What is a Credit Union?

The credit union movement began in the mid-19th century. Today, credit unions are in 80 countries around the world.

Credit unions are different from other financial institutions. They believe that it is the fundamental right of all people to have access to loans and affordable financial services.

The credit union movement is based on self-help, helping people help themselves. The most important principles of credit unions are:

  • Member Service: Since credit unions are non-profits, they can often offer more competitive interest rates and have lower fees than for-profit institutions.
  • Member Ownership: Each member of the credit union is an equal owner of the credit union.
  • Democratic Control: Every member has the right to one vote for the leadership at the annual meeting.
  • Volunteer Leadership: Credit unions are led by a board of directors who are elected at the annual meeting by the members. Board members participate as volunteers.
  • Social Goals: Credit unions are dedicated to ongoing education of their members, employees, and the general public. Credit unions collaborate together on a local, national, and international level to best serve the interests of their communities.

Surveys repeatedly show that members are more satisfied with the service they received from their credit union than customers of banks and other financial institutions.

Credit unions as they are today have their roots in 19th century Europe based on the idea that friends and neighbors could pool their money together to make loans to one another.

Since these humble beginnings, credit unions have developed across the world with the purpose of supporting and enriching communities through cooperative efforts.

1752 Benjamin Franklin founded the Philadelphia Contributionship for the Insurance of Houses from Loss, the oldest operating cooperative in the United States.
1847 The first Savings and Credit Cooperative was started in Germany.
1909 The United States' first Credit Union was established in New Hampshire.
1921 The Credit Union National Extension Bureau was created and its work led to the expansion of the credit union movement throughout the United States.
1934 Credit Union National Association (CUNA) was constituted as a confederation of state credit union leagues.
1974 The World Council of Credit Unions (WOCCU) was formed with its headquarters in Madison, Wisconsin.

 

Organizational Structure of a Credit Union

Member Owners

The members who join the credit union are the owners of the organization and control the credit union democratically. Members decide who forms the board of directors. Each member has a vote.

What is the Board of Directors?

The board of directors approves the strategy and the policies of the credit union. An annual meeting is held to elect board members to fill vacancies in the board.

All members of LCCU are invited to this meeting and have the right to vote (minimum age 16 years) and are also eligible to be elected to the board (minimum age 18 years).

Members of the LCCU board of directors serve for a term of three-years that can be renewed. They meet at least once a month. Board members are all volunteers.

Credit and Supervisory Committees

The Credit Committee is in charge of making decisions about the loans that the credit union makes to its members.

The Supervisory Committee ensures that the decisions made by the board of directors and the work of the employees are in compliance with the laws and regulations. They also serve the function of internal auditors.

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