October was National Co-op Month, a month dedicated to raising awareness about these unique establishments that offer a trusted and proven way to do business and build communities.

You have likely heard of a co-op, but do you really know what it means?  From community-minded decision-making to improved overall rates, being part of a co-op network offers numerous benefits.

What even is a co-op?

The International Cooperative Alliance defines a co-op (or cooperative) as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”

In other words, a co-op buys or sells products or services, but unlike other businesses, it’s owned by its members and doesn’t have to answer to outside stockholders. This lets them focus on the communities they serve and make decisions based on people rather than profit. It’s part of the credit union motto: People over profit.

Just like no person is the same, no co-op is either. There are worker co-ops (owned by their employees) and consumer co-ops. You may not know it, but credit unions are actually financial service co-ops that act as consumer cooperatives. Credit unions help strengthen the local economy and give their members (also called member-owners) the ability to make strategic decisions about their credit union’s future as well as share in the profits.

Now that we have that covered, let’s dive into some common benefits of joining a financial co-op, AKA a credit union.

Membership is ownership

At a credit union, you’re not just a customer, you’re a member. What’s the difference? As a member, you get to use your credit union’s services — like lower fees and higher rates on your savings and checking accounts — and you also get a say in how your credit union operates. Like all co-ops, credit unions are governed by a board of directors elected from the membership, by the membership. One member equals one vote, and everyone has an equal opportunity to participate in setting policies and making decisions. You can shape your credit union’s future just by getting involved.

Member and Community-focused

One of the unique perks of co-ops is that they are not-for-profit, meaning that they are created to serve their members, not outside investors. Since they are not focused on earning money for their stockholders (like for-profit financial institutions), credit unions can reinvest any profits they make back into their members and the communities they serve.

When it comes to members, this might mean lower rates on loans and higher rates on savings. But it might also mean more affordable fees and having access to free financial counseling or the option of skipping a payment without penalty.

When it comes to their communities, credit unions are all about service. From organizing volunteer efforts and donating funds back into the community to providing education and training opportunities for the people within their service area, credit unions find unique ways to support community organizations and make an impact locally.

Welcome to one and all

Co-ops are for all people willing to accept the responsibilities and benefits of membership. No matter your race, gender, income, religion, or political views, you are welcome at your local credit union.

Due to their inclusive, not-for-profit nature and hyper-local approach, credit unions can meet the needs of people in rural, underserved communities, many of whom may not have had access to a financial institution otherwise. Credit unions are creating opportunities for everyone to reach their financial goals.

The bottom line

As you can tell, being a part of a co-op network can have many different benefits, but at its core, these networks are in place to uphold the value of “people over profit.” Their purpose is to give the people who live, work, and recreate in these communities a say in how their financial (and other) institutions serve their community.

Pro Tip

When choosing a financial institution, it’s important to weigh the pros and cons of banks versus credit unions. While both offer similar services — such as checking and savings accounts, loans, and credit cards — the fundamental differences between these two types of institutions are significant.