Putting the Movement Back in Credit Unions

Credit unions exist not merely to be just another financial option, but to provide services other institutions cannot or will not.


At the end of a planning session a director said to me: “I understand why credit unions were formed in 1934. But if they did not exist today, would we start them, and what need would they serve?”

The director's inquiry raises the fundamental question of vision: Why do credit unions exist and whom do they serve? Some persons may not give the question a second thought, but pondering it may be more critical than ever.

Today most credit unions have a plan, but many lack a strategy. The plan is the budget plus the list of projects and initiatives to be accomplished in the short term. But strategy specifies how credit unions are different. This is important because to many commentators, credit unions are generally co-equal with other financial service providers.


But is our future best understood as merely a subspecies of financial services? Is there another way to understand and act on the UNIQUE role credit unions play? I believe there is a term that can better highlight what credit unions have done, and can do, to make their contributions more distinct. The term is "social entrepreneurs."

(I believe in this context the term, "social" is just as important as the term "entrepreneur." "Social" identifies the credit union's goal as doing good in society, not just making money.)

Credit unions were founded to challenge the status quo. Sometimes doing so meant providing individuals with financial services that were not available anywhere else. Groups of teachers, government employees, and railroad and factory workers organized to pool resources to give members an economic opportunity.

Discovering and then serving unmet needs has traditionally been the role of entrepreneurs, individuals who see potential where others do not. Then, through persistence or even irrational optimism, they commit resources to realize the vision. What needs in today's society are not being met?


Today an organization's impact can be much more than its business purpose.

Across America, marketplace issues are about more than price. It is a symptom of the fact that not all of a society's needs can be met by market-driven responses or state-supported programs. It is these gaps or needs that credit unions originally responded to, and to which they still can today.

As social entrepreneurs, credit unions can bring social, not just economic change, challenge private ownership models with commonwealth solutions and accomplish this in a democratic structure of accountability.

How can credit unions recapture their role as social innovators promoting community well being and economic democracy? We must identify emerging needs or ones not being met. Should loans for energy efficient automobiles enjoy lower rates? Should credit unions proactively seek financing for daycare centers in low-income areas, for public-private housing projects, for community retirement housing?

Responding to these and other unmet opportunities is how credit unions can define their uniqueness. Look to the community, ask the members, and initiate action. Isn't that how credit unions were begun in the first place?




