Credit Union and Cooperative Patronage Refunds - Filene ...

All three credit unions use their patronage programs as differentiators
from local competitors. Credit union executives and
their staffs use the payment of patronage refunds as occasions
for their credit unions to communicate with members about
co-op values.
In this chapter we will discuss the use of patronage refunds by
CoVantage Credit Union, Dow Chemical Employees’ Credit Union,
and Wright-Patt Credit Union, Inc. Each of these credit unions pays
a patronage refund to its members.
Executives at each credit union stressed that patronage refunds are
only paid to members in good standing, a crucial point we need to
emphasize. In each case, we were told that limiting the payment of
patronage refunds to members in good standing is an important
practice because members respond to the payment as an incentive to
manage their business relationship with the credit union in a way so
that the member avoids disqualifying
himself or herself from
receiving the patronage refund
when it is declared.
One of the recurring themes in
this chapter is that the leadership
of each credit union views
the credit union’s earnings as
belonging to the members (and in one case to employees as a specific
stakeholder group), and hence that the leadership is accountable
to members as stakeholders. The leadership of these credit unions
feels that the credit unions’ earnings belong to members (and other
stakeholder groups) regardless of whether the earnings are allocated
to members on the credit union’s books.
All three credit union executives said their credit union’s patronage
program is a differentiator that set their credit union apart from
competitors. Earlier in this report we discussed how other cooperatives
use the payment of a patronage refund as an opportunity to
communicate with their members about the value of the cooperative
form of business organization. All three executives and their staffs use
the payment of patronage refunds as occasions for their credit unions
to communicate with members about co-op values. A sampling of
their newsletters and websites is shown in the appendix.
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