Transcript Basics of the Co

Co-op Training Module I
Basics of the Co-operative Model
What is a Co-operative?
A legally incorporated business, owned by its members who use its
services.
Like other businesses a co-op:
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Requires start up capital/equity
Generates revenue to cover its costs
Must provide quality services
Can distribute profits back to its owners
Can retain profits for future needs
Goal is financial self sufficiency
Provides limited liability for member owners
Can borrow money/sign contracts
Pays business taxes
Co-ops are Different From Private Enterprise
Owners benefit from use of the co-op’s services
– Not seeking a financial return on their investment
Decision making is democratic – one member/vote
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on number of shares held
Profits are allocated based use of the co-op’s services
– Not based on number of shares held
A co-ops business assets are owned collectively by local
members
– Cannot be used for private gain
Co-ops have stated social as well as economic goals
– Profit is not the only concern
Who are Co-op Members?
They are:
– Individuals who access retail, financial, housing & health care
services
– Business operators who benefit from bulk purchasing, sharing
facilities & joint marketing activities
– CED and other nonprofit groups that share equipment, office
space, etc. to reduce operating costs
Types of Co-operatives in NL
Financial - providing banking, investment services
– Nfld. & Labrador Credit Union
– Hamilton Sound Credit Union
Retail – groceries, hardware, building supplies
– Indian head Consumer’s Co-op
– Gander Consumer’s Co-op
Service – health care, housing, childcare
– North Shore Central Ambulance Co-op
– Advocate Youth Services Co-op
Types of Co-operatives in NL
Producer – fishery, farming, filmmaking, crafts
– Northeast Coast Sealer’s Co-op
– Nfld Independent Filmmakers Co-op
Worker – provides members with employment
– Extension Community Development Co-op
Multi-stakeholder – membership categories
– Blueberry Industry Co-op
– Fogo island Co-op
Co-operative Profile: International
Ocean Spray
Agricultural Co-op formed 75 years ago
Owned by 800 cranberry growers in U.S. & Canada
Has over 2000 employees
Leading producer of canned & bottled juice drinks in North
America
$1.4 billion in gross sales
Co-op Profile: National
The Co-operators Group
Formed in 1945 by Saskatchewan farmers
Largest Canadian multi-product insurance company
Assets exceeding $5.7 billion
Owned by 37 co-op organizations in Canada
NL Federation of Co-ops is a member-owner
Co-op Profile: Provincial
Fogo Island Co-op
Formed in 1967 to resist resettlement
Development process pioneered the use of community television to
organize residents
“Fogo Process” used as community development tool around the
world
Co-op owns 3 fish plants, a laboratory, a marine service centre &
has access to a fleet of 30 long-liners
Annual sales of approx. $20 million
Co-op Profile: Provincial
Eagle River Credit Union
Formed in 1984 when BMO pulled out to lack of business
Received strong support from Caisse Populaire in Blanc Sablon &
local businesses
Now second largest credit union in the province
Full service credit union with 6300 members
Has 6 branches , $79 million in assets & 6550 member owners
Co-op Profile: Provincial
Advocate Youth Services Co-op
Formed by young people in Baie Verte in 2007 to:
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Engage local youth in the community development process
Undertake community infrastructure projects
Develop other opportunities for youth employment
Engage in training & career development activities
Support member participation in youth camps, conferences &
other provincial events
Next Units
Unit 2: Co-ops as a Business Model
Unit 3: Co-operative Principles, Legislation & Governance
Unit 4: The Existing Co-operative System
Unit 5: Developing a Co-operative
Unit 2
Co-operatives
As a Business Model
Co-op Structure: Roles & Responsibilities
Members
• Are the owner/investors and have ultimate control of the co-op
• Participate in decision making relating to;
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Policy development
Appointment of auditor & annual financial reports
Distribution of profits
Election of the board of directors
• Members participate through the co-op’s AGM & other
membership meetings
• Member shares are the basis for the co-op’s long term
financial stability
• Member use of services is the co-op’s primary source of
revenue
Co-op Structure: Roles & Responsibilities
Board of Directors
• Elected by & take direction from the members
• Pro-actively directs co-op operations based on co-op principles,
legislation, by-laws & policies
• Selects, supervises & provides direction to management
• Manages & protects the assets of the co-op
• Provide membership with full accounting of co-operative
activities
and directions
Co-op Structure: Roles & Responsibilities
Committees
• Appointed by members and/or board
• Delegated authority for specific tasks or projects
• Reporting relationships outlined in by-laws & terms of reference
• Standing Committees: Finance & Audit, Member
Communications, and Staff Relations
• May be appointed for short terms, to address specific issues
as they arise
Co-op Structure: Roles & Responsibilities
Management & Staff
• Hired by and reports directly to the Board
• Responsibilities & powers similar to those of private sector
manager
• Hires, directs and evaluates all other staff
• Responsible for successful management of the co-op business
• Understands co-op business structures & governance
processes
• Provides operational reports at board & membership
meetings
Smaller Co-operatives
Smaller co-ops may rely on part-time/seasonal staff or none at all
Member responsibilities remain the same as larger structures
Board and committee members may be more involved in day-today operations
Rely more on volunteer member and/or other community
resource support
Comparison with Other Sectors
Public Sector: federal, provincial & municipal governments that
provide public services, paid for by tax revenues
Private Sector: businesses & organizations that provide services for
the public to maximize profits for individual gain
Social Economy Sector: non-profit organizations & businesses
that respond to socio-economic needs of communities.
