Cooperative Principles


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

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  • Cooperative Principles

    1. 1. WELCOME
    2. 2. CooperativePrinciples & Philosophy Host Organization Date
    3. 3. America’s Credit UnionsWhere People Are Worth More Than Money
    4. 4. What, Who, and Why?Not-for-profit financial cooperatives serving members whoshare a common bond.92 millions American consumers are members of, and receiveall or part of their financial services from America’s 7,325credit unions.Credit unions generally offer more attractive savings andloan rates—and lower fees—making us an attractive choicefor consumers.
    5. 5. Philosophy and Structure
    6. 6. “It’s a great movement, worthy of great deeds,deserving of great loyalty.” Edward A. Filene
    7. 7. “A credit union is not an ordinary financial concern, seeking to enrich its members at theexpense of the general public. Neither is it a loancompany, 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. 8. People More Important than DollarsOur most basic values: Honesty Equal worth of all individuals Member participation Mutual respect and trust Mutual self-help
    9. 9. Roots in Cooperative MovementGoal – service and benefits to members above all elseCore characteristics: Owned by members Operate democratically Not-for-profit Support social and community programs
    10. 10. Volunteerism100,000+ Americans volunteer for their credit unionsMore than 500 volunteers serving LGFCU: Board of Directors Supervisory Committee Loan Review Committee Advisory Councils
    11. 11. Regulation and Supervision
    12. 12. Regulation and SupervisionCUs responsible for the care of members’ fundsStability of financial institutions critical to the economyGovernment ―checks‖ to be sure we fulfill obligationsRegulators establish standards for safe operation and ensurecompliance
    13. 13. Alphabet SoupFederal Charter vs. State CharterFCU Act (1934) vs. NC CU Act (1915)NCUA vs. NCCUDLGFCU vs. SECUNo tax dollars involved – fees paid by regulated credit unions
    14. 14. NCUAThree-member Board appointed by President/confirmed bySenatePresident selects ChairmanFive regional offices – NC in Region III
    15. 15. Safety and Soundness
    16. 16. Safety and SoundnessNCUA’s primary goal is to ensure overall safety and soundnessof credit union systemEvaluate degree to which managementidentifies, measures, monitors and controls risks in operationsAnnual Risk-Focused Examination and quarterly Call ReportsFinancial crisis of 2007 – ???; 14 failures as of November 30
    17. 17. Insurance Fund
    18. 18. NCUSIFNational Credit Union Share Insurance Fund (NCUSIF) –created by Congress in 19701984 – voluntarily deposited 1% of insured member savingsCredit unions make ―deposit‖ each year – ensure fund’s equityratio at or above 1.2%Protects member deposits to $250,000 (just like FDIC) –backed by full faith and credit of US governmentNo federal tax dollars, and no member losses
    19. 19. Credit Unions Around the World 53,000 credit unions in 97 countries Serving 188 million membersWorld Council of Credit Unions (WOCCU)
    20. 20. As of August 2011Number of U.S. Credit Unions: 7,325Consumer member/owners: 92.6 millionAssets: $963.4 billionLoans: $574.6 billionCapital to Assets: 10%
    21. 21. Why is this important, and does it matter?
    22. 22. Questions
    23. 23. Ordinary People… Extraordinary AchievementsA History of the Cooperative and Credit Union Movements
    24. 24. Cooperation―An association of persons for common benefit.‖ – Webster’s Dictionary
    25. 25. So how did we Add pic of host venueget here … ???
    26. 26. Cooperatives Are Not A New Concept … 1752: Ben Franklin Starts Philadelphia Contributorship
    27. 27. Cooperatives Are Not A New Concept … 1761: Fenwick Weaver’s Society Organizes in Scotland
    28. 28. Cooperatives Are Not A New Concept … 1844: Rochdale Society of Equitable Pioneers Organizes in England
    29. 29. The (Rochdale)Seven Cooperative Principles1. Voluntary & open membership2. Democratic control3. Member’s economic participation4. Autonomy & independence5. Education, training and information6. Cooperation among cooperatives7. Concern for community
    30. 30. Break
    31. 31. Four Basic Operating Models Government ―For Profit‖ Not-for-Profit Non-Profit
    32. 32. Four Basic Operating Models ―For Profit‖
    33. 33. Investor-Owned
    34. 34. Are there ―for profit‖businesses in the co-op and CU sector? Why?
    35. 35. Four Basic Operating Models ―For Profit‖ ―Non-Profit‖
    36. 36. Non-Profit (Charitable)
    37. 37. What other non-profits?Are there ―non-profits‖ in co-op and credit union sectors? Why?
    38. 38. Four Basic Operating Models ―For Profit‖ ―Non-Profit‖ ―Governmental‖
    39. 39. Are there governmental entities in the ―credit union space‖Why? Good, bad or indifferent?
    40. 40. Four Basic Operating Models ―For Profit‖ ―Non-Profit‖ ―Governmental‖ ―Not-for-Profit‖
    41. 41. What types of Not-for-Profitsand names of some, exist among co-ops and credit unions?
    42. 42. 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
    43. 43. Co-op Types Worker Producer Purchasing Consumer
    44. 44. You may know…
    45. 45. Co-ops’ Economic ImpactNumber of Co-ops = 30,000Offices and branches = 75,000Memberships = 350 million*Assets = More Than $3 TrillionRevenue = More $500 Billion/annumValue added benefits = $133.5 BillionJobs = Approximately 2 millionWages and Benefits = $75 Billion*Some members have multiple co-op memberships (data a year or so old)
    46. 46. America’s Credit Union Brand Image
    47. 47. Early Growth…untilYear-end 1969: 23,866 U.S. credit unionsYear-end 2007: 8,396 U.S. credit unionsAugust 2011: 7,325 U.S. credit unions but…
    48. 48. While No. of Credit Unions Falls…1969: Membership 21,500,000/$15.8 billion2007: Membership 89,324,000/$776.6 billionQ311: Membership 92,616,245/$963.4 billion
    49. 49. WOCCU CUNAState League Chapter CU Member
    50. 50. The Co-op DifferenceDoes it Matter and, if so, to whom?
    51. 51. 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
