It’s a matter of principles

December 13, 2012 · By Kelvin Smith

In my previous post I brought up the subject of governance, and how our volunteer, member-elected governance structure sets us apart from most traditional financial services providers. But the fact is that our governance structure is simply an outgrowth of our adherence to seven core principles, written by the founders of a food co-op in Rochdale, England in 1844, that define what it means to be a cooperative. If you’re going to understand what we’re about and why, you’re going to need to understand those cooperative principles.

So, in my next few posts I’ll go over the principles, and talk about what they really mean and how we’re trying to live them out. Here are the first three:

Principle #1 – Voluntary and Open Membership. This principle states that “cooperatives are voluntary associations open to all people, providing services to those willing to accept the responsibilities of membership.” Did you catch that? “Responsibilities of membership.” Now, you might think that just means things like making your payments on time – and that’s certainly part of it – but it doesn’t end there. All of Us are owners of Arizona Federal, and we share the responsibility of keeping our cooperative strong and helping it grow and prosper. That means not only should we all avoid harming the cooperative by failing to keep our commitments; we must also give the credit union the chance to earn our business whenever we need anything it offers, use self-service options as opposed to more-expensive delivery channels when we can, and invite others who are like-minded to join us.  We also have the responsibility to participate in the decision-making process, which leads me to …

Principle #2 – Democratic Member Control. This one says “cooperatives are democratically controlled by their members.” As I explained last time, my fellow directors and I – all of whom are members – are elected by the membership on a one member, one vote basis. Every year a certain number of director positions come up for election, and announcements go out to all members inviting applications for nomination. If we end up with more nominees than there are positions up for election, we hold an election. Trouble is, we don’t always get many applications – this year we received no completed packets, so we have no candidates to offer except for the incumbents. That’s OK in that we’re willing to continue to serve, but if you want your voice to be heard, there’s no better way to make that happen than to get involved. At the very least, when we do have an election, please vote. (By the way, the next time we have an election we’ll have an online balloting option, making participation easier than ever.)

Principle #3 – Members’ Economic Participation. The gist of this principle is that members should contribute equally to the capital of the cooperative, and benefit in proportion to the business they conduct with it. If you’ve read any of the materials we’ve all received from the credit union recently, this should sound familiar. Yes, we’re all being asked to pay membership dues – each of Us, including the directors, employees, and management. They aren’t being waived for anyone, even those who have high deposit balances or are paying hundreds of dollars a year in loan interest. And we all also have the opportunity to receive PLUs – Payback for Loyalty to Us – based on our participation. To me, it really is a matter of principle: no matter who I am, I pay an equal amount for the equal privilege of membership, and receive a proportional share of the proceeds based on what my personal participation brings.

There you have it – the first three cooperative principles. We’ll look at the rest next time. Meanwhile, if you have comments or questions, please send us an email and we’ll gladly respond – and perhaps address your question in a future post. Think of it as another way you can exercise “democratic member control;” we’ll represent you better if we know what you think.

Thanks for being one of Us!


Tags: Cooperatively Speaking