Transcript Slide 1

Co-ops 101 & 202
CED Workshop, June 8th, 2011
Peter Cameron, Co-op Development
Manager
Your Presenter
Peter Cameron
Co-op Development Manager
Ontario Co-operative Association
[email protected]
www.ontario.coop
1-888-745-5521
519-763-8271 ext. 23
Overview
Co-ops 101
What is the Ontario Co-operative Association?
What is a co-op?
Co-ops in Ontario and across Canada
History of the Co-op Movement
Why choose a Co-op?
Co-ops 202 -Models, Structure and Roles
FSCO and Incorporation Procedures
Financing Co-operatives
What’s the Co-op Difference?
Opportunities, Challenges and Trends
The Ontario Co-operative
Association
Mission: To lead, cultivate and connect the
co-operative sector.
Vision: An Ontario where co-operatives
contribute to the sustainability and growth
of our economy and communities.
The Ontario Co-operative
Association
Four Strategic areas:
1. Lifelong Co-operative Learning
2. Communications and Member Relations
3. Co-operative Development
4. Government Relations
(it’s not just a work placement in school)
WHAT IS A CO-OP?
A Co-operative is…
An autonomous association of persons
united voluntarily to meet their common
economic, social, and cultural needs and
aspirations through a jointly-owned and
democratically-controlled enterprise.
Examples of Co-ops
- Co-operators Insurance
- Desjardins Credit Union
- Mountain Equipment Co-op
- Gay Lea Dairy
- Organic Meadow Dairy
- AgEnergy
- La Siembra –Cocoa Camino Fair Trade Co-op
- Co-op Cabs
-Co-operative Housing Federation of Canada
Co-operative Principles
Seven Principles of Co-operatives Worldwide
1.Voluntary and open membership
2.Democratic member control
3.Member economic participation
4.Autonomy and independence
5.Education, training and information
sharing
6.Co-operation among co-operatives
7.Concern for community
Elaborated in 1995 by the International Co-operative Alliance
Co-ops in Canada
Canada’s 10,000+ co-ops and credit
unions have combined assets of
approximately $167 billion
Co-ops and credit unions employ over
160,000 people
In Canada, 4 out of every 10 Canadians
are members of at least one co-op (or
43%)
Approximately 70% of Québec’s
population and 56% of Saskatchewan’s
population are co-op members
THE ONTARIO CO-OPERATIVE SECTOR:
1300 CO-OPS; 1900 LOCATIONS; 400 COMMUNITIES
Co-ops in Ontario
There are more than 1,300 co-ops and credit
unions in Ontario
The province’s co-ops and credit unions have
over $30 billion in assets
More than 1.4 million individual members
belong to a co-op or credit union
Ontario has the second highest number of
non-financial co-ops in Canada, after Quebec
Co-operatives by Sector
Ontario’s Co-op
Sector Today
•1,300 co-ops in Ontario
•1,900 locations in 400
communities
•1.4m members; 49k
volunteers (10k directors)
•16k employees
Other, 194,
15%
Agriculture,
77, 6%
Housing,
Child Care,
216, 17%
587 or 45%
Financial, 226,
17%
A BRIEF HISTORY OF CO-OPS
Where do Co-ops come from?
