Credit Union Information "Not for profit, nor for charity, but for service"

How Credit Unions Started Credit Unions began in Germany in the mid-1800s. Hermann Schulze-Delitzsch, a civil servant, began organising credit co-operatives to help working people respond to the shortage of goods and money that resulted from the crop failure and famine of 1846. At about the same time, Friedrich Raiffeisen, mayor of a small village, wanted to help people avoid the loan sharks that were taking advantage of the economic situation. In 1864, he opened the Heddesdorf Credit Union. What Is A Credit Union? A Credit Union is a co-operative local financial institution, owned and controlled by the people who use its services. These people are members. Credit Unions serve groups that share something in common, such as where they work, live, or go to church. Credit Unions are not-for-profit, and exist to provide a safe, convenient place for members to save money and to get loans at reasonable rates. Credit Unions, like other financial institutions, are closely regulated. And they operate in a very prudent manner. What makes a credit union different from a bank? Like Credit Unions, these financial institutions accept deposits and make loans but, unlike Credit Unions, they are in business to make a profit. Banks are owned by groups of stockholders whose interests include earning a healthy return on their investments. The Credit Union comes to America The idea of credit co-operatives spread to North America by the turn of the century through the work of Alphonse Desjardins, a Canadian journalist. He worked to develop co-operatives in his country, where poor people were at the mercy of money lenders who charged as much as 1200 percent interest. His work caught the attention of a group of Catholic priests in Manchester, New Hampshire. At their invitation, he helped establish the first credit union in the United States, the People's Bank of St. Mary's, in 1909. Edward Filene, a wealthy department store owner in Boston, also was watching Desjardins' work. He met with Desjardins and Pierre Jay, the Massachusetts state bank commissioner, to discuss how to bring more Credit Unions to America. Jay drafted a law providing Credit Unions with a legal foundation, and by 1909, Massachusetts became the first state to enact a credit union law. From then to 1920, little towards CU progress happened in Indiana or anywhere else in the country. After World War I, however, America entered a period of prosperity. Consumers had more money to save and spend, but few banks were willing to serve them. So Credit Unions grew in popularity. In Massachusetts, still the only state with a credit union law, Filene formed the Massachusetts CU Association to promote the credit union movement. He hired Roy Bergengren in 1920 to serve as its managing director. Bergengren threw himself into his work and gave the struggling movement life and vitality. He organised 19 Credit Unions in Massachusetts in 1921. Filene felt so good about credit union growth there that he decided to develop and finance the credit union movement nationally. In July 1921, Filene created the Credit Union National Extension Bureau - or CUNEB - and Bergengren agreed to head it. CUNEB's goal was to create Credit Unions around the country.

Credit Union Administration Board of Directors The members of a Credit Union elect a volunteer Board of Directors, which sets the policies of the Credit Union and oversees its management. These board members are not compensated; they serve simply to make the credit union as successful as it can be. Because they are not paid, they are not in it for personal gain. Some small Credit Unions are run completely by volunteers. In these Credit Unions, the board treasurer also serves as the manager. Most Credit Unions, however, have at least one paid employee to manage the daily operations. Of course, many Credit Unions have large paid staffs. Each credit union holds an annual meeting each year that members can attend and participate in (vote, run for election, etc.). Committees Credit Unions use a variety of committees to help the Board of Directors establish policies and oversee management. A credit union's members can run for and elect the members of some of these committees, while the board of directors appoints others. Every Credit Union has a Supervisory Committee, which oversees the duties of the board and the financial operations of the credit union. Some Credit Unions have other committees, too, such as a Marketing Committee, a Credit Committee, a Human Resources Committee, etc. All committee members are volunteers who serve without pay. Democratically controlled Credit Unions are democratically controlled, which means members (owners) have a voice in the overall governance of their Credit Unions, which are run by volunteer boards of directors elected by, and from, the membership. Each member has one vote, no matter how much money he has in the credit union. The board of directors is accountable to the members. If the majority of members are dissatisfied with the directors who set the policies, they have the power to replace them. In addition, members can run for the board of directors or other volunteer positions within the credit union. Field of membership The association, affiliation or residential area stipulated in a credit union's Constitution that legally defines who may become a member of the credit union is called the field of membership. Credit Unions are for everyone, but not everyone can belong to a credit union. A credit union can serve only individuals within its field of membership. Most Credit Unions serve employee groups, association or church members, or defined residential communities. Many Credit Unions have expanded their original fields of membership to include additional select employee groups. This was done to make credit union membership available to as many people as possible and to protect Credit Unions' financial health during economic downturns. Leagues Each Country has a League, and most are affiliated. Leagues provide a variety of services to the Credit Unions in their respective areas, such as consulting assistance, information services, public relations, education and training, and legislative and regulatory support and representation. They provide a framework of co-operation among the Credit Unions in a particular Country. The Vale of Leven Credit Union is affiliated to The Scottish League of Credit Unions, which is located in Glasgow. Member When a person deposits money in a credit union, he becomes a member and owner of the credit union, not a customer, because his deposit is considered his share of ownership in the credit union. As a member, an individual can vote in the elections for the board of directors and other volunteers. He can even run for election to sit on the board. People - Helping - People philosophy Credit Unions operate by the philosophy of People Helping People. This philosophy has its roots in early Credit Unions, which were organised to bring financial services to people who couldn't get them anywhere else. Credit Unions are unique financial institutions because they are co-operative organisations of people who pool their money to help each other. They are member-owned, democratically controlled, not-for-profit financial co-operatives. "Not for profit, not for charity, but for service" is a traditional credit union motto; it means that Credit Unions exist to help people. Share account A share account is similar to a passbook savings account at a bank. It's called a share account, however, because when someone deposits money in a credit union, his deposit is considered his "share" of ownership in the credit union. Services Credit Unions offer a wide variety of financial services, depending on their size and their members' needs. Some Credit Unions offer only basic savings and loan products, while others are full-service financial institutions offering certificates, IRAs, ATM service, cheque accounts, credit and debit cards, mortgage loans, and more. Volunteers Volunteers are the backbone of the credit union movement. When Credit Unions were first created more than 70 years ago, they were run entirely by volunteers. As Credit Unions grew in size and scope, however, most of them found it necessary to hire paid employees to manage the day-to-day operations. Today, nearly all Credit Unions still have volunteer Boards of Directors and Committee members who serve not for personal financial gain, but for the satisfaction of knowing that their efforts and hard work assure the credit union's members have a safe, convenient and affordable place at which to conduct their financial affairs. The members of a credit union elect the volunteer board of directors, and the board sets the policies of the credit union and oversees its management. Again, these board members are not compensated, so they are serving simply to make the credit union as successful as it can be. Volunteers also can serve on committees. Each credit union has a supervisory committee, which oversees credit union operations. Then, Credit Unions can have credit committees (to make loan decisions), a marketing committee, a building committee, etc. - a committee for any project, in other words. None of these people are paid, either. Some small Credit Unions are still run completely by their volunteers. In these Credit Unions, the board treasurer also serves as the manager. Most Credit Unions, however, have at least one paid employee to manage the daily operations. Of course, many Credit Unions have large paid staffs.

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