Credit Unions and banks are the same to the outside world…but the differences are vast. Credit unions are not-for-profit financial cooperatives. Think of it this way…You can do business locally or at national chain. You may be able to get the same products and services at both, but they are run very differently. They same may be said about cooperatives.
A cooperative operates solely for the members’ benefit, and in accordance with seven basic principles:
- Open and voluntary membership. It’s important that members voluntarily choose to become members.
- Democratic member control. Members ultimately control their cooperatives. When you attend your credit union’s annual meeting or vote for the board of directors, you’re exercising your member-owner control.
- Member economic participation. According to the Manchester Congress, “Cooperatives operate so that capital is the servant, not the master, of the organization.”
- Autonomy and independence. While governments determine the legislative framework within which co-ops function, this principle asserts that co-ops also have an “essential need to be autonomous in the same way that enterprises controlled by capital are….”
- Education, training, and information. This principle says members can play their role in the cooperative only when they understand that role and the co-op. That’s one reason, for example, that credit unions provide you with this information and other educational tools.
- Cooperation among cooperatives. Cooperators believe that co-ops have a unique opportunity to protect and expand the interests of ordinary people. This kind of one-for-all and all-for-one idea is unique among businesses. Even in localities where they compete, it’s common for them to also cooperate on numerous activities.
- Concern for community. Cooperatives exist primarily for the benefit of their members. Because of this strong association with members, they also are often closely and actively tied to their communities.