Co-ops have strong roots in both 19th century
rural communities and the newly industrialized
urban areas of the late 1800s
Focus on providing goods and services to
members meant co-ops were formed to provide:
Essential services in under-resourced communities
Fair and accessible alternatives to existing services
Many of these same motivations exist today, but
with additional pressures and trends
The Rochdale Pioneers
1844: Formed in England by skilled workers facing
poverty and unfair conditions due to
industrialization of the workplace
Co-op provided access to affordable food and
essential goods
Origin of the 7 Principles
Antigonish Movement
Maritime-based co-operative movement
spearheaded by priests and educators: Moses
Coady, Jimmy Thompkins, Hugh MacPherson
Advocated for as a way for Nova Scotians to lift
themselves out of poverty and achieve greater
freedom and self-realization
1860s-1890s: farmer co-ops started in great
numbers but high failure rates
by 1910s co-ops were more successful and
widespread
Alphonse (and Dorimène) Desjardins
1900: First North American
caisse populaire (credit
union) formed in Levis, QC
Was a response to usurious
interest rates (3000%)
faced by farmers and
factory workers
Based on the German,
Italian and French models
of community banks
The Ontario Roots
Co-ops started later in Ontario compared to other
parts of Canada:
Lack of financial support from government (as in
Prairies and Maritimes)
Lack of understanding about the co-op model
Late start for farmers seeking political solutions to their
economic situation
Took until 1917 to see legislation that would allow for
co-ops
First co-ops were farmer based and in rural areas
Growth Continues
40s-60s: Credit unions start to grow in
prominence (1400 by the 60s); agriculture co-ops
decline in numbers but increase in business,
number of child care co-ops start to grow
70s-80s: housing co-ops begin in earnest due to
government funding agreements, credit union
numbers drop due to mergers
90s-00s: co-ops focused on social services and
sustainability start to be developed: energy,
transportation, vulnerable populations
Why choose a co-op (1)?
• Economies of scale: Bulk buying; sharing of costs
and expenses; joint processing or branding
• Accountable & inclusive: Open to everyone; each
member has equal vote regardless of investment;
local decision making
• Build stronger communities: Most co-ops are
community based - investment and surplus stays
in the local community; collaboration
• Members’ needs met: may not always be ROI
Why choose a co-op (2)?
• Benefits to both member-owners and users:
Investment and economic contribution
Value added
Democratic functioning and collaboration
• Self-determination: Member-ownership makes
co-ops less vulnerable to takeovers by outsiders
Co-ops can own non-co-op subsidiaries or
businesses
• Multiple bottom lines – financial, social and
environmental
The Co-operative Context
Wherever a member need can be identified, a
co-op can be structured around it
Co-ops have always had roles where public or private entities
cannot meet community needs eg. Credit Unions have stayed
when banks have pulled out
As community needs have changed, so have the types of
co-ops
Originally, strong needs seen for basic farm needs and
infrastructure in rural areas
Now, co-ops providing many services, Renewable Energy,
Car Co-ops, Health Care, Child Care, Housing, Senior Care
Survival Rate of Co-ops
Co-operatives generally have a higher survival rate
than traditional business corporations
Summary of the Benefits of
Co-operatives
 Contributes to community well-being
 Supports the triple bottom line (economical,
social and environmental)
 Builds and enhances local prosperity
 Empowers people in a democratic way
 Helps individuals increase livelihood assets
The what, why and how of co-ops:
CO-OPS 202
Basic
Co-operative
Structure
Role of Members and Board
Co-ops are member-owned and organized in a
democratic structure to meet member needs
The “business function” of the co-op consists of
activities that meet those needs
The “democratic function” is the control of the
membership over the co-op, carried out by a
board of directors elected by members
Board oversees both business and democratic
functions of co-op
Role of Staff
Primary role of staff is to carry out activities according to
board’s strategy to meet member needs
Senior management is hired directly by the board to
manage the business function of the co-op
Senior manager hires additional staff to assist with particular
business functions or activities
Junior staff report to a senior staff person, who in turn
reports to the board
Staff do not tell the board what to do, they provide
information and recommendations
Board provides plan and direction to senior staff person,
who in turn works with other staff to implement the plans
Starting-up a Co-op
5 people to start a co-op (3 for worker co-op)
Articles of Incorporation go to a different agency
than other corporations
Regulating body: Financial Services Commission
of Ontario (FSCO)
Required details are different: share structure and
member investment
Co-op Legislation
Ontario Co-operative Corporations Act
Ontario Credit Unions and Caisses Populaires Act
Federal Co-ops –Canada Corporations Act –
operating in more than one province
Unofficial Co-ops – “Co-op-like” organizations not
legally incorporated under the CC Act
May operate in a co-operative manner, or follow the
7 Principles
FSCO
Financial Services Commission of Ontario
The Financial Services Commission of Ontario
(FSCO) registers organizations conducting
business as a co-operative under the Cooperative Corporations Act. You should be aware
that many co-operatives are regulated under
additional pieces of legislation. Day care cooperatives for instance, are also regulated under
the Day Nurseries Act.
