The United Nations has declared 2025 the International Year of Cooperatives, highlighting how cooperatives build a better world through their vital role in sustainable development, inclusive growth, and strengthening community resilience.
As not-for-profit cooperatives, credit unions are uniquely equipped to foster financial well-being for all through their adherence to the seven Cooperative Principles originally adopted by The International Cooperative Alliance and an emerging eighth cooperative principle set by the National Credit Union Foundation and America's Credit Unions.
This month, let's learn more about Cooperative Principle #3, Member Economic Participation, and how credit unions live out that principle daily!
The National Credit Union Foundation defines this principle as the following:
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.
Cooperatives are established to fulfill the needs of individuals, rather than to merely generate speculative returns on invested capital. The core reason for forming a cooperative is to foster self-reliance, with member decisions guiding how to contribute to their cooperative, raise or generate capital, and allocate any surpluses.
The formulation of this 3rd Principle sparked considerable debate, with a fundamental economic concept being that, within a cooperative, reserves serve the enterprise rather than control it. The entire structure of a cooperative is built on the idea that capital supports people and labor, rather than the other way around.
In cooperatives like credit unions, members contribute equitably the cooperative’s reserves. Capital contributed by members is not intended primarily to generate investment returns; instead, it represents pooled money aimed at delivering goods, services, or employment needed by members at fair prices.
To remain viable, cooperatives work to generate income to preserve the future of the cooperative. By doing this, the cooperative is fulfilling its goal of meeting its members’ economic, social, and cultural needs. Well-capitalized cooperatives can rely on this capital to weather economic uncertainty or losses and remain a viable business for its members.
At credit unions, any earnings are often returned to members in the form of better rates, fewer or no fees, investment in products and services, and higher savings dividends. In fact, in the past year, Wisconsin’s credit union members saved $590 million in better rates and fewer fees alone.
As not-for-profit financial cooperatives focused on fostering financial well-being for all, credit unions reflect these time-honored Principles that have built the bedrock for their success and member success. Stay tuned as we continue to celebrate the Cooperative Principles throughout 2025!