July 3, 2006


  • I joined my first credit union at the age of 20 and had no idea it was a by member only or that I was considered part owner. I went in search of a 'bank' where I was a person with a name, not an item with a number. Small banks got chewed up by big banks - I wanted to feel like my financial questions and needs were considered important. And back then from the CEO to the teller, the comraderie and team mentality were evident. I still love my credit unions ... all of them serve me and my family very well.
  • I am a CU member, however, I am treated just like any customer at a bank who provides poor service. The customer experience must be the priorty for all credit unions and then you can focus on providing other services. It seems that is is so simple, yet no one seems to get it.
  • Chip - you are right on with this one. You know I continously preach that we are not an industry - that is for mainstream players. We must find our niche, and the ideas you set forth about responding to community needs, and the needs of people in our immediate community should be our priority. That is what a Movement is about!! Nicely done.
    dick ensweiler
  • The essay is well written, but way off base in its conclusions. Despite the prior commenters remarks, the social activists in the credit union industry are in a minority, but obviously still vocal. I'm sure being a social entrepreneur is what most credit union CEOs think about every morning on the way to work (Not!). Filson includes a particularly revealing paragraph with a clear socio-political agenda. "As social entrepreneurs, credit unions can bring social, not just economic change, challenge private ownership models with commonwealth solutions and accomplish this in a democratic structure of accountability." Sounds left of center to me. What the heck is a "commonwealth solution?" Are credit unions supposed to be anti-ownership? I believe that this type of thinking is dangerous and potentially divisive. Those from outside the credit union industry will certainly wonder about what is going down.
    Marvin Umholtz
  • Thank you for your insightful article. It is refreshing to know others see credit unions should be truly different. I have a background in banking and I see so little difference in many credit unions that it disturbes me. I want the credit union movement to be something special, to really be different. We do need to "recapture the role as a social innovator." If we do not provide a uniquely different experience, we are nothing more than a bank with interesting product names.
    Helen Mickel
  • Credit unions were formed as cooperatives to serve and benefit individual members who participated. Period. Not for communal or socialistic purposes. You and the credit union leagues are trying to transform them into "social" (istic) experiments to perpetuate the bureaucracy you've helped create. You are trying to capture capital that really belongs in the private sector. This is sad and wasteful. Your proposed experiments will not work. The capital will be squandered until members get tangible ownership. I am sure this is not something you like to hear, but it is true.
  • Excellent questions. However, it's becoming very difficult to be "social entrepreneurs" in an environment where regulators are increasingly trying to force us into a bank mold. Let me quote from my examiner, "It looks like you're trying too hard to serve your members."
  • you pose the question, but there is no arc to argument... what credit unions lack is the ability to create that movement and your piece offers little or no guidance how gain momentum caputring the role as social innovators means taking an active role in the community...perhaps credit unions should model themselves after Asian banks
  • Chip...love it! I think the term "social entrepreneur" is one of the most powerful visions for CUs in the future that I have heard.
    Steve Willliams - Cornerstone Advisors, Inc.
  • Chip, I appreciate your thought provoking article. I believe the word that defines us as a movement (and a social entrepeneur) is the word trust. Our members trust us to do right by them and for them. We must remember that we are in the people business - people helping people. How this noble goal is achieved is up to individual CU's but we must be true to the principles on which we were founded or we could become a footnote in history.
    Merrill Mann - APCO Employees CU
  • From one of the most prescient thinkers in the movement comes this call to action. Will credit unions look up long enough to see the light?
    Carol Anne Burger
  • Sorry to break the feel good trend of the responses and comments, but I must say that the sentiments in this article and in the reponses cause me concern for the future of the "movement". I concur that we must be innovative in the value we create within the househods of our members in order to be relevant in the future, but to think that we should be redistributing the earnings of the members to make broad decisions for social good and community betterment is dangerously distracting from the realities of survival in the financial services world, industry, movement, or whatever. This new world is a competitive fight to the death, and the battleground is within the walls of the members' homes. Rather than harken back to yesteryear to recapture the ethos, or redistribute the members' equity in feel-good initiatives, we must be innovative, aggressive, and extremely good at what we do to maintain relevance by giving members what they value. If you think the fight can be won by focusing on the social and financial well-being of our commnunities, you will always be placing behind the huge banks with their enormous PR and CRA pockets. Decide how your members define value and consistently deliver that to them through a relentless focus and effort. This may not feel as gratifying, grand or noble, but at the end of the day, the participation of your members' households is the only thing that will preserve you.
  • “Recapturing the Ethos”… and Embracing our Roots! This is a wonderful springboard for management teams of credit unions all across the nation to start thinking of how we are the “social entrepreneurs” or agents for social and financial well-being for the communities we serve to further substantiate your precise write up.
    Melinda - Southland CU
  • Very well said, Chip. As a long time member of our Credit Union and having had accounts at other banks, and now as an employee of our Credit Union, I find it very refreshing to see an organization that places its' members needs high on providing as we call it here "Pickle Service". Advocating "social entreprenuership" is another area in which our credit union differs over other financials in our area. Marketing to and providing excellent service to ALL segments of our community is paramount in our efforts to responding to the needs of our non-tradional member-base. Gracias for a very though provoking piece.
    Guadalupe (Wally) Rendón
  • I couldn't agree more with this article. I have one comment for whom ever sent in comment #3, "the examiners don't run your credit union."
    Jim Gillard (CU Executive)