FSCO Services for Co-ops
How to Register a Co-operative
Find out Which Co-operatives are Registered with FSCO
Tips for Co-operatives Relating to Offering Statements
Tips for Co-operatives Relating to Articles of Incorporation and
Amendments
Tips for Renewable Energy Co-operatives Relating to Articles of
Incorporation and Amendment
Legislative and Regulatory Changes: Co-operative Corporations Act and
Regulation Amendments
Resolving Co-operative Complaints
Fee Schedule under the FSCO Act (Certificates of Status)
Fee Schedule under the Co-operative Corporations Act
Forms
For more information:
Phone: (416) 250-7250
Toll free: 1-800-668-0128
Fax: (416) 226-7838
Attention: Licensing and Market Conduct Division
Or, you may write to:
Licensing and Market Conduct Division
Financial Services Commission of Ontario
5160 Yonge Street,
Box 85, 4th Floor,
Toronto, ON M2N 6L9
Maintaining a co-op
 Yearly filing of information
 Running member meetings
and AGMs
 Good member-board
relations
 OnCo-op offers a plain
language Guide to the Act
FINANCING CO-OPERATIVES
Financing Co-ops
Co-ops can raise money through traditional
channels
Can also raise funds from members and
community investors
Offering Statement (analogous to prospectus)
• Must be prepared in certain cases
• Receipt from FSCO required
• Can sometimes be challenging process
Offering Statements
Offering statements are special documents that
are prepared for co-ops to use to sell securities to
members and others
• Analogous to prospectus required by OSC
Not required in certain cases
Meant to be a full, plain and continuous
disclosure of risk to investor
Need to be submitted and receipted by FSCO
before co-op can sell securities
When is an OS required?
If your co-op has less than 35 security holders, you
do not need an offering statement
More than 35, co-op can still be exempt from an OS if
co-op meets certain conditions
Two most common are:
Raising <$200,000 in total through the offering
Members contributing <$1,000/yr, <$10,000 lifetime
Conditions usually practically DO NOT apply to RE
co-ops (especially wind projects), so OS required
Why is this a problem?
Process is administrative and financial burden
FSCO has been somewhat obstructive in the past
because do not understand the sector well (or coops in general)
Business with members requirement has been
difficult to quantify, led to problems with OS
On Co-op and partners have been advocating for
changes since 2003 –progress is being made
Three ways co-operatives differ
from other businesses
1. Co-operative
Values
2. Democratic Structure
3. Allocation of Profit
Co-ops vs. Business Corporations
CO-OPERATIVES
BUSINESS CORPORATIONS
 Exist to meet needs of members
 Accountable to members
 Surplus distributed to members
 Exist to maximize ROI
 Accountable to shareholders
 Unlimited return on shareholders’
capital
 Vote based on number of shares
held
 Board represents shareholders;
director may not be shareholder
 Shares may be traded
 One member one vote
 Board represents members; 80%
of directors must be members
 Shares generally not traded
Co-ops vs. Non-Profits
CO-OPERATIVES
NON-PROFITS
 Always member controlled
 Usually member controlled
 One member one vote
 Mandated to meet the needs of
members
 Board of Directors elected from
membership 20% can be non
members
 Operate under CC Act or CU&CP
Act; with or w/out share capital
 Surplus & patronage may be
distributed to members
 Membership voting classes
 Broader mandate to the
community
 Board of Directors elected from
membership
 Operate without share capital
under Ontario Corp. Act
 Surplus kept to further goals and
objectives of organization
Opportunities by Sector
As a result of changing needs and new pressures,
there are particular sectors with growing
opportunities:
Renewable energy
Business succession from sole proprietors retiring
Transportation
Rural Infrastructure
Local and organic food
Microfinance and social finance
Long term possibility: Home and health care
Challenges
Lack of awareness can make development
difficult (esp. in emerging sectors)
Access to financing is difficult
Few co-op specific sources or programs that
support co-ops in early stages or otherwise
Dealing with conventional financial institutions
can be difficult
Ontario co-ops have unique capital process, but
can be challenging to manage
Challenges
Co-op model is viewed as alternative to the
dominant form of enterprise (shareholder
business)
Always on the outside of what the public and
government expect and are familiar with
Not the same connection to non-profit /“social
enterprise” sector as exists in other locations
Limited opportunities and success in seeking joint
support and recognition
Influences and Trends
Globalization
Growing consumer culture
Growing interest in local and organic food
Technology
Interest in corporate social responsibility and
sustainability
Go big or go home (merge, merge, merge!)
