a general overview of the Rochdale Principles, which guide most cooperatives in the modern era

1. WELCOME

2. Cooperative
Principles & Philosophy
Host Organization
Date

3. America’s Credit Unions
Where People Are Worth More Than Money

4. What, Who, and Why?
Not-for-profit financial cooperatives serving members who
share a common bond.
92 millions American consumers are members of, and receive
all or part of their financial services from America’s 7,325
credit unions.
Credit unions generally offer more attractive savings and
loan rates—and lower fees—making us an attractive choice
for consumers.

5. Philosophy and Structure

6. “It’s a great movement,
worthy of great deeds,
deserving of great loyalty.”
Edward A. Filene

7. “A credit union is not an ordinary financial
concern, seeking to enrich its members at the
expense of the general public. Neither is it a loan
company, seeking to make a profit at the expense
of the unfortunates….The credit union is nothing
of the kind; it is the expression in the field of
economics of a high social ideal.”
Alphonse Desjardins

8. People More Important than Dollars
Our most basic values:
Honesty
Equal worth of all individuals
Member participation
Mutual respect and trust
Mutual self-help

9. Roots in Cooperative Movement
Goal – service and benefits to members above all else
Core characteristics:
Owned by members
Operate democratically
Not-for-profit
Support social and community programs

10. Volunteerism
100,000+ Americans volunteer for their credit unions
More than 500 volunteers serving LGFCU:
Board of Directors
Supervisory Committee
Loan Review Committee
Advisory Councils

11. Regulation and Supervision

12. Regulation and Supervision
CUs responsible for the care of members’ funds
Stability of financial institutions critical to the economy
Government ―checks‖ to be sure we fulfill obligations
Regulators establish standards for safe operation and ensure
compliance

13. Alphabet Soup
Federal Charter vs. State Charter
FCU Act (1934) vs. NC CU Act (1915)
NCUA vs. NCCUD
LGFCU vs. SECU
No tax dollars involved – fees paid by regulated credit unions

14. NCUA
Three-member Board appointed by President/confirmed by
Senate
President selects Chairman
Five regional offices – NC in Region III

15. Safety and Soundness

16. Safety and Soundness
NCUA’s primary goal is to ensure overall safety and soundness
of credit union system
Evaluate degree to which management
identifies, measures, monitors and controls risks in operations
Annual Risk-Focused Examination and quarterly Call Reports
Financial crisis of 2007 – ???; 14 failures as of November 30

17. Insurance Fund

18. NCUSIF
National Credit Union Share Insurance Fund (NCUSIF) –
created by Congress in 1970
1984 – voluntarily deposited 1% of insured member savings
Credit unions make ―deposit‖ each year – ensure fund’s equity
ratio at or above 1.2%
Protects member deposits to $250,000 (just like FDIC) –
backed by full faith and credit of US government
No federal tax dollars, and no member losses

19. Credit Unions Around the World
53,000 credit unions in 97 countries
Serving 188 million members
World Council of Credit Unions (WOCCU)

20. As of August 2011
Number of U.S. Credit Unions: 7,325
Consumer member/owners: 92.6 million
Assets: $963.4 billion
Loans: $574.6 billion
Capital to Assets: 10%

21. Why is this important,
and does it matter?

22. Questions

23. Ordinary People…
Extraordinary Achievements
A History of the Cooperative and Credit Union Movements

24. Cooperation
―An association of persons
for common benefit.‖
– Webster’s Dictionary

25. So how did we Add pic of host venue
get here … ???

26. Cooperatives Are Not A New Concept …
1752: Ben Franklin Starts
Philadelphia Contributorship

27. Cooperatives Are Not A New Concept …
1761: Fenwick Weaver’s
Society Organizes in Scotland

28. Cooperatives Are Not A New Concept …
1844: Rochdale Society of Equitable Pioneers
Organizes in England

29. The (Rochdale)
Seven Cooperative Principles
1. Voluntary & open membership
2. Democratic control
3. Member’s economic participation
4. Autonomy & independence
5. Education, training and information
6. Cooperation among cooperatives
7. Concern for community

