Credit Unions Ask, 'Now What?' Answer: Invest in Cooperatives

3p is proud to partner with the Presidio Graduate School’s Macroeconomics course on a blogging series about “the economics of sustainability.” This post is part of that series. To follow along, please click here.

By Amy Johnson

The president and chief executive of the National Association of Federal Credit Unions (NAFCU), Fred R. Becker Jr., posed an important question in the Washington Post, “Credit unions reported a surge in membership after Bank Transfer Day. Now what?”

Anger over big banks’ announced plan to charge for debit card use combined with the energy behind the Occupy Movement fueled the successful Move Your Money campaign that culminated on November 5^th with Bank Transfer Day. The campaign resulted in approximately 700,000 new members depositing $4.5b into credit unions across the country since September. It’s been estimated that this brings the total assets held by US credit unions to surpass $1 trillion. While credit unions may have been a passive participant in the battle between an enraged public and big Wall Street banks, with this new influx of financial capital and a membership base exceeding 91 million they are now in a powerful position to strategically support the new progressive movement for a more sustainable economy.

The opportunity now exists to better articulate the connection between credit unions as cooperative businesses owned by the members and the need for them to invest more heavily in the growing cooperative business sector. Worker-owned businesses are not only an economically viable solution, but also a necessary one for addressing the massive wealth disparity present in our economy. They help build local wealth by retaining more of their profits within a community. Coops also place a high value on social capital by creating stable, living wage jobs and establishing workplaces that value the contributions of all workers. This business model will be gaining much more international attention over the next year, thanks to the UN’s 2012 International Year of Cooperatives campaign that highlights the positive economic contributions of cooperatives.

Here in the US there is a new generation of worker-owned businesses bubbling up in communities across the country. Incubators, like Third Coast Workers for Cooperation and Green Worker Cooperatives, are well underway in training the new generation of entrepreneurs.  But for many of these new businesses, securing financial capital is often one of the hardest challenges. This is where credit unions, as fellow cooperative businesses, can become increasingly valuable tools in helping create a truly sustainable economic future.

Exactly as Becker states, credit unions have indeed found themselves in a “now what?” moment. His proposal to mobilize the membership to demand passage of Senate bill 509, which would increase the small business lending cap from 12 percent to 27.5 percent, and reform outdated restrictions on credit unions is a critical first step. As mentioned in a prior Triple Pundit post, without increasing the lending limit, credit unions are severely limited in terms of the amount of financial capital they can invest and level of social impact they can have. And with this recent influx of members and capital, passage of S509 becomes even more essential.

But along with this policy fight, there is a window of opportunity to begin envisioning new ways to channel financial capital into cooperatively owned social enterprises. There is a new generation of entrepreneurs taking responsibility for creating the innovative business solutions needed to solve the environmental, social, and economic challenges facing our country. And they will be their own bosses along the way. As a credit union member, this is how I would like my money invested.

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Amy Johnson is a Masters of Public Administration candidate at Presidio Graduate School focused on the design of public policies that support and scale the worker-cooperative movement.  She tweets about all things co-op @makeitobsolete and can be reached at amy.johnson@presidioedu.org

image: Jonathan Haeber via Flickr cc