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ARTMEK-YO P ..iAGRICULTURE-
Farmer Cooperative Service
U. S. Department of Agriculture
Washington, D. C.
Joseph G. Knapp, Administrator
The Farmer Cooperative Service
conducts research studies and service
activities of assistance to farmers in
connection with cooperatives engaged
in marketing farm products, purchasing
farm supplies, and supplying business
services. The work of the Service
relates to problems of management,
organization, policies, merchandising,
product quality, costs, efficiency, fi-
nancing, and membership.
The Service publishes the results of
such studies; confers and advises with
officials of farmer cooperatives; and
works with educational agencies, coop-
eratives, and others in the dissemina-
tion of information relating to coopera-
tive principles and practices.
Keys to Effective
Rural Credit Unions
By Arthur H. Pursell
Farm Services Branch
A rural credit union pioneer once
said, "A credit union will not build or
run itself." Credit unions, like other
cooperatives, need honest, efficient,
and aggressive leaders who plan their
program carefully and keep service to
members a major objective at all times.
Leadership is an essential ingredient
for which there is no substitute.
The following suggestions summarize
methods or techniques used by credit
union leaders at one time or another
in building successful programs.
Begin your program building by
making an appraisal or analysis of your
present program. How does it rate in
your own opinion? Is it performing all
the member services it should?
Is it growing in membership and
volume as fast as you think it should--
in light of your potential? What factors
have helped its growth most? What
factors have hindered its growth? Has
growth in members, shares, and loan
volume been continuous year by year?
Plan for Future Growth
Set up annual goals for new members,
share capital, loan volume, and mem-
ber services. What should these be for
1 year, 2 years, or years hence? Plan
your program to reach these goals once
they are established.
Get directors, committeemen, and
members to approve the plan. Or better
still, let them help develop it. Authorize
an adequate budget for preparing and
distributing educational materials.
Maintain a Team of Workers
Select a "team" of helpers. Don't
try to work alone. Credit union work
is rightfully group work and should be
kept that way.
Start building your team with present
workers and enlarge the group, as
possible, after your plan is well decided
upon. Be sure to make a place for
women on this team. Select workers
throughout the county, and ask them to
share literature with neighbors. Tell
them about your credit union program.
Let them, in essence, be your credit
union representatives in their part of
One successful rural credit union
asks all former directors and com-
mitteemen to remain and serve on the
member relations committee to help
promote the program. If feasible, also
secure the assistance of enough special-
ized skills for making educational ma-
terials such as posters, charts, and
Stress Membership Enlistment
While member enlistment should be
continuous throughout the year, there is
great advantage in an annual member-
ship drive. We must accept the fact that
most people will not join the credit union
unless and until invited to do so. Credit
unions must assume the responsibility
for carrying the program to non-mem-
bers and inviting them to join.
Plan your membership enlistment
program to reach, eventually, all poten-
tial members, encouraging themto join
and start saving--and not to wait until
they need to borrow.
If you have your educational teams set
up, let member enlistment be one of
their early assignments. Each person
who is willing to work initially on mem-
ber enlistment may be willing to con-
tinue as an educational worker or spon-
sor for his or her area and for handling
a program for thrift promotion.
Work for Member Understanding
Member education and information
programs are vital to any credit union
program--more so than is generally
realized. Members must be kept well in-
formed to become or remain good mem-
bers. At a time when it is least expected,
such a program may pay the greatest
dividends. The value of good member
relations is both cumulative and invalu-
Use monthly newsletters to help with
membership information and education.
In addition, credit unions should con-
sider making home mailings to mem-
bers at regular intervals. These may in-
clude general literature,annual reports,
and related information. They are espe -
cially effective in reaching the house-
wife and other members of the family for
credit union member ship-and patronage.
Write or adapt as many articles as
possible for use in your sponsor's mem-
ber publication--where one exists. In
addition, invite credit union leaders to
contribute special articles usable in this
publication (or your newsletter). Use
photographs when possible.
Don't hesitate to take full credit for
the many good things you are already
doing such as encouraging habits of
thrift, paying dividends, paying off loans
for deceased or disabled members with
your Loan Protection insurance pro-
gram, making loans to help young farm-
ers get started in business, and helping
4-H members. Let your performance
speak for you.
