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Making it happen: Exploring the nature of successful co-operatives

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In naming 2012 as the United Nations’ Year of Co-operatives, UN Secretary-General Ban Ki-moon said, “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.”

In recognition of the Year of Co-operatives and given the significant and increasing overlap between nonprofits and co-operatives, CharityVillage thought it would be helpful to look at the co-operative movement, its activities that intersect with the charitable sector and the challenges that are particular to the movement.

What’s a co-operative?

A co-operative is a different way of doing business. Co-operatives are social business enterprises owned and controlled by the members they serve, whether these members are customers or producers/workers banding together. One important distinction of co-operatives is that each member receives one vote, unlike most businesses where each share gets a vote.

Worldwide, co-operatives today have more than a billion members while in Canada, four in ten people belong to a co-operative or a credit union. Co-operatives are spread across a spectrum of sectors, such as banking, agriculture, fisheries, housing, insurance, services and travel. While co-operatives play a prominent role in developing countries, large and small co-operatives are found in developed countries including Canada.

In Canada, the majority of co-operatives are provincially incorporated and regulated. Co-operatives that operate in more than one province are federally regulated.

History of the co-operative movement

Co-operatives began in the early 19th century in Europe as a response to widespread industrialization which kept profits in the hands of the few. The first efforts to import the co-operative method to Canada began in the 1840s with mutual insurance companies in Quebec and then an unsuccessful attempt by British emigrant farmers to organize co-operative stores. Over the next forty years, farmers in Ontario, Quebec and Atlantic Canada developed more than 1,200 co-operative creameries and cheese factories. In 1900 in Quebec, Alphonse Desjardins organized his first Caisse Populaire, the first co-operative banking or credit union in North America. The movement itself grew extensively throughout the 1930s and after the Second World War, and is today in a bit of a renaissance.

“In the wake of the 2008-2009 global financial and economic crisis,” said Sha Zukang, United Nations Under-Secretary-General for Economic and Social Affairs and Secretary-General of Rio+20, the UN Conference on Sustainable Development, “financial co-operatives proved to be more resilient than their investor-owned counterparts.”

A 2008 study in Quebec found that 62% of new co-operatives are still operating after ten years, compared with 44% for other traditional businesses. No longer are co-operatives “easily dismissed as worthy but irrelevant”; the success of co-operatives and the failure of many developed economies to make a sustainable recovery has “raised public interest in alternative ways of doing business.”

Co-operative and nonprofit

While most co-operatives are for-profit businesses, many co-operatives are nonprofits and registered charities, or include nonprofit work as part of their mandate. Housing and social service-oriented co-operatives are among the nonprofit co-operatives. In for-profit oriented cooperatives, like the Saskatoon Co-op which operates a wide variety of businesses, profits are shared among their member-owners based on how much the members use the co-op. Profits are also invested back in the cooperative itself and the local community in which it is located. The surplus in a nonprofit co-operative goes directly back into the co-operative itself.

Most co-operatives follow the seven principles of co-operative identity as set out by the International Cooperative Alliance. These principles were originally developed in 1895 and have been amended over the years, most recently to include the seventh principle (Concern for Community) which brings the co-operative movement into close alignment with nonprofits, charities and NGOs.

Donna Balkan, Communications Manager of Canadian Co-operative Association says that “the Canadian co-operative movement is closely linked to the NGO community, particularly in the area of international development, and is also involved in local community initiatives.” She reports that in 2011, credit unions contributed $41 million to community initiatives – including donations, sponsorships, and scholarships; that Mountain Equipment Co-op (MEC) donates 1% of annual revenue to environmental causes and was the first major organization to join 1% for the Planet; The Co-operators insurance company donated 3.9% of all pre-tax profits in 2011 to community initiatives and is considered a Caring Company by Imagine Canada.

Co-operative stories

Here are other ways co-operatives are directly connected with nonprofits. Housing co operatives are both nonprofit and co-operative. Members pay rent rather than owning their housing, but the rental fee may be geared to income with government funds covering the difference, or may be full price. The housing is nonprofit with only the cost of repairs, costs and reserve charged – thus making co-operative housing far more affordable than private sector rental. As with all co-ops, housing co-operatives are legal associations controlled by members (rather than an outside owner or landlord), each of whom has a vote in governance decisions and an opportunity to serve on the member-elected board of directors.

Albro Court Housing Co-operative in Dartmouth, Nova Scotia is an example of such a housing cooperative. Home to 24 units, the cooperative was constructed in 1982 and is self-run by residents in an effort to keep maintenance costs low. A general meeting is held four times each year, while the board of directors meets monthly. The cooperative also holds various community activities throughout the year.

Child care co-operatives are also nonprofit organizations. Child care co-operatives are developed by parents, early childhood educators and community members. Parents serve on the board of directors, work on committees, and assist with various other tasks. Child care co-operatives use any surplus funds to increase or improve their services.

