Cooperativas proudly serve their members

Financial cooperatives in Puerto Rico have a strong presence in rural and urban areas.

August 24, 2022

The diversity of our movement never ceases to amaze me. Throughout my career, I have visited with credit union leaders from Canada, Brazil, Spain, Italy, Uganda, and, of course, dozens of U.S. states and learned about the unique impact credit unions have in communities they serve.

There is a segment of U.S. credit unions many know nothing about but nonetheless proudly shares our mission and values: Puerto Rico’s financial cooperative system.

I know Puerto Rico well. I was born in the city of Ponce. I visit the island frequently to spend time with family, and during every visit I notice the branches of local financial “cooperativas.” I hear the pride with which people talk about them.

Like credit unions on the mainland U.S., cooperativas have existed for decades and have a strong presence in rural and low-income urban areas. Puerto Rico’s financial cooperative system grew parallel to the credit union system on the mainland.

Despite differences in history and culture, the mission is the same: to serve people of modest means, particularly those who have been excluded from the financial mainstream, and to provide individuals and communities with tools to prosper and achieve financial security.

Today, 106 cooperativas serve more than 1.1 million members. Collectively, they hold $10.2 billion in community-owned assets and represent the third-largest financial entity on the island. 

Even though cooperativas and credit unions offer similar products and services, their structure, regulator, and insurer are different. This is a result of their history, as well as the needs of Puerto Ricans.

Cooperativa members make monthly deposits to a restricted share account. They are paid dividends on those shares and can use the balance in the account as collateral for loans. This system promotes savings and a strong sense of ownership, as members are also shareholders.

‘Cooperativas, like credit unions, are the ultimate financial first responders.’

Cooperativas are state-regulated and insured by the Public Corporation for the Supervision and Insurance of Cooperatives, which offers share insurance up to $250,000, like NCUA and FDIC.

Along with the church and local government, cooperativas are pillars of their communities. They’re trusted partners of the people, as they stay when others leave and act as a counterbalance to natural disasters and financial crises. They are, like credit unions, the ultimate financial first responders.

In 2017, Hurricane Maria ravaged Puerto Rico. A Category 5 storm, Maria devastated infrastructure, roads, the electrical grid, and thousands of homes, leaving most of the island without electricity for many months.

In the aftermath, cooperativas worked against all odds to resume operations, most coming back online within 48 hours while banks remained closed.

Their CEOs personally traversed impassable roads to pick up cash and ATM files as the lack of power and communications accentuated the need for cash to procure the most basic supplies. The heroic role they played cemented the gratitude of the population, and their growth has been remarkable in years since.

Unfortunately, cooperativas have not had access to the same resources available to mainland U.S. credit unions. Tools such as secondary capital, federal grants, and the non-qualified mortgage secondary market are only now becoming available.

Inclusiv, a network of community development financial institutions (CDFIs) and minority depository institution credit unions, has been leading the way, collaborating with a growing number of entities to connect Puerto Rico with the U.S. credit union system to rebuild more resilient and equitable local economies.

With 77 CDFI-certified cooperativas, Puerto Rico has the second-largest concentration of regulated CDFIs and ranks fifth in the total number of CDFIs.

I encourage you to learn more about and connect with cooperativas in “my” Puerto Rico.

TONY BUDET is CUNA Board Chair and CEO at University Federal Credit Union, Austin, Texas.