1. 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.
2. 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.
3. 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.
4. 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.
5. Education, Training and 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.
6. 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.
7. 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.
This weekend I've been facilitating the BarCampBankSeattle conference. Jesse and I agreed to organize it as Open Space and we made the right choice. The participants have embraced the freedom and focus of the format and the quality of topics and discussions has been spectacular.
Yesterday morning there was the usual hesitation at the start as people adjusted to having so much responsibility along with the freedom, but by lunch nobody was asking me for permission, anymore. They just figured out the right thing to do, and then worked with others to get it done.
This morning I barely had time to get people into a circle before the passionate mob descended on the paper and pens to start creating the agenda for the day. After the disaster of facilitating a different event on Friday, I almost cried at the sight of so many excited, smart, creative people taking ownership and running.
A great event and I'm really looking forward to the next one!
Why don't people spontaneously create banks and credit unions as needed, then dissolve them when the needs are no longer present? And why are these the only choices for financial institutions?
I was talking to my coach, Leigh, earlier today about the difficulty for "older" folks to really understand and use these strange new tools like blogs and social networks.
"But, Leigh, think of Thomas Paine's 'Common Sense'. What was that? How did people get it?"
"What do you mean?"
"It was a pamphlet. Printed at his expense and handed out on the street or sold cheaply in shops. It was one of thousands of pamphlets vying for attention, just like the Federalist Papers. The individual pushing his ideas into the public space like that was the norm! It was only through the massive newspaper consolidation activity at the end of the 19th century that we came to see a merely consuming information from a few, large outlets as standard. Blogs are a return to the raucous marketplace of ideas present at the creation of the country!"
That diverse marketplace simply couldn't scale fast enough or far enough using the technology of the time: paper, ink, the printing press, people handing out pamphlets on street corners. Consolidation to achieve scale was inevitable. Now, though, technology is offering the possibility for diversity and efficiency.
Returning to the credit unions, they are consolidating because they are using 18th century technology in a 21st century world. But is the answer simply the same old credit unions, however much they might focus on their members, with new technology? The laws and regulations that define what it is to be a credit union or a bank are as much artifacts of hundreds of years in the past.
At the heart of the problem I think we will find transaction costs: when you have nothing but pen, ink, and paper the barriers to creating new institutions is enormous. Credit unions and banks are simply part of the universe of possible configurations, just as Zopa is.
Our platform will allow exploration and exploitation of the rest of that universe.
A group of people comes together to form what looks like a credit union. Their focus is on pooling their money, lending it out among the members so that they can achieve more together than they could alone. Disaster strikes, a hurricane perhaps, and the small group is overwhelmed. They join together with other groups impacted by the disaster or simply reaching out to help those now in need. Their resource pool grows, they draw on it to rebuild, they repay the other groups, and the larger group of groups now disbands, its purpose complete.
This story cannot happen over and over, sustainably, with either current tools or current mindsets. Credit unions can't do this because they are too constrained by history and regulation. Zopa can't do this because they foster no real community and serve no purpose beyond their own enrichment.
The platform we build will support credit unions and things like Zopa, but to be successful it must free us to explore the rest of the universe of possible organizations. It must do more than simply allow creation of endless permutations of financial products.
The platform must support the creation of amazing, new organizational forms. Forms we never even considered, and that perfectly serve the needs of the community that creates them. This freedom is inconceivable to most and will define our success.
Democracy thrives when it is supported by a vigorous, informed, and engaged citizenry. Freedom, the hallmark of a thriving democracy, must be constantly exercised lest it wither. We are presented daily with myriad opportunities for this exercise of freedom, but often let them pass without consideration. When we ignore our opportunities to chose, our choices are made for us by others, and our democracy suffers.
The management of our finances is one of our most important responsibilities and one we must exercise regularly. It is also a responsibility many find confusing and intimidating because they have little experience with it and little support from their community for learning or sustaining fiscal responsibility. This is a problem with far reaching consequences starkly illustrated by record low rates of savings and rapidly increasing income inequality. This threatens the economic stability of our country and, because of our leadership position, the economic stability of the world.
We see a tremendous opportunity to restore the practice of individual fiscal responsibility, and in so doing stabilize the economy and reinvigorate our great democracy.
Our primary tool to achieve this enormous task is the humble credit union. As the National Credit Union Association says: "Credit unions are nonprofit, cooperative financial institutions owned and run by their members. Organized to serve, democratically controlled credit unions provide their members with a safe place to save and borrow at reasonable rates. Members pool their funds to make loans to one another. The volunteer board that runs each credit union is elected by the members."
While credit unions have lost their way, the spirit of their creation remains as compelling, viable, and essential as ever.