Others….?
2012 UN International Year of Co-ops
On December 18, 2009, the United Nations
General Assembly adopted a resolution
declaring 2012 the International Year of
Co-operatives, in order to highlight the
participation of co-operatives in economic
development and social innovation around the
world.
This resolution urges governments to create an
environment conducive for co-operative
development and to increase their contributions
for the overall conditions in which they operate.
Discussion
Ways in which the co-op model
contributes to job creation &
retention and fosters local
economic development
Next Steps…working together,
moving forward…
Time for Questions…
Thank you
Useful Resources
Ontario Co-operative Association
www.ontario.coop
Conseil de la coopération de l’Ontario
www.cco.coop
Canadian Co-operative Association
www.coopscanada.coop
Conseil Canadien de la Coopération
www.ccc.coop
Co-operatives Secretariat
www.agrc.gc.ca/policy/coop
CIEP Presentation March 30/11
Everything you wanted to Know about
Worker Co-ops
What is a Worker Co-op
Worker co-operatives are businesses that are owned and
democratically controlled by the members. The main purpose
of a worker co-operative is to provide employment for its
members. Each member pays a membership fee or purchases
a membership share, and has one vote regardless of how
much money they have invested in the co-op. The Co-op’s
assets are collectively owned and surplus earnings are
allocated to the workers according to policies established by
the co-op, often in proportion to hours worked by members
and with limited return on shares and member loans.
How Does It Differ from Other
Businesses?
Traditional businesses aim to make profit for the
shareholders, who receive their share of that profit according
to the amount of money they have invested in the business.
Control of the business is also based on the amount of money
invested, usually one vote per share purchased.
In a worker co-op, each member has one vote no matter how
many shares they have purchased. They all have equal say in
the way the business is run and in the decisions affecting their
everyday work lives. Members combine their skills, interests
and experiences to achieve mutual goals, such as creating jobs
for themselves, providing a community service or increasing
democracy in the workplace. Because they develop the
policies that determine the co-operative’s daily and long-term
operation, trust, communication and co-operation are vital to
the co-op’s success.
Can It Work For You?
The worker co-op idea can work for you if you have a
marketable product, start-up capital and a plan for
organization and growth. Of course you must be
prepared to work long hours and overcome the many
challenges which face all new enterprises.
Canadian WC’s
300 WC’s across Canada
14,658 Members and 10,792 employees
$474 billion in revenue generated
$325 million in assets
Worker Co-ops in the U.S.
223 firms (1% of co-op enterprises)
5,514 Members (includes PT)
2,380 non-member employees
$219 million in annual revenue (’08)
Source U of Wisconsin 2009
Examples of WC’s
- The Big Carrot
- Sumac Worker Co-op –Planet Bean
- Urban Cyclist
- Come As You Are
- Just US
- La Siembra –Cocoa Camino
International Worker Co-ops
Mondragon – founded in 1956,five members
Four main areas –Finance, Industry, Retail, Knowledge
Top Basque business Group, 7th in Spain
Annual Revenue $23 Billion
92,773 employees 83% members
Voted MAKE –Most Admired Knowledge Enterprises top
10 in Europe for 2009
International WC’s -continued
Italy –Region of Emilia Romagna
4 million people -2/3rds are members of co-ops, 10%
employed by co-ops
7,500+ Co-ops of which 2/3 are WCs
30-40% of GDP
High standard of living
1992 law passed 3% of profits to Co-op fund
Four national apex co-op organizations
Constitution of the Italian
Republic (1947), Article 45:
"The Republic recognizes the social function of
co-operation with a mutual and non-profit
character. The law promotes and favors its
growth by the most suitable means and ensures,
by appropriate controls, that its character and
purposes are respected.”