30. Break

31. Four Basic Operating Models
Government ―For Profit‖
Not-for-Profit Non-Profit

32. Four Basic Operating Models
―For Profit‖

33. Investor-Owned

34. Are there ―for profit‖
businesses in the co-op and CU sector?
Why?

35. Four Basic Operating Models
―For Profit‖
―Non-Profit‖

36. Non-Profit (Charitable)

37. What other non-profits?
Are there ―non-profits‖ in co-op
and credit union sectors?
Why?

38. Four Basic Operating Models
―For Profit‖
―Non-Profit‖
―Governmental‖

40. Are there governmental entities
in the ―credit union space‖
Why? Good, bad or indifferent?

41. Four Basic Operating Models
―For Profit‖
―Non-Profit‖
―Governmental‖
―Not-for-Profit‖

43. What types of Not-for-Profits
and names of some, exist among
co-ops and credit unions?

44. Most Common Types of Co-op Sectors
(in alphabetical order)
Agriculture; Child Care and Preschool; Credit Unions;
Financial Services (other than credit unions); Food;
Funeral & Memorial Societies; Healthcare; Housing;
Insurance; Marketing; Manufacturing; Technology; Utility

45. Co-op Types
Worker
Producer
Purchasing
Consumer

46. You may know…

47. Co-ops’ Economic Impact
Number of Co-ops = 30,000
Offices and branches = 75,000
Memberships = 350 million*
Assets = More Than $3 Trillion
Revenue = More $500 Billion/annum
Value added benefits = $133.5 Billion
Jobs = Approximately 2 million
Wages and Benefits = $75 Billion
*Some members have multiple co-op memberships (data a year or so old)

48. America’s Credit Union Brand Image

49. Early Growth…until
Year-end 1969: 23,866 U.S. credit unions
Year-end 2007: 8,396 U.S. credit unions
August 2011: 7,325 U.S. credit unions
but…

50. While No. of Credit Unions Falls…
1969: Membership 21,500,000/$15.8 billion
2007: Membership 89,324,000/$776.6 billion
Q311: Membership 92,616,245/$963.4 billion

51. WOCCU
CUNA
State League
Chapter
CU
Member

52. The Co-op Difference
Does it Matter and, if so, to whom?

53. Civic-Minded Millennials* Reward or Punish Companies
Based on Social Issues
83% will trust a company more if it is
socially/environmentally responsible
74% believe a company’s message when it
has a deep commitment to a cause
89% consider switching from one brand to
another, with price/quality being equal
Source: Cone 2006 Millennial Cause Study
* Millennials are aged 28-10, born 1982-2000

54. CU Tag Line
America’s Credit Unions
Where People are Worth More than Money

55. Credit unions are financial institutions formed by an organized group of
people with a common bond. Credit unions differ from other financial
institutions in several ways:
Credit Unions Other Financial Institutions
Not-for-profit cooperatives For-profit entities
Owned by members Owned by outside stockholders
Operated by mostly volunteer
Controlled by paid boards
boards

56. Credit Union Mission
Promoting the wise use of thrift and credit
through the cooperative model

57. Credit Union Motto
Not for Profit,
Not for Charity,
But for Service

58. What Do These Mean in
Credit Unions’ Everyday Life?
Not for Profit
Not for Charity
But for Service

59. Credit Union Slogan
―Keep Purpose Constant‖

60. Seven Cooperative Principles
―These seven principles are founded in the philosophy of
cooperation and its central values of equality, equity and
mutual self-help.
―They express, around the world, the principles of human
development and the brotherhood of man through
people working together to achieve a better life for
themselves and their community.‖
CUNA Cooperative Alliances Committee

