Are Credit Unions Non-Profit?

When many of our Detroit credit union members learn that banks are for-profit institutions designed to make money for their owners, they immediately conclude that a credit union is a non-profit. Public Service Credit Union is a 501(c)(14) non-profit, but that designation might sound different from the most common one you hear: 501(c)(3). Read on as we break down the difference.

Credit Unions Are Non-Profit

The reason we are able to offer Detroit and Romulus residents better options than a traditional bank is because we are not concerned with making a profit — it’s just not how credit unions work. Once you join a credit union, you become a member, and the purpose of a credit union is to best serve its members. Of course, most people hear “non-profit” and immediately jump to “charity,” which is the difference in that 501(c) designation.

501(c)(3) vs.501(c)(14)


  • Both serve the needs of a group or community
  • Both make income and reinvest any earnings into the organization
  • Both are often composed of both volunteers and paid staff
  • Both can become incorporated at the state level for additional financial and legal protections
  • Neither pay dividends to stockholders

What’s the Difference?

A 501(c)(3) has specific regulations placed upon it due to its status as a charity. They are prohibited from conducting political campaign activities, are limited in their reach beyond the United States’ border, and have strict requirements about how their income is distributed within the organization.

A 501(c)(14) is specifically a designation for state-chartered credit unions (and mutual funds). While they are bound by the same requirements of reinvesting any profits back into the organization, they are not held to the same standards as a 501(c)(3).

Perhaps the most important distinction is that a deposit into a credit union account is obviously not the same as making a charitable donation. So when you’re trying to get the most out of your taxes, simply depositing money into your credit union account won’t do the trick. (Although a though a tax-exempt retirement account would do the trick. Compare 401k vs. IRA retirement plans to learn more.)

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