Creating a Common Wealth

Who owns the peanut butter and jelly sandwich? Sure enough, a patent exists! In America, a product or service is privately owned or it is government property. These are the two alternatives for “owning” productive assets, but the credit union model—the cooperative—doesn’t easily fit either option. The real challenge is to understand and exploit the advantages of this third way of managing wealth in America


Who owns the peanut butter and jelly sandwich? Surely this creation is as American as apple pie, patriotism and motherhood. No one could own this everyday staple of school lunch boxes—or could they? Recently I picked up a Smuckers “Uncrustable” Peanut Butter and Jelly Sandwich. On the back of the package was patent no. 6,004,596.

Sure enough, a patent exists, granted in December 1999, describing a product with a “first bread layer having a perimeter surface coplanar to a contact surface” and containing a “first filling comprised of peanut butter” and a “second filling comprised of jelly.”

Moreover, reports say that Smuckers has filed suit to enforce its rights to the peanut butter and jelly sandwich against a Michigan firm that developed a substitute sandwich.

Nowhere except in America, where concepts of ownership come in two flavors, would this kind of reasoning appear. Either a product or service is privately owned or it is government property. These are the two alternatives for “owning” productive assets, whether they be land, commercial assets or intellectual property.

What About Credit Unions?

But the credit union model—the cooperative—doesn’t easily fit either option. As of June 30, credit unions managed over $450 billion in assets. Credit unions can’t be bought or sold; merger requires a majority vote of members. Moreover, there is more than $50 billion of “net worth,” or members’ collective savings, within the 10,000 credit unions in excess of members’ savings and loans. That’s a lot of capital for no one to “own.” It is also a tremendous responsibility.

Although some people might be tempted to convert this vague, collective ownership to private property through charter conversion, the real challenge is to understand and exploit the advantages of this third way of managing wealth in America.
Credit unions are creating a unique organization that combines individual benefits with cooperative power. Outside credit unions, an individual seeks the for-profit firm offering today’s best financial deal. But the credit union model says join us for individual service and collective economic strength. Each member is part of a community of common-wealth that is attempting to create more advantageous economic opportunity now and in the future. Two

Levels of Cooperative Power

The immediate advantage to the member must be at the local credit union level. Members should be getting a better economic deal as well as an opportunity to participate in the credit union’s future direction.

Participation certainly means using the credit union’s services, but the credit union model also promises other kinds of involvement. Why is this “participation” important? How can credit unions develop this advantage?

Recently I attended my Vietnam Navy ship reunion. We came because we had participated in a shared experience, albeit in our own individual ways. The enginemen or snipes on my LST had a very different view of the ship’s evolutions than did a quartermaster. An officer aboard ship as well as “on the beach” experienced very different events than did an enlisted person or the chiefs. Yet 30 years later there was a common bond of service that everyone shared, even if there had been no ongoing contact.

Credit union participation may seem utilitarian, not something to build “reunions” around. But maybe not. I have been to many events where the speaker shares his or her first experience with a credit union. For example, when “Doc” Heins retired from CUNA Mutual he talked about getting an auto loan as a graduate student with no money and no credit history. That event helped shape his entire career.

Throughout our credit unions there are stories about the first loan, the help with a purchase or the extra special service. These participations are sometimes simply identification through creative marketing such as a credit card from Congressional FCU with a picture of the Capitol on the plastic—members want that card.

The Alternative Example

But often participation is much more than a marketing “contact.” A recent example of extended involvements is in the Annual Report of Alternatives FCU, a $35-million community development credit union in Ithaca, N.Y. Stories about members’ and employees’ “participation” in the credit union “experience” appear throughout the report. One concerned a young college student, Gabe Flores:

“Gabe Flores is one of the first IDA (individual development accounts) youth participants. . . . As a peace activist, Gabe did not want to register for the selective service. However without registering, he would not have access to a number of student loans and grants. The IDA helped Gabe get money for his education while not having to go against his values” (page 19).
Another member is quoted in the Report: “I am honored to be a partner with an organization dedicated to the ideals of compassion, justice, sustainability and abundance for all. I appreciate your integrity and steadfastness.”

Every time a credit union conducts a member survey, holds town hall meetings, invites letters for political action, or hosts an open house for a new branch or head office, community spirit is fostered.

This spirit is clear from a recent Web survey in which members were asked why the credit union’s on-line account was their most important relationship:

“The credit union does not make you feel unimportant, but lends more of a humanistic service to its members.”

“This is MY credit union. It will never be the target of a hostile takeover.”

“They rock . . . I have most of my money there as well.”

The Second Level of Community

Creating common-wealth must certainly occur in the interactions a credit union has with its members. But the greatest strength may come from credit unions’ commitments with each other.

In every instance of a coordinated effort to create common advantage and a network created to support it, credit unions have been successful. Sometimes this is in the political arena, such as the capitalization of the NCUSIF or passage of HR 1151. More often it is in the operational area. The corporate network, created by credit unions, has done more to keep smaller credit unions viable and provide large credit unions with options than any other financial system today. Shared networks and ownership of initiatives in areas such as data processing, member investment alternatives, new insurance options and even credit counseling leverage credit union capabilities far beyond the powers of any one credit union.

In networks and CUSOs being created today, the collective market power of credit unions is aggregated and used to benefit members. The strength is not in the resources being mobilized but in the collective intent. Can credit unions negotiate better automobile deals for their members working individually or by creating an organization that aggregates the buying power of members and the financing power of credit unions? Both strategies are being used. Which approach is most likely to impress the auto manufacturers or large dealers that credit unions want fair, consistent value for members?




Oct. 15, 2001


  • sappy, i dealistic bs