WHY CREDIT UNIONS ARE EXEMPT FROM MOST TAXES

CREDIT UNIONS PUT MONEY INTO THE WALLETS OF THEIR MEMBERS

As a cooperative, a credit union is obliged to return its earnings (in the form of dividends on savings) to its members, after paying for the operations of the credit union and meeting required net worth (reserve) targets. In fact, according to CUNA studies, credit unions return $5 to their members in lower costs for every $1 realized in tax savings. And since that money goes directly to the credit union’s members, it stays (and is spent again) in the community—an important distinction when more consumers must do business with giant out-of-state banking conglomerates.

THE FOCUS IS ON SERVICE, NOT ON PROFITS

Credit unions maximize financial gain for the members through higher dividend rates, lower interest on loans, or reduced fees than those that other financial institutions may choose to pay or charge. Further, credit unions aim to offer services that fit the needs of their members. Credit unions often provide low-dollar loans, or allow members to maintain low-balance accounts, that other financials would never consider because they are not "cost effective." This focus on service to members is a fundamental difference between not-for-profit credit unions, and for-profit financial institutions.

CREDIT UNIONS ARE OWNED AND CONTROLLED BY MEMBERS

Credit unions reflect the needs and desires of the members who they serve. Aside from the fact that each member has an equal ownership share (regardless of how much money that member has in savings), the credit union is also democratically controlled by the members. Each member has one vote in electing the leadership of the credit union (board of directors, most of whom serve as unpaid volunteers). In this manner, the member-owners themselves influence the policy and direction of their credit union.

IT'S NOT THE SCOPE OF THE SERVICE, OR SIZE, THAT MAKES A CREDIT UNION

Credit unions’ structure as not-for-profit, member owned cooperatives directed by volunteers is what sets them apart. Not even mutual savings banks can claim they are merely credit unions by another name. MSBs pay their directors, do not operate on a one-member, one-vote basis, and routinely use proxies that effectively limit control of the institution to a select few. Credit unions do exactly the opposite in each of those instances -- making them, indeed, credit unions.

Copyright © 2008 - Credit Union National Association, Inc.