to the extent of their financial transactions and general usage.

Finally! Let’s start talking about money. (Cleverly disguised here as “economic participation.”) This principle is loaded with info, so let’s take it apart and look at the pieces.

Members are the owners.

While there is much debate over what an individual credit union should call those that participate (member, owner, customer), it’s very clear that “owner” is a term that is appropriate. (Though I believe thinking of participates as “customers” is the more effective, there are those much more experience than I that would choose the word “owner”)

The word “owner” implies both authority and responsibility but unfortunately these seem to be lost on the CU member of today.

They contribute to the capital of the cooperative. (And democratically control that capital.)

Members fund the CU and through democratic process control those funds. (In modern times democratic control = voting on a Board who controls the funds.) Yes, your $50 deposit is funding the credit union. This principle really doesn’t address other forms of funding (profits from CUSOs, external funding).

They recognize benefits in proportion to the extent of their financial transactions and general usage.

I like this part. Members get benefits! And low and behold, it’s based proportionally on participation. So the more you put into the CU (through financial transactions and general usage) the more you get out of it. All seems rather sound and fair.

This currently plays out in dividends paid out to members and contributes to the ability to set rates, but this principle alone doesn’t limit these benefits to these two use cases.

The unnecessary editorial

For credit unions, which typically offer better rates, fees and service than for-profit financial institutions,…

I have a hard time understanding this as part of the principle. My first thought is that it probably isn’t part of the original, but some how has been inserted in over time and just been duplicated and copied so many times that you rarely find a list that doesn’t include it. Maybe it’s just an example of how members can benefit from their financial funding.

I hope that some part of the above is true, because if it IS part of this underlying principle, if CUs were built on the principle of providing better rates, better fees, and better service, well then it could be the biggest disconnect from credit union philosophy and credit union practice that we’ve looked at so far. (What the heck is a ‘better’ fee anyways?)

I’d be very interested in hearing from anyone that has any insight into this part of the principle.

Back to You

What do you think about the different pieces of Members’ Economic Participation? How do they play out in your credit union? If you could start from scratch, would you want this principle manifested in it’s current practices?

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Just getting into my look at the 7 cooperative principles? You can check out the other articles in the series here.

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1 comment so far

  1. […] credit union member owners, credit union ownership, hey boss, my pleasure | In talking about Members’ Economic Participation, it’s clear that “owner” is a term that can be used to describe CU members. I […]


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