Archive for the ‘7 Cooperative Principals’ Tag

Pie in the Sky: Financial Self Improvement at Your Local Credit Union

In regards to my thoughts on Principle #4 and Credit Unions as self-help organizations:

With Americans apparent obsessed with all things self-help, how is this not a focal point of American CUs?

If there is a National Brand that could weave CUs together, I’d make a strong case for this as “the one”.

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Principle #4: Autonomy and Independence (Part 1)

It’s time to jump back into our ongoing discussion about the 7 cooperative principles. If you need a refresh, the other articles in the series are located here.

Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their members. If the cooperative enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the member and maintains the cooperative autonomy.

There’s so much jammed into Principle #4 that it looks to be a 2 parter for me. Let’s start by looking at “Cooperatives are autonomous, self-help organizations controlled by their members”

Credit Unions are autonomous.

Each Credit Union is self-governing. Each has it’s own set of rules. Your CU can’t tell my CU what to do. (I do what I want!) But not really.

CUs do have levels of governance above them. No CU is an island. They are subject to local and federal laws and in most cases some kind of regulatory body. (I would say all cases but don’t really have the time to research the credit union practices of every country.)

This isn’t necessarily a bad thing. We certainly can’t have credit unions making up rules that supersede federal law. But, have you seen the 428 page beast of a document that is the NCUA Regulations? That’s a lot of regulating for entities that are supposed to be self governed.

In addition, the recent incident with TDECU and the FDIC clearly shows that Credit Unions can and are influenced by forces beyond their member controller.

Credit Unions are self-help organizations.*

For me this could be one of the most powerful and differentiating ways to look at Credit Unions. Instead of seeing CUs as Financial Institutions that are member controlled, it very much within the CU DNA to be seen as places for financial self improvement.

This means more than just good auto loan rates. (Though it’s probably under the self improvement umbrella.) This means helping members with things like budgeting and retirement planning and making that feel like the norm instead of the exception. It means educating members of their financial options in ways that are engaging, maybe even fun.

Credit Unions are member controlled.

This is the 3rd principle that mentions member control. It’s kind of big deal. (See Principle #2 and #3 for more thoughts on that.)

What’s your take?

My big questions for members of the Credit Union community in regards to part 1 of Principle #4 are:

  1. Do you feel like your CU is really autonomous? Is there too much regulation? Is there not enough regulation? What are the areas where you feel free to self-govern and write your own rules?
  2. Do you view your CU as a self-help organization? Do your members view it that way? What would you need to do internally and externally to act more like a self-help organization

* I’m not 100% sure about the original intentions of “self-help organization.” Self-Help could be an adjective to describe the organization or part of the noun. It could make a difference in one’s interpretation of a credit union as a self-help organization. Is a credit union an organization that provides for itself and solves its own problems (an organization that is “self-help”) or is it a place where people go to help better themselves? I prefer the later.

Principle #2: Democratic Member Control

I’m finally getting back to talking about the 7 cooperative principles. You can check out my other posts in the series here.

Let’s talk about Democratic Member Control

Cooperatives are democratic organizations owned and controlled by their members, one member one vote, with equal opportunity for participation in setting policies and making decisions.

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

What strikes me about this principle is it’s simplicity. Doesn’t it sound so nice, simple, and peaceful?

Once again, the modern day credit union is far from looking like this simplistic cooperative principle. (Now that I think about it, just about the only place you hear about “one member one vote” actually playing out is in conversion votes.) We elect a Board and they do most of the “participation in setting policies and making decisions.”

I’m not against this kind of representative system, however, in the credit union cooperatvie (as it does in other representative democracies) representation does create a disconnect between “regular members” and “board members.”

In most cases, this disconnect is fair price to pay for each member in return for not having to deal to many of the policies and decisions that have to be made in a fully functioning credit union. However, as evident by stories of board/member clashes and even board members suing members, this disconnect is one that if left unchecked can get really ugly.

Back to You…

What are you thoughts on the current state of credit union democracy? I’d love to hear your thoughts!