61. Seven Cooperative Principles
Voluntary Membership
Democratic Member Control
Members’ Economic Participation
Autonomy and Independence
Education, Training and Information
Cooperation Among Cooperatives
Concern for Community

62. Break

63. WELCOME BACK

64. Seven Cooperative Principles
Voluntary Membership
Democratic Member Control
Members’ Economic Participation
Autonomy and Independence
Education, Training and Information
Cooperation Among Cooperatives
Concern for Community

65. Voluntary Membership
Credit unions are voluntary, cooperative organizations,
offering services to people willing to accept the
responsibilities and benefits of membership, without
gender, social, racial, political or religious discrimination.
Many cooperatives, such as credit unions, operate as
not-for-profit institutions with volunteer board of directors.
In the case of credit unions, members are drawn from
defined fields of membership.

66. Pros and Cons of Voluntary
Membership

67. Democratic Member Control
Cooperatives are democratic organizations owned and
controlled by their members, one member one vote, with
equal opportunity for participation in setting policies and
making decisions.

68. Pros and Cons of
Democracy in the Business Model

69. Annual Meetings?

70. Members’ Economic Participation
Members are the owners. As such they contribute to,
and democratically control, the capital of the cooperative.
This benefits members in proportion to the transactions
with the cooperative rather than on the capital invested.
For credit unions, which typically offer better rates, fees
and service than for-profit financial institutions, members
recognize benefits in proportion to the extent of their
financial transactions and general usage.

71. What ―forms‖ of economic
participation exist in credit unions today
Benefits and advantages of each
The member’s participation…

72. Autonomy and Independence
Cooperatives are autonomous, self-help organizations
controlled by their members.
If the cooperative enters into agreements with other
organizations or raises capital from external sources, it is
done so based on terms that ensure democratic control
by the member and maintains the cooperative autonomy.

73. Pros and Cons of
Autonomy and Independence
Control issues
Preferential treatment/discrimination
Financial impact
Dictatorship
Nationwide…early 2000s

74. Education, Training & Information
Cooperatives provide education and training for
members, elected representatives, managers and
employees so they can contribute effectively to the
development of the cooperative.
Credit unions place particular importance on educational
opportunities for their volunteer directors, and financial
education for their members and the public, especially
the nation’s youth. Credit unions also recognize the
importance of ensuring the general public and policy
makers are informed about the nature, structure and
benefits of cooperatives.

75. How have credit unions’ succeeded
or fallen short in education and
training…with members, staff, board,
community?

76. Cooperation Among Cooperatives
Cooperatives serve their members most effectively and
strengthen the cooperative movement by working
together through local, state, regional, national, and
international structures.

77. Do credit unions ―co-operate‖
with co-ops?
How, why, and with whom?

78. Concern for Community
While focusing on member needs, cooperatives work for
the sustainable development of communities, including
people of modest means, through policies developed
and accepted by the members.
These seven principles are founded in the philosophy of
cooperation and its central values of equality, equity and
mutual self-help. They express, around the world, the
principles of human development and the brotherhood of
man through people working together to achieve a better
life for themselves and their community.

79. How have credit unions
demonstrated
concern for community?
What opportunities exist?

80. Credit Union Motto
Not for Profit,
Not for Charity,
But for Service

81. Summary / Overview
These seven principles are founded in the philosophy of
cooperation and its central values of equality, equity and
mutual self-help.
They express, around the world, the principles of human
development and the brotherhood of man through
people working together to achieve a better life for
themselves and their community.

82. Discussion Questions
• What do the principles mean to me, and my
credit union?
• How do I and my credit union practice these
principles?
• What could I and my credit union do that we are
not currently doing?

83. Consider a few minutes…
what’s your take?

84. Taking it Home
What can you do to follow the cooperative
principles within your community?
What can you do to follow the cooperative
principles within your credit union?
What more can your credit union do to follow the
cooperative principles in the way it operates?

85. Questions?

86. Thank you!