Co-ops are part of this sector
Co-ops are Unique
Different Purpose
Private Sector: seeks to maximize profitability for investors
Co-operatives: seeks to provide members with needed services at
the lowest possible cost
Different Control Structure
Private Sector: amount of invested capital dictates the level of
voting control
Co-operatives: each member has one vote, irrespective of
amount of capital invested
Co-ops are Unique
Allocation of Profits
Private Sector: profits distributed as dividends on invested capital,
regardless of use of products or services
Co-operatives: profits allocated to members as rebates on
proportional use of products and services, not on the amount of
capital invested
Member Benefits & Obligations
Benefits
Access to quality services at reasonable cost
Control of a business that places priority on their needs
Sharing of surplus profits that remain in the community
Stable service delivery & and longer business life
Priority on local employment
Obligations
Use their co-op’s services
Buy shares & maintain their equity investment
Attend AGMs and other membership meetings
Be informed and engage in the decision making process
Co-op Facts
Operate in a wide variety of business sector
– Not just grocery stores or credit unions
They are subject to co-op legislation
– But not controlled by government
Have a higher survival rate than other businesses
– Not “last resort” enterprises operating in marginal business
situations
Make profits, employ local people and contribute to local
economies
– Not charities or non-profit organizations
Essential Conditions for Success
A co-op must:
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Meet the needs of its members
Be economically viable with secure financing
Have strong member patronage & participation
Deliver top quality services at reasonable cost
Make board/staff/member education a priority
Hire competent & committed management/staff
Have strong leadership and a succession plan.
Have a positive relationship with the community
Buy & hire local as much as possible
Be adaptable to changing business environments
Next Units
Unit 3: Co-operative Principles, Legislation & Governance
Unit 4: The Existing Co-operative System
Unit 5: Developing a Co-operative
Unit 3
Co-operative Principles,
Legislation & Governance
Co-operative Principles & Values
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Voluntary and open membership
Democratic member control
Member economic participation
Autonomy and independence
Education, training, and information
Co-operation among co-operatives
Concern for community
Co-operative Legislation
Canada Co-operatives Act
Applies to co-ops that do business in two or more provinces or territories
NL Examples: Co-operators Group & Mountain Equipment Co-op
NL Co-operatives Act
Incorporates local co-ops & gives them legal status
Regulates operations including:
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Member investment & profit sharing
Democratic processes
Limited member liability & board indemnification
Non-member investments
Financial & audit requirements
Dissolution of a co-op
Co-operative By-Laws
The NL Act requires co-ops to develop by-Laws to govern their
operations. By-laws address:
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Structure and objectives of the co-op
Who can be a member
Member share purchase requirements
Meeting quorum & notification requirements
For profit or non-profit status
Distribution of profits
Board size, election, & term of office
Membership withdrawal & share pay outs
Role of officers, committees & manager
Bonding requirements
Procedures for by-law amendment
Co-operative Operational Policies
• Articulate operational & service delivery procedures
• Are developed by individual co-ops and articulated in:
– Meeting minutes
– Operational manuals
– Member information kits
• Build on the Co-op Act & by-laws by & address:
– Procedures for decision-making
– Actions to be taken in different situations
– Stakeholder roles, responsibilities, and authorities
Common Co-operative Policies
Procedures for:
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Hiring of staff, personnel policies, working conditions
Member & public relations
Gender equity & responding to harassment issues
Charitable donations & other community supports
Setting of service fees
Terms/conditions for access to services
Treatment/protections - members/customers/clients
Conflict of interest guidelines
Financial management & reporting
Co-op Governance Summary
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Co-op Principles
Canada Co-operatives Act
NL Co-operatives Act
Co-operative By-laws
Co-operative Operational Policies
Membership handbooks
Member/customer service procedures
Next Units
Unit #4: The Existing Co-operative System
Unit #5: Developing a Co-operative
Unit 4
The Existing Co-operative System
An Integrated Co-op Network
First Tier: Local co-operatives in the community that provide
services for their members e.g.
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Petty Harbour Fishermen’s Co-op
North Shore Central Ambulance Co-op
Terrington Consumer’s Co-op
Eagle River Credit Union
Second Tier: Centrals formed by at the provincial or regional
level to represent first tier co-ops & provide them with
other services
– NL Federation of Co-ops (NLFC)
– Co-operative Housing Association of NL (CHANAL)
– Co-op Atlantic (CA)
An Integrated Co-op Network
Third Tier: National co-op organizations that represent second tier
co-ops and provide a range of other support services e.g.
