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USDA study defines economic value of CUs coops
WASHINGTON (4/9/09)—In a first-ever government study of the economic impact of cooperatives in the United States, the U.S. Department of Agriculture (USDA) said the billions of dollars in assets and paid in wages, and the millions of job opportunities provided, tell only a part of the value story. The other part of the story, the report’s executive summary pointed
Click to view larger image Source: USDA report: Research on the Economic Impact of Cooperatives
out, involves complex issues that stem from the fact that cooperative firms are “fundamentally different from other forms of business organization.” “Assessment of economic impact solely in terms of the magnitude of business activity provides an incomplete perspective on the total impact of cooperatives.” The USDA said it will study the more complex economic benefits, as well as social benefits, in a future series of eight discussion papers to explore these “deeper issues.” However, its initial report unveiled this week noted some interesting facts about credit unions:
* The country’s 8,344 credit unions account for about $760B in assets; * There are nearly 100 million credit union memberships, representing approximately one-third of the population; and * Adding indirect and induced impacts, credit unions account for close to $75 billion in revenue, close to 500,000 jobs, $20 billion in wages paid, and somewhat less than $42 billion in valued-added income.
USDA noted that credit unions resemble banks in the financial products and services they offer, but underscored that credit unions are very different from banks. “(Credit unions) have several distinctive legal differences: they are not-for-profit cooperatives with an IRS tax exemption status. “They return earnings to their membership in the form of reduced fee (interest) on loans and increased interest (dividends) on deposits, or they may re-invest earnings into the credit union,” the report noted. According to Bill Hampel, chief economist of the Credit Union National Association (CUNA), that savings on products and services equals approximately $9 billion a year, when compared to the rates and fees consumers would pay and earn at banking institutions. More broadly, the USDA study reported that in the U.S., nearly 30,000 cooperatives operate at 73,000 places of business. They own something less than $3 trillion in assets, and generate nearly $500 billion in revenue and $25 billion in wages. The USDA said if extrapolated to the entire population, the study estimates that cooperatives account for nearly $654 billion in revenue, almost 2 million jobs, $75 billion in wages and benefits paid, and a total of $133.5 billion in value-added income. USDA's Rural Development received a $1.5 million congressional appropriation to develop the project in conjunction with the University of Wisconsin-Madison, the National Cooperative Business Association and other private-sector associations. The NCBA Wednesday called the release of the report a “definitive moment for all cooperatives.” A spokesman said NCBA now anticipates the data produced will support the position that cooperatives are “the better business model when it comes to making economic and social change.” “Cooperatives give consumers and the general public services and products they need at reasonable prices while retaining any 'profits' in the community in which the co-op operates,” the NCBA spokesman said. He added, “Knowing that credit unions account for the largest number of firms, establishments, memberships, and employees, they can use this data to educate consumers about the sustainable power of our model."
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