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Why Small Credit Unions are Needed

The earliest form of credit unions were financial cooperatives in the 19th century in England. This financial cooperative model was followed in Germany in 1846 due to the crop failure and famine. These early credit unions are the model for today's credit unions in the United States. As is true today the early credit unions included these distinguishing features:

  • Democratic governance
  • Each member has one vote, regardless of the size of the member's deposits
  • Member-elected board of directors
  • Volunteer based

Whether it be crop failure, Mother Nature's fury, or intercity rebuilding the non-profit credit union is the only financial institution which can provide affordable loans to the low income customer. When individuals within a community pooled their savings, the resulting funds allow the credit union to make affordable loans to its members, benefiting everyone in the community.

Over the last 100 years, credit unions have provided the opportunity for hundreds of thousands of Americans in rural, suburbia, and intercity communities to improve their lives. This has allowed millions of credit union members to buy their first cars, usually a used car, their first home, or send their child to college. The credit union is the true form of neighbor helping neighbor.


Just as microfinance is a sustainable means of poverty alleviation in the third world leads to lasting, holistic development, the small American credit union can supply similar results. Because the small credit union (less than million in assets) is local, it can provide financial tools and training to empower local entrepreneurs to start and build businesses. These businesses enable them to support their families and transform their communities.

According to the Consumer Federation of America in Washington, D.C., currently across America there are approximately 22,000 storefront payday loan stores. This is a very profitable part of the financial loan industry. On billion of loans it makes billion in finance charges each year. As non-profit lenders the small credit unions can save their members, the local consumers, billions of dollars in fees since they can offer low rate loans or break-even loans.

Bob Duff – Chairman and CEO

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