A credit union is a member-owned, member-controlled, not-for-profit, cooperative financial institution formed to permit groups of persons to save, borrow, obtain related financial services, and participate in management. Credit unions make consumer loans and offer other consumer financial services such as writing residential mortgages, issuing credit cards, and providing interest-bearing transaction accounts. A credit union’s principal source of funds comes from shares purchased by the individual owners (members). The members also elect the volunteer board that runs each credit union.

Cooperative Organizations

Credit unions are cooperatives. A cooperative (co-op) belongs to the people who use it, and operates solely for the members’ benefit. The member-owners share equally in the co-op’s directions, either directly as a volunteer, or by electing the board of directors that oversees policies and hires top management to run the daily business. Each member of a credit union has one vote in the selection of a board of directors, regardless of the size of the member’s share balance.

Open and voluntary membership: Cooperatives are open to all persons able to use their services and willing to accept the responsibilities of membership.
Democratic member control: Members ultimately control their cooperatives by electing the board of directors. Members have equal voting rights in a cooperative. This is called the one member, one vote principle.
Member economic participation: In most co-ops, including credit unions, members contribute capital in four ways: initial investment in a membership share; reinvesting earnings in the co-op; contributing some portion of their dividends if the co-op needs additional capital for special purposes; and/or responding to special appeals for further investments in very rare cases.