Credit unions are a permanent, expanding resource for current and future generations. They are the physical manifestation of the pay-it-forward concept. But for the cooperative model to truly make a difference in today’s financial landscape, members and supporters must understand the inherent values of the system.
At its core, the credit union cooperative model is an outsider system. Established in 1934 to enhance credit availability and consumer demand within established groups or communities, it remains a dynamic and evolutionary system that is funded by and focused solely on its members.
Reporting to members, not stakeholders, credit unions can take the long view and partner with organizations without being constrained by quarterly earning targets. They are a community resource with a member story to share behind every product, service, and transaction. Credit unions are a different way for members to organize and influence financial choices, and they rise and fall on a simple, yet innovative, concept: Always do the right thing for the membership.
Yet that "right thing" isn’t always easy to define, let alone execute. And in today’s environment, it can be challenging to convert the ideals of what it means to be a cooperative entity into a successful business model.
“We have 72,000 members,” says Patricia Smith, CEO of Oregon-based Unitus Community Credit Union, in the March 2011 Callahan Report. “How can we foster the notion that we are a community of people helping one another, that we all have responsibilities for one another, that we are not just a storefront or website dispensing financial services?”
Indeed, the importance of member participation is a cornerstone of the cooperative. To build an engaged community, the $840 million Portland credit union encourages its members to participate in board elections and annual meetings. It educates its members about the one member, one vote standard. And it doesn’t take for granted its members’ loyalty. Instead, it strives to demonstrate that credit unions are indeed a community of persons who are willing to help one another. That, after all, is the credit union difference.
“It is critical we memorialize and embed a sense of where we came from or there will not be a sense of who we are and where we are going,” Smith says. “We will just be like a bank but operating without a bank’s benefits. If we don’t act different, no one will understand we are different.”
Financial services is just one sector of the American economy that has entities — such as credit unions, the farm credit system, and mutual insurance groups — who have folded cooperative ideals into their business model. Another example that is familiar to most American consumers is the commercial sales sector. This includes grocery stores, farm supplies, and biofuels, to name a few. The Wedge Natural Foods Co-Op in Minneapolis attributes its succss to listening to and acting upon member feedback.
“We were started by people who knew exactly what they wanted in terms of a grocery,” says Elizabeth Archerd, membership and marketing manager for the co-op, in the March 2011 Callahan Report. “Then they listened to members in order to continuously supply what those members wanted.”
The co-op listens to members in a variety of ways. During store hours, the co-op staffs its customer service desk with two employees; it fields phone calls and written requests, takes comments via email and its website, and conducts routine member surveys.
“We don’t have to guess at what our shoppers need,” Archerd says in The Power of the Cooperative Advantage webinar. “They tell us constantly.”
Of course, listening, acting, and serving are just three components of the co-op’s overarching goal, which is to live the principles of the cooperative ideal.
“We offer education about cooperatives,” Archerd says, noting that every newsletter as well as its website discusses the cooperative principles. “And we cooperate with cooperatives.”
Several Wedge managers serve on national cooperative and advisory boards, its warehouse distributes to other food cooperatives, it works with fair-trade groups, and it helps budding food co-ops get their footing in the marketplace. The grocer even offers a credit card through a local credit union. Despite its success — The Wedge posted $42 million in sales last year, holds $16 million in retained earnings, and returned $1 million to its more than 14,500 members — or perhaps because of it, the cooperative is as committed to its founding principles as it was when it launched in 1974.
“The more people who join, the more we see our principles at work,” Archerd says. “Growth helps more people understand cooperation. Our success, we believe, comes directly from our co-op structure."