CUSO funding follows function

An update from an attorney with long experience with credit union service organizations.

How credit union service organizations structure and seek funding begins with the type of relationship they intend to form with their client owners and investors, says Guy Messick, partner with Messick Lauer & Smith, Media, Pennsylvania.

The National Credit Union Administration and state regulators oversee credit unions’ investments in CUSOs, not the businesses themselves, Messick notes. To qualify for credit union funding, a CUSO must (1) engage in any of a long list of permitted services, ranging from payroll administration to IT development and (2) primarily serve credit unions and/or their members. A CUSO can be 100 percent owned by credit unions or 1 percent. Typical forms of CUSOs are wholly owned subsidiaries, small consortiums and larger companies begun either by credit unions or industry vendors seeking investors.


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