When the Federal Credit Union Act of 1934 established a national system of federal credit unions, the idea was to create an alternative to banks, one that relied on a cooperative model to solve problems, compete with other financial institutions, and inspire innovation. Almost 80 years later, that cooperative model has grown into networks that include credit union service organizations, corporate credit unions, and credit union leagues. Together, they provide a system for credit unions to share resources and best practices, strengthening these institutions further.
But the cooperative model doesn’t end there. For many credit unions, an informal network outside the established system serves as a key component of their success.
CUSocialGood.com is an example of such a network. The site gives credit unions an outlet to share ideas, discuss best practices, and inspire community-focused innovation that can be implemented at institutions around the country.
The forum allows credit unions to share stories about their true missions — supporting people and communities over pure profit. At CUSocialGood.com, credit unions and their employees describe helping charities, providing scholarships, or teaching financial literacy, as employees from Freedom Credit Union ($515M, Springfield, MA) did when they addressed seniors at Franklin County Technical High School in Turners Falls, MA.
After the event Vicky Murray, one of the students, told a local news outlet, “It helped me really see how the world is, and how I’m going to need the credit score. It really opens your eyes.”
Apart from serving as idea incubators, informal networks also help small and mid-size credit unions pool resources to compete with larger financial institutions.
The National Federation of Community Development Credit Unions, for example, created the Faith-Based Credit Union Program in 1992 to help faith-based cooperatives serve their members better. Faith-based credit unions provide low-income communities with access to a range of financial products and services including loans for first-time homebuyers or small businesses, and for students to attending college or job-training programs. The network provides faith-based credit unions with the economies of scale needed to offer financial products and services competitively and affordably.
Informal or not, networks extend the cooperative spirit beyond the local branch to other credit unions enabling them to identify, use, and develop each layer of the cooperative structure to give themselves —and the movement as a whole — the best shot at success.