Business and Management

Management models and priorities in member associations

Credit unions are membership-based cooperative financial services organisations run by and for their members. Traditionally, in the ‘old’ management model, the emphasis is on fostering community development through philanthropy and volunteering. However, they have been encouraged to adopt a 'new' management model, which encourages for-profit financial management practices. Does the emphasis in the new management model on the adoption of for-profit financial management practices diminish the community involvement of credit unions?

Business Finance

Management models and priorities in member associations: is credit unions' community involvement crowded-out?

The study

With colleagues from the Universities of Ulster and Bath, Professor John Forker has conducted the first comparative evaluation of the impact of the choice of management model by credit unions on their financial management and community involvement. The study investigates the differential effect of the‘new’ compared to the ‘old’ management model on financial management and community contribution. 

Methodology

The study focuses on the credit union sector in Northern Ireland, using data extracted from 2,275 annual returns of 188 credit unions over the period from 1996 to 2008.

Findings 

Whilst the study focuses on a country with a uniquely restrictive regulatory environment, the key findings of the study indicate that:

  • Increased emphasis on growth and financial efficiency in the credit union sector from the adoption of the ‘new’ model does not diminish the industry’s role in community involvement (crowding-out effect is absent)
  • The emphasis on for-profit financial management and community involvement can be complementary

The research suggests that the pursuit of improved financial performance can benefit credit union management, without affecting their commitment toward community involvement and development. In fact, organisations may find that improved financial performance helps them improve their services to their members. 


Access the paper

Forker, JohnGrosvold, Johanne and Ward, Anne Marie (2014) Management models and priorities in member associations: is credit unions' community involvement crowded-out? Nonprofit and Voluntary Sector Quarterly, 43 (25). 105S-123S. ISSN 0899-7640

Financial support for this research was obtained by the Principle Investigator, Professor Anne Marie Ward, from the Irish Accounting Education Trust (Chartered Accountants Ireland).