These human interest stories are in-
valuable in increasing member under-
standing, in securing additional mem-
be rs, and in building both share and loan
1955 56 57 58 59 60 61 62 63 64 1965
Use Charts and Graphs
A good educational and promotional
idea is to chart the growth of your credit
union graphically. Progress may be
shown from the beginning of operations
by using four different colored lines--
one each to show growth in member rship,
member savings, loan volume, and total
Once the chart is made it canbe used
to advantage at annual or special
meetings and displayed daily on the wall
of the credit union office. Such charts
should be brought up to date annually,
semi-annually, or quarterly. An educa-
tional item of this type is effective, yet
Give Material Awards
Awards are as effective for credit
unions as for other organizations, when
properly used. Especially useful are
awards for children when made for pro-
moting thrift. These may be in the form
of shares rather than money.
Many progressive credit unions open
share accounts in the name of children
at the time of birth. In this way they
usually get the parent's membership,
too--if they are not members already.
Appropriate awards can be purchased
at cost from CUNASupply Cooperative,
P. 0. Box 431, Madison, Wis., if not
Maintain Group Acivity
Many rural credit unions are working
with other rural membership groups.
This is a good practice and is to be en-
couraged. Many people seemingly can be
reached only through group activity.
Rural credit unions should endeavor to
use every proven method to extend their
The annual meeting of the member-
ship should be made the biggest event of
the year. It is not enough to barely fulfill
legal requirements by having a business
meeting only. The annual meeting should
be made an occasion with a meaningful
educational and business purpose--
planned carefully and handled so as to
leave a lasting impression on the
In addition, many rural credit unions
could profitably have semiannual meet-
ings in the nature of a picnic, fish fry,
or other recreational gatherings, where
the major emphasis is placedon devel-
oping good membership relations.
FCS Circular 22, "Making the Most
of Your Co-op Annual Meeting" by
French M. Hyre and' Oscar R. LeBeau,
is available on request from Farmer
Cooperative Service, U. S. Department
of Agriculture, Washington 25, D. C.
This circular provides help for annual
membership meetings of cooperatives
and may also be used profitably by
rural credit unions.
Use Guest Speakers
For annual meetings and special
occasions use speakers who understand
your program and share your objec-
tives. Outstanding leaders are avail-
able for your asking. These include:
1. Officials of your cooperative or
2. Officials of your credit union
league or the Credit Union Na-
3. Credit union supervisory offi-
cials--especially for discussing
certain technical problems re-
lated to your operations.
4. Local credit union officials and
experienced volunteer workers
from neighboring credit unions or
5. Community, governmental, and
other recognized leaders.
Officials of other organizations
usually welcome the opportunity to
participate in local credit union pro-
grams. Use them.
Mainaiin Efficient Operations
Needless to say, credit unions must
maintain efficient operations and render
good member service, continuously.
This is not always easy, but unless the
credit union program is service-
motivated throughout and kept effi-
cient, it can never achieve its intended
objectives. The best credit union has
been defined as the one whose pro-
gram remains the most serviceable
to the most members.
Officer training--or leadership
training as it is frequently referred
to--is an invaluable ally to efficiency
in building a credit union program.
One successful ru
points a Junior Bc
each year as a p
training program. J
bers serve 1-year t(
to the directors.
usually made from
sented on the board
ral credit union ap-
oard of Directors
art of its officer
'unior board mem-
erms as assistants
areas not repre-
or on committees.
Encourage Capital Growth
Credit unions must raise most of
their operating capital from members
and therefore must give proper atten-
tion to mobilizing member resources.
This raises share capital forthe credit
union and promotes thrift on the part
of the members. Both are an integral
part of the credit union system.
Successful rural credit unions may
use one or more of the following
methods to raise operating capital.
1. By conducting special drives for
capital, perhaps with awards to those
making the largest deposits during a
given period. New members may also be
enrolled during a drive for operating
2. By stressing regular invest-
ments--especially for employees of the
credit union and affiliated organiza-
3. By arranging for deductions from
milk checks f dairy farmer members,
or salary clcks of employee mem-
bers of the co-op, credit union, or
4. By featuring seasonal deposits--
equivalent to a load of grain at harvest
time, a steer at sale time, or some
other familiar unit.
