How to Start a Church Credit Union in Michigan

The National Credit Union Association organizes and charters all types of federal credit unions across the U.S. A religious group that opens a federal or domestic credit union becomes a cooperative financial institution that provides lending and saving services to its members. To become a church credit union in Michigan, state laws require your church group to meet the requirements from the NCUA as well as additional state requirements.

Instructions

Federal Requirements

1. Choose whether you want to start a federal or domestic church credit union in Michigan. The difference between a federal union and a state union lies in the fact that the a federal credit union only requires a federal license, while a domestic credit union in Michigan requires licenses from the federal government as well as from the government of Michigan. Another difference is that the federal government regulates federal credit unions, while state governments regulate state unions. A federal credit union does not require registering or licensing in the state. However, it must comply with state laws, such as the Michigan law that individuals under age 18 cannot have a share in the credit union.

2. Apply for a charter with the National Credit Union Association. A charter is a license that the NCUA gives that allows the owner to operate a credit union. To get a federal charter, your church group must submit a written statement to the NCUA for "the proposed field of membership," which is a list that provides information on the group of people and organizations that the church union plans to serve. After this, your church must choose seven to 10 people from the group to be subscribers, who then choose individuals to serve as a board of directors, credit committee, supervisory committee and chief operating officer of the proposed credit union, according to the NCUA publication "Steps to Organize a Federal Credit Union." If the NCUA gives the charter to your church union after these steps, the board of directors must then choose a supervisory committee.

3. Choose the type of charter your church group wants to obtain. The NCUA offers three types of charters: a single common bond, a multiple common bond or a community charter. A common bond charter requires the formation of the union based on a common bond among the members, such as a religious affiliation. This type of charter best fits the needs of a church credit union. Common requirements include showing that employees and officials have the necessary skills to make the union work, passing background and criminal checks for each employee and official and submitting a business plan to the NCUA. Employees in official and management positions must have management skills and knowledge, such as a business management degree. Employees responsible for investment and finances must have extensive knowledge in such fields, such as having an accounting degree or comparable qualification.

4. Write the credit union's business plan. According to the NCUA, your business plan must contain a mission statement as well as an analysis of market conditions. It must also contain information on the fields of membership, evidence of member support, goals for shares, loans and members, financial services that the union will provide, an organization plan, information on operating facilities, record-keeping, source of funds and a pro forma financial statement. The NCUA publication "Guidelines for NCUA's Express Chartering Process" provides detailed information on each of the things you must include in your business plan, as well as additional business plan sections.

5. Fill out all necessary forms to obtain the federal charter. As the organizer of the church credit union, you must submit all necessary forms. The organizer can fill out Form NCUA 4001 and Form FCU Investigation Report. The subscribers must fill out Form NCUA 4008, Organization Certificate, while each employee and official must fill out and sign Form NCUA 4012, Report of Official and Agreement to Serve for each official in your church credit union. The chief executive officer and the chief financial officer must both fill out and sign Form NCUA 9500, Application and Agreements for Insurance of Accounts. Information required to fill out these forms include the proposed name of the church union, such as "Manuel's Faith Credit Union," information for each individual filling out the forms, the office location of the union and the union's contact information.

6. Decide the par value of each share each member has. Par values may vary from $1 to more than $50. Usually, a new union's par value is lower than those of existing unions. The par value of each share depends on how well the union is doing and if it is producing profit it can invest back into the business. Decide the price members must pay at the time of subscription, which is usually a monthly quote. Decide the church credit union policies on membership joint account requirements, such as whether both members must belong to the union. Make sure you follow all the rules established by the NCUA, such as holding an annual meeting every year, giving proper notice of the meeting to all the church union members and having a quorum of at least 15 members to be present at such meetings.

State Requirements

1. Obtain a Michigan charter to operate as a credit union in Michigan. Before you can do so, though, the Michigan government also requires your church group to obtain a NCUA charter, and therefore, it requires your church group to meet all NCUA requirements before your group is able to obtain a Michigan charter. To obtain this charter, you must fill out an application and submit it to the State of Michigan Office of Financial and Insurance Regulation. You can download this application from this office's website.

2. Meet the state church credit union requirements. These requirements include that all members of the credit union must have a common religious affiliation and a place of religious worship within the Michigan area. Your church group must also be able to show that you have capable people to occupy positions of authority and all necessary positions to make the union work, the same requirement you needed to meet to obtain a federal charter.

3. Fill out Form FIS 1056, Application for Permission to Organize a Domestic Credit Union. To receive the charter, seven individuals who are members of the credit union must fill out this form. Send this application to the State of Michigan Office of Financial and Insurance Regulation. The office does not require any fees for the application.

4. Decide the par value of shares each member has, as well as other rules regarding the union policies, such as membership subscription, membership status and payments, if you did not do so while you were meeting the federal requirements.

5. Comply with all state laws, such as holding the necessary annual meetings, having the right number of members and providing a full description of the benefits of having a membership in the church union. The state advises that at least 500 members are necessary to start a successful church credit union. If you have fewer than 500 members, you may consider joining with another church credit union.

References

• National Credit Union Association; Facts About Federal Credit Unions; October 2010
• National Credit Union Association: Guideline for NCUA'S Express Chartering Process
• National Credit Union Association: Federal Credit Unions Bylaws
• State of Michigan: FIS 1056 Credit Union Organization Information Package
• National Credit Union Association: How to Start a Credit Union
• National Credit Union Association; Chartering And Field of Membership Manual; March 2003