Lakeridge Co-operative Preschool in Saskatoon was formed in 1990 by a group of parents who believed the co-operative approach – with members participating in decision making and in the day-to-day aspects of running a preschools – was and is the best approach to suit their families’ needs. In addition to participating in decision making, parents are required to attend one cleaning night per year, provide homemade playdough once per year and fill the board of directors, as well as having the option to volunteer in the classroom on a monthly basis.

Some co-operatives meet specific needs of their members and provide community services needed by those in their community. Hub City Cycles in Nanaimo began in March 2012 as a community bike hub that promotes cycling, educates and advocates about cycling, and provides a safe and welcoming space for bicycle maintenance and repair. Its 450 members pay a nominal fee and can do bike repair and maintenance.

The Community Laundry Co-op (CLC) is an Ottawa nonprofit facility that provides affordable laundry services to low-income residents of Ottawa. Established in 1999 to provide affordable laundry to people on low income in a safe supportive environment, members can also develop job skills through contract laundry services to community clients. The CLC has more than 300 active members who each pay a one-dollar annual membership and pay just one dollar per load, including wash, dry and laundry supplies.

The West End Food Co-op is “a multi-stakeholder co-operative that includes eaters, producers, workers, and community partners.” Working in the west end of Toronto, the cooperative uses a variety of strategies to provide sustainable food security and access to local healthy foods specific to the needs of the community. Their initiatives include a farmers market, a community cannery, a food mapping project and a food hub containing a community kitchen and store.

Challenges of co-operating

In 2009, MEC began selling bicycles at their stores, and was criticized by the bicycle industry “for everything from unfair competition because of its tax-exempt status, to a Wal-Mart-style money grab, to unethical sourcing.” While in fact MEC does pay taxes, the protest shows the challenge of operating as a co-operative in the marketplace.

There are other challenges for co-operatives. Too much growth can present a problem as a sense of ownership and mutual responsibility is difficult to maintain in a larger co-operative. Another issue is for members of a co-operative to decide whether their aim is to create a distinctly different economic system from private or public enterprise, or whether they simply want to compete in the same area.

An emerging challenge for housing co-operatives is the issue of self-governance and identity. Many housing co-operatives emerged in the 1970s and had 35 to 40 year mortgage periods. As they come to the end of this period, Canada Mortgage and Housing Association will no longer oversee their activities. This may provide a challenge or new opportunities.

For many in the nonprofit sector, the co-operative movement may be unknown before the UN Year of Co-operatives, but Balkan says to members of charities and nonprofits, “If you don’t know much about co-operatives, go out and learn. The values and missions are very similar to nonprofit organizations and there is a natural affinity between the sectors and many close relationships, beyond finances.”

Jawn Lafratta, president of HubCity Cycles agrees. “When we started, we chose to be both a nonprofit and co-operative at same time – we wanted our mandate to be serving our community, and as a co-operative, our members can have a say in how we operate. I can’t think of a better way than to operate.”

As nonprofits increasingly look at engaging in social enterprise as part of their mandate, the co-operative approach is indeed one to consider.

Quick facts about co-operatives

Four out of every 10 Canadians are members of a co-operative. There are about 9,000 co-operatives in Canada. These include:

  • More than 2,200 housing co-operatives which are home to about 250,000 individuals.
  • More than 1,300 agricultural co-ops.
  • More than 650 retail co-operatives.
  • Nearly 900 credit unions and caisses populaires with close to 11 million members.
  • About 450 co-ops offering child care or early childhood education.
  • More than 600 worker (employee-owned) co-ops with a total membership of over 13,000.
  • More than 100 health care co-operatives.

Statistics courtesy of 2012 International Year of the Co-operatives.

Do you have a personal experience with Canadian co-operatives? Share your story in the comments below.

 

Editor's Note: An earlier version of this story stated that Mountain Equipment Co-op donates 1% of pre-tax profits to environmental causes, when in fact, they donate 1% of annual revenues. CharityVillage regrets the error. 

Susan Fish is a writer/editor at Storywell, a company that helps individuals and organization tell their story well. She has written for the nonprofit sector for almost two decades and loves a good story.

Photos (from top) via iStock.com. All photos used with permission.

Please note: While we ensure that all links and email addresses are accurate at their publishing date, the quick-changing nature of the web means that some links to other websites and email addresses may no longer be accurate.

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amcdonell@writersfest.bc.ca amcdonell@writersfest.bc.ca
I wanted to compare MEC's donation to the average corporate donation. I found this from a 2005 Wall St Journal article:

"Over the past 40 years, U.S. companies have followed a pattern of giving between 1.2 % and 1.7 % of annual pre-tax income to charity, according to Giving USA. Some companies stand out from the corporate pack...More than 100 firms, including accountant Deloitte & Touche, EMC Corp. and General Mills (pledge) to donate at least five percent of pre-tax income each year. "
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