Have you ever wondered what makes credit unions different? Their unique ownership structure is what sets them apart from traditional banks. The member-focused approach of credit unions determines who owns and controls them. We’ll break down the complex ownership structure of credit unions and uncover the power their members hold at these beloved institutions.
What is the Member-Ownership Model? 
The member-ownership model gives their members immediate and direct control. At a bank you are a customer. At a credit union you are part-owner with certain voting rights on organizational matters.
Member Rights
- All account holders are entitled to a vote in the credit union board elections and can nominate a candidate for an open seat on the board.
- Members can attend the Annual Meeting where they can ask questions and give input on organizational and operational matters.
- Provide input or vote on organizational decisions such as a location change or name change.
Who has Control over a Credit Union?
Credit unions are ultimately owned and controlled by the people, or members, who use their services. Members can elect the board of directors, a governing body that provides strategic direction and oversight for an organization. The board of directors then appoints the supervisory committee who holds the board of directors and senior management accountable for operating according to sound business, ethical, and regulatory standards.
Board of Directors: What is Their Role?
As not-for-profit organizations, credit unions rely on their volunteer board of directors to govern the organization. The board’s role is to ensure the institution’s financial stability and sustainability, and to act in the best interests of its members. Their responsibilities include:
- Leadership: Represent the credit union on all levels and oversee the organization.
- Strategic Decisions: Monitor the credit union’s strategic plan and shape the vision, mission, and goals of the organization.
- Operations: Oversee that all credit union operations align with legal and financial compliance.
- CEO: Hiring, managing, and succession planning for the CEO.
Board of Directors Eligibility Requirements:
- Individual is a current credit union member
- Individual has not been convicted of a crime involving dishonesty or breach of trust
- Must meet the minimum age requirement
- Additional membership eligibility criteria established by the credit union bylaws must also be fulfilled.
The number of board members usually ranges between five and twelve. Positions typically include a president, vice-president, secretary, treasurer and additional directors overseeing various parts of the credit union.
How is The Board Elected?
Directors are most often directly elected by the membership. The election takes place at the Annual General Meeting. In most credit unions, the directors on the board serve for a term of three years. Terms of office can vary depending on the size of the credit union. There is typically a limit on the number of terms/years a person can serve.
Role of The Supervisory Committee
The supervisory committee safeguards member assets by ensuring the credit union is operating properly. Their responsibilities include:
- Broad oversight authority to hold a credit union’s board of directors and senior management accountable for fulfilling their responsibilities in the interests of the credit union’s members
- Ensure the credit union is operating according to sound business, ethical, and regulatory standards.
- Selecting a chairman and a secretary.
The supervisory committee must be comprised of three to five individuals appointed by the board of directors. To serve on the committee, the individual must be a member of the credit union and bondable by the credit union’s surety bond company.
Recap Key Points: Who Owns and Controls Credit Unions?
Credit unions are unique in their ownership structure as member-owned and controlled organizations. The structure also plays a significant role in fostering a sense of community among credit union members. As owners of the institution, they feel more connected and invested in its success compared to customers at traditional banks where there is often little sense of ownership or control.
At The District we understand this cooperative approach allows for a more democratic decision-making process and prioritization of members’ needs over profits. We hope to help our membership make informed decisions about whether joining a credit union is right for them.
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