Your Board and The 7 Cooperative Principles

Do your board members know the seven cooperative principles? Better yet, do you know the seven cooperative principles? If you’re looking for a short lesson, play the song “Seven Good Reasons” by The Disclosures (a credit union thrift rock band) or look up the lyrics at After listening to their upbeat harmonies, you may want to dig a bit deeper into the cooperative principles and share the lessons with your board.

There has been a lot of chatter about increasing board training. We all know that it’s important that board members understand and receive training on financials, but what about our cooperative structure? As we work hard to defend our current tax status, it’s more important than ever for our board members, employees and members to understand our cooperative structure. Here’s a quick lesson to get you started:

1. Voluntary and Open Membership: Cooperatives are voluntary organizations, open to those that are able to use their services and willing to accept the responsibilities of membership. As credit unions, we accept members based on different fields of membership (ex. community, select employer groups) but without personal discrimination.

2. Democratic Member Control: Cooperatives are democratically organized and controlled by the members, and the member board of directors. Each member gets one vote towards the election of the board of directors. The board is elected to serve in the best interests of the membership.

3. Members’ Economic Participation: Surplus profits are returned to members in the form of fewer and lower fees, competitive dividends on shares and lower interest rates on loans. Members may also receive extra dividends and patronage dividends.

4. Autonomy and Independence: Cooperatives are self-help organizations that are autonomously and independently controlled by the members, not external shareholders. If cooperatives enter into agreements with outside organizations, they must do so in a fashion that ensures democratic control and continued autonomy by the members.

5. Education, Training and Information: It is our duty as a cooperative to provide training and education to our members, elected board members, managers and employees to ensure that they can effectively participate in the development of the cooperative.

6. Cooperation among Cooperatives: It is imperative to the strength of the cooperative movement that we work together. For credit unions this can be accomplished through collaboration, shared branching amongst credit unions and working with other types of cooperatives outside of the financial services industry.

7. Concern for Community: Cooperatives show concern for the community by giving back to the communities where they reside to help build more sustainable and economically viable communities for their members. More economically viable communities mean better lives for members.

When your board members make decisions, they should be thinking about these seven cooperative principles and the membership. If nothing else, at least show your board’s members and employees this article. Imagine if politicians did their job without reading the United States Constitution.

Actually, that might have to be my next article…

Danielle Frawley

Danielle Frawley

As Chief Lending Officer for Fort Community Credit Union, Danielle has implemented electronic and remote delivery of consumer lending, doubled insurance income, and overhauled loan policies and procedures. In the ... Web: Details