5. By making "add-ons" to loan re-
payments--designated for the mem-
ber's savings account.
6. By distributing coinbanks--espe-
cially to children.
7. By holding "pie supper auctions"
or the equivalent- -where the amount bid
on a pie or cake goes into the bidder's
8. By urging investment or re-
investment of co-op and credit union
9. By making loans for re-deposit--
such as the "share loan" or "estate
10. By promoting and accepting lump
sum deposits from members, as when
settling estates, and so on.
11. By encouraging parents or
grandparents to build educational funds
for children or grandchildren, or funds
for other worthy future use.
12. By proper use of the "Life Sav-
ings" insurance program--a member
service originated and popularized by
Provide a Sound Lending Program
Credit unions are known best by,
and judged mostly by, their lending
record. Credit union law and bylaws
permit loans to be made for any "provi-
dent or productive purpose."
Following this broad provision, credit
unions may make--and do make--
almost any type loan for which they
have funds, provided it is "for a good
purpose" and the borrower has a good
record and the ability to repay it as
There need be very few limitations
on credit union lending. Loans are
made to members only, and members
usually constitute select risks. Credit
unions maintain reserves to cover
losses from loans uncollectible, and
most of them carry loan protection
insurance that automatically covers
loss in case of death or disability of
the borrowing member. These provi-
sions permit broad, liberal programs
unless negated by operating policies.
New trends in credit union lending
include finance counseling, line-of-
credit loans (made annually for the
farmer), and estate loans (for re-
investment in the credit union). Rural
credit union loans are short-term or
intermediate term loans made to meet
needs of the farm family, as well as
for farm production.
Liberalized lending practices have
grown with the movement. In making
loans, credit unions do not need to re-
sort to, or follow, the conventional con-
servatism of many finance organiza-
tions. They are designed to be non-profit
service organizations and so long as
they are operated efficiently they can,
without fear, maintain a broad, liberal
lending program for members. The
more successful ones do.
,' .... ... ..
&operate with Ot/er
called "chapters"; in almost every
State there are statewide associations
called "credit union leagues"; and the
Credit Union National Association, or
CUNA is now international.
Local credit unions make up the
chapters and leagues; leagues make
up CUNA. All these are operated to
assist locals with education, legis-
lation, supplies, technical assistance,
and other forms of necessary service.
All are operated on a cost basis and
represent the cumulative experience of
the entire movement.
Maintain Basic Essentials
There are multiple techniques for
building successful rural credit union
programs. Officers and workers will,
quite naturally, select and use from
this or any other similar list only the
one, or ones, they think will help them
most--with the idea of adding others
later. However, three basic essentials
are required by--and are present in--
all good programs. They are:
1. The desire to have a successful
2. A carefully planned program
(preferably with a timetable)
3. A group of interested, informed,
and faithful workers.
Do not overlook or omit these basic
credit union essentials. They con-
stitute the A-B-C's of any successful
program. Given these, and any com-
bination of the suggestions made here
will get results. Without them no credit
union can be successful.
UNIVERSITY OF FLORIDA
IIII11111111111 III 1111 lllllill I11I I i 111111 II lII'I
3 1262 08500 2334
Other Publications Available
Using Your Rural Credit Union, Educa-
tional Circular 16. Arthur H. Pursell.
Rural Credit Unions in Indiana, General
Report 47. Arthur H. Pursell.
How Cooperatives Use Credit Agencies
To Meet Patron's Needs, General
Report 52. John M. Bailey, Arthur H.
Pursell, and Russell C. Engberg.
Rural Credit Unions in Nine Mid-
western and Great Plains States,
General Report 94. Arthur H. Pur-
The Rural Credit Union--a Place to
Save and Borrow, Rural Resource
A copy of each of these publications
may be obtained upon request while a
supply is available from--
Farmer Cooperative Service
U. S. Department of Agriculture
Washington 25, D. C.
Growth Through Agricultural Progress
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