7 Principles of a Cooperative
As financial cooperatives, credit unions operate under a different set of rules than big banks. So what exactly is a cooperative?
A cooperative (also known as co-operative, co-op, or coop) is an autonomous association of people united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled business.
Here are the 7 principles of cooperatives, that make them stand out from other businesses:
1. Voluntary and open 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 a volunteer board of directors. In the case of credit unions, members are drawn from defined fields of membership.
2. Democratic member control.
Co-ops operate on a democratic platform, meaning one vote, one member - no matter their financial status. Each credit union has a board of directors that serve on a volunteer basis.
3. Member economic participation.
Members are both owners and customers. The more people that participate, the more that can be given back in the form of more products, lower loan rates, higher savings yields, and fewer fees.
4. Autonomy and independence.
Cooperatives are owned by members, not shareholders, making each member the boss. This means that if the Cooperative enters into an agreement with other organizations, it is done so based on terms that ensure democratic control by the member and maintains the cooperative autonomy.
5. Financial education, training, and information.
Credit unions are committed to providing financial education to their members and to the community at large. From budgeting basics to retirement planning and how credit works, they do all they can to ensure that the general public and policymakers are informed.
6. Cooperation among cooperatives.
Working together, financial cooperatives are there when you need them. Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, state, regional, national, and international structures.
7. Concern for the community.
Credit unions are passionate about serving their members and about making an impact in the community. They volunteer for local charities and participate in causes to make a difference.