– Canadian Co-op Association
– The Co-operators Group Ltd.
– Worker Co-operative Federation of Canada
Fourth Tier: International co-op agencies, made up of national
centrals, which promote co-operatives on a global level e.g.
– International co-operative alliance
– World Council of Credit Unions
Canadian Co-operative System
(Co-op Sector)
Co-op Sector
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Over 10,000 co-ops & over 10 million members
Three of every 10 Canadians are members of a co-op
Over $160 billion in assets & employ over 160,000 people
Over 250,000 producers rely on co-ops for their livelihood
Financial/Credit Union sector
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Over 1600 credits unions and caisse populaires
10 million members at over 3400 locations
Over $170 billion in assets and employ over 60,000
Only financial institutions in over 900 communities
across Canada
Provincial Co-op Sector Overview
Provincial Statistics
Over 90 co-ops and credit unions
Employing 1,400 people
57,000 members doing business in excess of $800 million
Types of Co-ops
Consumer (Clarenville Consumers Co-op)
Fisheries (Torngat Fisheries Co-op)
Agriculture ( Eastern Farmer’s Co-op)
Cultural industry (Nfld. Independent Filmmakers Co-op)
Health services (North Shore Central Ambulance Co-op)
Community development (Advocate Youth services co-op)
Child care (Confederation Daycare Co-op)
Housing (Kilbride Housing Co-op)
Intra-Provincial Co-ops
Co-op Atlantic
– Retail & agricultural co-op services
– Gander warehouse
Co-operator’s Group Ltd
– Insurance & investment services
Others
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True Serve Hardware Co-op
Country Ribbon Chicken
Central/Farmer’s Dairy Co-ops
Mountain Equipment Co-op
Unit 5 - Developing a Co-operative
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Overview of the incorporation process
Key questions to be addressed
Requirements for success
Understanding the development process
Steps involved in the development of a co-operative project
Where to obtain financial assistance & advice
Unit 5
Developing A Co-operative
Incorporation
• Understanding of the Co-operatives Act
• Minimum of 3 members
• Must submit:
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Articles of Incorporation,
Draft By-Laws
Business Plan
Required fee
• Reviewed by the Registrar of Co-operatives
• Certificate of Incorporation issued
Opportunity Identification
Key Questions:
Would the recipients of the services (potential co-op members) be
better served by owning and having direct control of the
enterprise?
Will the services provided by the co-op enterprise provide a clear
and direct benefit for the member–owners that would justify
their investment in the enterprise?
Are there available sources of technical, advisory and financial
support to help with the co-op enterprise development
process?
The Development Process
• Elements of a Successful Co-op Start-up
• Identifying a common need for a service that requires a
common action
• Agreement amongst potential members that the a new coop
can best address this need
• An adequate level of trust among potential members must be
developed
• Member’s personal and financial commitment must be
secured
• Other key stakeholders support must be on side
• Capacity to implement business and operational plans
must be in place
Phases of the Development Process
Phase 1: Opportunity Identification
– Marketing & Promotion of the Co-op Model
– Informed Response to Public Inquiries
– Introductory Presentations/Workshops
Phase 2: Development of the Business Idea
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Initial Concept & Market Assessment
Initial Agreement re: Co-op Model & Objectives
Development of Concept Paper
Initial Assessment - Project Financing and Feasibility
Development of Initial Budget Estimates
Phases of the Development Process
Phase 3: Building the Co-op Group
– Confirmation of Co-op Structure & Membership
– Establishment of Steering Committee
– Agreement on Tasks & Time Lines
Phase 4: Confirming Business Feasibility
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Group Consensus - Potential Feasibility
Development of Business Plan*
Recruitment of Members Initiated
Agreement on Member Equity Contributions
Potential Financing Sources Confirmed
Phases of the Development Process
Phase 5: Co-op Incorporation
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Draft By-laws and Business Plan Completed
Provisional Board of Directors Confirmed
Articles of Incorporation Completed
Documents and Fee Submitted
Registrar Confirms Incorporation
Phase 6: Business Start Up
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Banking/Accounting Procedures in Place
Member Equity and Business Financing in Place
Staff Hired (if required)
Operational Policies/Procedures Developed
Opening Ceremonies - First AGM Held
Phases of the Development Process
Phase 7: Ongoing Co-op Operations
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Policies and Procedures Manual
Monitoring of Operations
Regular Board Meetings
Ongoing Policy Development
Development of Business/Community Networks
Membership in Provincial/Regional Centrals
Support Services
Co-op Zone Newfoundland & Labrador
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Regional Co-op Developer’s Network
Co-op Equity Investment Fund
Community Capacity Building Program
www.nlfc.coop
Agriculture & Agrifoods Canada
– Co-op Secretariat
– Co-op Development Initiative
National Co-op Sector Programs/Services
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Co-op Atlantic
Co-operators Development Fund
Canadian Co-op Association
www.coopzone.coop