Philosophy – (n.) a system of principles for guidance in practical affairs
According to Merriam-Webster, “philosophy” is a term defined as the most basic beliefs, concepts and attitudes of an individual or group. For more than 100 years, credit unions around the world have held true to its deep-rooted philosophy of “People Helping People,” a core belief that guides how credit unions operate and serve its members and communities.
As a follow-up to last week’s newsletter article about the history of credit unions, this week the Tennessee Credit Union League would like to focus on the philosophy of credit unions—a simple idea that has helped shape credit unions for over a century.
Credit Union Difference
“People Helping People” is a modest, yet powerful philosophy that reflects a deep commitment to cooperation, community support and mutual benefit. Originating during the evolution of credit unions, the credit union philosophy illustrates the humble beginnings of credit unions as a safe and convenient place for members to save money and obtain a loan at a reasonable rate. Credit unions, or cooperative financial institutions, were owned and directed by organized groups of people with a common bond of members pooling their assets to provide loans and other resources for mutual benefit— “People Helping People.” Unlike banks, credit unions are member-focused and differ from their counterparts in the following ways:
- Not-for-profit institutions, owned by members
- Member-driven decisions
- Higher savings rates and lower loan rates
- Qualifications for membership
- Dividends returned to members
- Deposits insured up to $250,000 by the National Credit Union Administration
Cooperative Principles
Another fundamental difference that makes credit unions unique, especially in comparison to traditional banks, is that they are guided by eight cooperative principles. As cooperative institutions, credit unions live by these principles, which act as their foundation and explanation for functioning:
- Voluntary and Open Membership: Credit unions are voluntary, not-for-profit financial cooperatives, offering services to people willing to accept the responsibilities and benefits of membership, without gender, social, racial, political or religious discrimination.
- Democratic Member Control: Credit unions are democratic organizations owned and controlled by their members. Each member gets one vote, no matter their financial status, to help make the organization’s policies and decisions.
- Member Economic Participation: Members are the owners of their credit union and contribute to its capital. Members, not shareholders, benefit from their credit union’s profits in proportion to their relationship and use of its products and services.
- Autonomy and Independence: Credit unions are independent, self-reliant organizations controlled by their member-owners, not outside stockholders. When making business deals or raising money, credit unions never compromise their autonomy or democratic member control.
- Education, Training and Information: Credit unions provide education and training for members, elected representatives, and employees so they can contribute effectively to the cooperative. Credit unions place particular importance on educational opportunities for their volunteer directors, and financial education for their members.
- Cooperation Among Cooperatives: Credit unions serve their members most effectively and strengthen the cooperative principles by working with other cooperatives through local, state, regional, national and international structures.
- Concern for Community: While focusing on member needs, credit unions work for the sustainable development of communities, including people of modest means, through policies developed and accepted by its members.
- Diversity, Equity and Inclusion: Credit unions support diversity, equity and inclusion as a shared credit union cooperative principle and continue to have a responsibility and take a leadership role in building and serving more diverse, equitable and inclusive communities.
All around the world, credit unions follow these principles to guide their daily actions and decision-making in regard to its members, to make a positive community impact and to continually strengthen the credit union movement.
A deep-rooted philosophy based on people over profit, “People Helping People” is a guiding principle for credit unions putting service into action; people at the center. Whether it’s helping a first-time homebuyer, supporting small business loans, or offering financial literacy programs, credit unions are influenced by a shared common goal of improving the well-being and lives of its members and making its communities stronger and better places to live — simply by “People Helping People.”
Learn more about the credit union principles from the National Credit Union Foundation.
