Cooperative Principles 3 & 4 – Participation and Independence

Heart hands around flagThe International Cooperative Alliance adopted a set of seven principles in 1937. These still guide cooperatives worldwide today–including Dane County Credit Union. Find out how credit unions are governed democratically for the sole benefit of members. 

In our first post, we covered the principle of ‘voluntary and open membership.’ In our second, we went over ‘democratic member control.’ Here, we’ll be taking on ‘members’ economic participation.’

Volunteer Elected Board

As it applies to credit unions, this cooperative principle is one of the most obvious! Under the principle, all member-owners contribute democratically (meaning equally) to the credit union. This means members elect their representatives on the board of directors. Together the board members oversee the well-being and growth of the cooperative.

According to the International Cooperative Alliance board members should allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves; benefiting members; and supporting other approved activities.

Ballot box for credit union voting

Other Cooperatives

Outside of a credit-union setting, this is seen mostly in grocery store cooperatives. Often, grocery co-op members pay a fee to join the store. And, in turn, they receive special discounts each week, and are often given a certain percentage off of each of their purchases. Members of cooperative stores like REI, receive a member dividend each year–which amounts to 10 percent of their purchases.

Use More, Benefit More

At Dane County Credit Union, member-owners also benefit directly. For example, we offer competitive (if not better) rates than banks, fewer fees and lower-cost services to our member-owners. In a nutshell, the more accounts and services each member uses, the more they will benefit.

Further, since we’re not a bank, DCCU doesn’t issue stock–or pay dividends–to outside stockholders or a board not elected by members. Our board is volunteer-run, and, because of that, we see more economic bang for our buck. Our earnings are, essentially, returned to our member-owners in the form of lower rates and lower fees.

credit union board of directorsPrinciple 4 – Autonomy and Independence

The fourth principle of cooperatives is ‘autonomy and independence.’

This principle states that cooperatives must be autonomous and independent, meaning they have to be self-controlling. The principle guarantees that cooperatives continue to benefit their member-owners, and their member-owners alone; it assures that cooperatives cannot enter into agreements with other organizations, or raise funds from outside sources, in any way that may threaten member control over the cooperative.

Member Owned and Controlled

As we’ve mentioned previously, credit unions aren’t controlled by outside shareholders and/or selected, secretive board members. Like all credit unions, Dane County Credit Union is controlled by its member-owners. We operate independently, meaning we won’t–and, thanks to this principle, can’t–enter into agreements that allow an exclusive group of unknown administrators to make money off of members’ money, without consent.

Special Interest Money

You see this principle work its way into politics; at times, our local, state and federal-level representatives can be given–and thus benefit from–money from out-of-state businesses. This may lead these leaders to form relationships with business interests that may not have constituents’ best interests in mind. These politicians legally collecting money from outside business interest groups can then potentially sway the legislation they introduce, as well as the way they vote on other legislation. They can become, then, in a sense, no longer autonomous and independent. On the other hand, some politicians now refuse to take money from special interest groups, no matter how small or local the groups are.

American flag credit union principle

Members are the Priority

At Dane County Credit Union, our board is made up of elected volunteers, meaning they absolutely cannot unfairly profit off of the decisions they make. As the fourth guiding principle reaffirms, this keeps our credit union autonomous and independent; we serve the member-owners, and our community, and that’s it.


Published by

Tom S.

Tom is a 2006 graduate of UW Madison, currently residing in Verona with his wife and 2 girls. He has been passionate about writing ever since he was 15 years old, and displays that same enthusiasm in his work today. When he’s not sharing insightful financial wisdom, you can find Tom chilling on the Union Terrace, enjoying craft beer at the Great Dane, or hiking at Governor Nelson State Park. In the Fall he loves to take his family to Badger Football games!