What Do Credit Unions Have to Do with Social Responsibility?
Written By: Lara Thomas
I was invited to give a talk at the Global Women’s Leadership Network in Gdansk, Poland. This was part of the World Council of Credit Union Conference. Naturally, I was thrilled to give a talk about the work The MILLA Project does, but I wasn’t expecting to walk away from this experience wondering why we are still using banks.
The MILLA Project focuses on human rights, specifically for women and children. Before I went to the conference, I understood the basic concept of credit unions, or at least what I thought was the basic concept. My idea was that credit unions were for the elite, a “membership only” financial institution that gave back to the community in one way or another. Therefore, I thought The MILLA Project tied into giving back to the community. I was sort of right. Credit unions do give back to the community but on a much larger scale than I could have ever imagined. Credit unions are for people—all people and it’s definitely not designed for the elite.
If you browse through some of our ongoing projects, you will notice that The MILLA Project believes in micro-loans and building the status of women socially and economically by teaching women about micro-finance. We believe that by achieving financial freedom, women will be financially independent, have higher self-esteem, participate in the rise their societies’ economic status, and have the ability to flee a violent situation should the need arise.
As I sat during the opening ceremony, I watched members of credit unions proudly carry their country’s flag to the stage, where it stayed the entire conference. Credit unions are in over 100 countries. Their vision is “Improving people’s lives through credit unions.” At the conference, I met with many owners of credit unions from around the world and asked them why credit unions? They all said the same thing: solidarity, building communities, helping our members, sustainability, and more.
World Council of Credit Union’s core capabilities are, “Since 1971, WOCCU has increased access to high-quality financial services worldwide by strengthening credit unions using a well defined and thoroughly tested development model. Member-owned and established at the grassroots, credit unions are sustainable financial intermediaries that serve a broad base of members from all income and wealth levels.”
What is member-owned? It is simply that. The members own and control the credit union in which they belong. At the end of the year, the members receive a dividends check, not just the CEO (like at a bank) and not the government. What is a member? A member is an individual who has an account at the credit union. A dividends check is best described as profits distributed to the owners. In a nutshell, the credit union members make money from the profits it receives by offering reduced rate interests loans and credit cards. They offer the same services as a bank, but at a reduced rate, and in essence, you are borrowing and paying yourself back—not the bank.
What does this have to do with The MILLA Project? Imagine this. The MILLA Project implements a credit union in the rural area of South Pakistan. Let’s call it CUSP (Credit Union of South Pakistan). All the members of the village deposit their money into the credit union. The funds deposited equal 10,000 rupees. Now, a single mother of three needs to buy two hens and the cost is 175 rupees. She only deposited 100 rupees and needs to borrow 75. She now has access to a loan with 5% interest. She buys the chickens, sells the eggs, and is able to pay the loan back at 78.75 rupees. The credit union made 3.75 rupees.
WOCCU describes their unique approach as “. . . WOCCU’s technical assistance programs equip credit unions and other types of financial cooperatives with the tools and techniques necessary to strengthen their financial management and deliver fairly priced financial services to large numbers of poor and low-income people.” WOCCU’s eight key areas are “Providing access to the rural poor, developing integrated business networks, offering domestic and international remittances, rebuilding during and after conflict, supporting communities at risk, reconstructing after disaster, establishing new credit union systems, encouraging legislative reform, and regulatory system development, and they create long term relationships.”
I left the conference wondering why are we still using banks. They take our money, do little for communities, and refuse loans to those who need it the most; we are paying them to do this. While I am not in the financial business, it just doesn’t make any sense. I encourage you to look for a credit union in your area, and if you don’t find one, make one.