The Role Played by Credit Unions
The philosophy behind credit unions sets them apart from other financial institutions. Credit unions are not for profit financial institutions that operate like an economic coop to service its members, who are member owners of the credit union. Credit unions look out for their members’ interests and provide a level of service that is not generally available at other financial institutions. Like other financial institutions credit unions make loans to members but also offer financial counselling and act as a community organization.
Credit unions are cooperative organizations that are based upon voluntary membership and a small membership fee. Many credit unions operate as not-for-profit institutions with unpaid member volunteers serving on the board of directors. Credit unions are democratic organizations owned and controlled by their members, each of whom has a vote, and an equal opportunity to set policies and make decisions.
Each member is also an owner of the cooperative credit union. The members contribute to, and control the capital of the credit union. Members decide what financial investments the credit union should make and what financial products should be offered to member, as well as the terms and interest on these products. For this reason and because credit unions are not for profit, they can usually offer better rates, fees and service than for-profit financial institutions. Members enjoy benefits in proportion to the extent of their financial transactions and investment.
The philosophy behind Credit unions place importance on educational opportunities for their volunteer directors, and financial education for their members and the public, especially the nation’s youth. The philosophy holds that the better informed its members are, the more likely it will be to make informed and logical decisions. Credit unions also recognize the importance of ensuring the general public and policy makers are informed about the nature, structure and benefits of the organization.
While focusing on member needs, cooperatives work for the sustainable development of communities, including people of modest means. Credit unions are participants in the communities the serve, and the general philosophy is that service to their members and the community supersedes the goal of profit taking. Credit unions have often played significant roles in their communities by offering low cost reconstruction loans to the community at large, not just members, in times of natural disaster. Credit Unions historically were very important in drawing the United States out of the throes of the Great Depression during the 1930s.
by Sally.Anderson 19 years ago