    52. 52. CU Tag Line America’s Credit UnionsWhere People are Worth More than Money
    53. 53. Credit unions are financial institutions formed by an organized group ofpeople with a common bond. Credit unions differ from other financialinstitutions in several ways:Credit Unions Other Financial InstitutionsNot-for-profit cooperatives For-profit entitiesOwned by members Owned by outside stockholdersOperated by mostly volunteer Controlled by paid boardsboards
    54. 54. Credit Union MissionPromoting the wise use of thrift and credit through the cooperative model
    55. 55. Credit Union Motto Not for Profit, Not for Charity, But for Service
    56. 56. What Do These Mean inCredit Unions’ Everyday Life? Not for Profit Not for Charity But for Service
    57. 57. Credit Union Slogan―Keep Purpose Constant‖
    58. 58. Seven Cooperative Principles―These seven principles are founded in the philosophy ofcooperation and its central values of equality, equity andmutual self-help.―They express, around the world, the principles of humandevelopment and the brotherhood of man throughpeople working together to achieve a better life forthemselves and their community.‖ CUNA Cooperative Alliances Committee
    59. 59. Seven Cooperative Principles Voluntary Membership Democratic Member Control Members’ Economic Participation Autonomy and Independence Education, Training and Information Cooperation Among Cooperatives Concern for Community
    60. 60. Break
    61. 61. WELCOME BACK
    62. 62. Seven Cooperative Principles Voluntary Membership Democratic Member Control Members’ Economic Participation Autonomy and Independence Education, Training and Information Cooperation Among Cooperatives Concern for Community
    63. 63. Voluntary MembershipCredit unions are voluntary, cooperative organizations,offering services to people willing to accept theresponsibilities and benefits of membership, withoutgender, social, racial, political or religious discrimination.Many cooperatives, such as credit unions, operate asnot-for-profit institutions with volunteer board of directors.In the case of credit unions, members are drawn fromdefined fields of membership.
    64. 64. Pros and Cons of Voluntary Membership
    65. 65. Democratic Member ControlCooperatives are democratic organizations owned andcontrolled by their members, one member one vote, withequal opportunity for participation in setting policies andmaking decisions.
    66. 66. Pros and Cons ofDemocracy in the Business Model
    67. 67. Annual Meetings?
    68. 68. Members’ Economic ParticipationMembers are the owners. As such they contribute to,and democratically control, the capital of the cooperative.This benefits members in proportion to the transactionswith the cooperative rather than on the capital invested.For credit unions, which typically offer better rates, feesand service than for-profit financial institutions, membersrecognize benefits in proportion to the extent of theirfinancial transactions and general usage.
    69. 69. What ―forms‖ of economicparticipation exist in credit unions today Benefits and advantages of each The member’s participation…
    70. 70. Autonomy and IndependenceCooperatives are autonomous, self-help organizationscontrolled by their members.If the cooperative enters into agreements with otherorganizations or raises capital from external sources, it isdone so based on terms that ensure democratic controlby the member and maintains the cooperative autonomy.
    71. 71. Pros and Cons ofAutonomy and Independence Control issues Preferential treatment/discrimination Financial impact Dictatorship Nationwide…early 2000s
    72. 72. Education, Training & InformationCooperatives provide education and training formembers, elected representatives, managers andemployees so they can contribute effectively to thedevelopment of the cooperative.Credit unions place particular importance on educationalopportunities for their volunteer directors, and financialeducation for their members and the public, especiallythe nation’s youth. Credit unions also recognize theimportance of ensuring the general public and policymakers are informed about the nature, structure andbenefits of cooperatives.
    73. 73. How have credit unions’ succeeded or fallen short in education andtraining…with members, staff, board, community?
    74. 74. Cooperation Among CooperativesCooperatives serve their members most effectively andstrengthen the cooperative movement by workingtogether through local, state, regional, national, andinternational structures.
    75. 75. Do credit unions ―co-operate‖ with co-ops? How, why, and with whom?
    76. 76. Concern for CommunityWhile focusing on member needs, cooperatives work forthe sustainable development of communities, includingpeople of modest means, through policies developedand accepted by the members.These seven principles are founded in the philosophy ofcooperation and its central values of equality, equity andmutual self-help. They express, around the world, theprinciples of human development and the brotherhood ofman through people working together to achieve a betterlife for themselves and their community.
    77. 77. How have credit unions demonstratedconcern for community?What opportunities exist?
    78. 78. Credit Union Motto Not for Profit, Not for Charity, But for Service
    79. 79. Summary / OverviewThese seven principles are founded in the philosophy ofcooperation and its central values of equality, equity andmutual self-help.They express, around the world, the principles of humandevelopment and the brotherhood of man throughpeople working together to achieve a better life forthemselves and their community.
    80. 80. 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?
    81. 81. Consider a few minutes… what’s your take?
    82. 82. Taking it HomeWhat can you do to follow the cooperativeprinciples within your community?What can you do to follow the cooperativeprinciples within your credit union?What more can your credit union do to follow thecooperative principles in the way it operates?
    83. 83. Questions?
    84. 84. Thank you!