A look back at the International Year of Co-operatives

You’d never know it from the pages of business press, but the corporate model isn’t the only way to do business. The fact is that some of Canada’s most successful and innovative companies are neither share capital corporations nor private firms. They are co-operatives. Co-operatives like Mountain Equipment Co-op, Federated Co-operatives, Gay-Lea Foods, The Co-operators as well as your local credit union or caisse populaire.

To recognize the important but often unsung achievements of co-operative enterprises, the United Nations designated 2012 as the International Year of Co-operatives. In Canada, credit unions and co-operatives organized events over the year to celebrate and raise awareness. The year also produced in some lasting initiatives to strengthen new and existing co-operatives.

What distinguishes a co-operative from other companies is that ownership and control are shared equally and democratically by members, instead of being concentrated in the hands of a few. Sure, co-operatives have boards of directors who plan how business gets done, but these are elected by and accountable to every member equally. It’s impossible for one or two owners to gobble up shares and take control of a co-operative. Nor is there any incentive to do this, since profits generated by the co-operative are returned to members as dividends based on how often they use the co-op, are retained to fund future growth, or used to help the larger community.

Broadly controlled and focused on member service instead of profit maximization, the co-operative model is for businesses with an altogether different sense of their “how” and “why”.

One of the remarkable accomplishments of the year was a historic parliamentary study of the state of the co-operative model in Canada. The House of Commons Special Committee on Co-operatives issued recommendations based on testimony they heard from co-operatives in housing, finance, agriculture, retail and other sectors. The committee called on the federal government find ways to help co-operatives with the challenges of capitalization, including allowing Canadians to invest a larger share of their RRSP funds in co-operatives.

The government implemented a few recommendations almost immediately. Lending programs were changed to allow federally funded housing co-ops to pursue private financing from credit unions for needed renovations. Plus, the government also agreed to consolidate responsibility for the co-operative sector from the department of agriculture to Industry Canada.

In 2012, the federal government also enacted historic legislation to allow credit unions to incorporate at the federal level. Under these new rules, credit unions – full-service co-operative financial institutions – which had generally been unable to operate outside their province of incorporation can now form federal credit unions to operate anywhere in the country; a development which has the potential to dramatically alter the landscape of financial services for consumers and small business.

Credit unions and co-operatives hosted to a variety of gatherings last year, such as the Co-operating to Build a Better West Conference that I had the pleasure to attend in Saskatoon. But the central event of the year was the International Summit of Co-operatives sponsored by the Desjardins Group. So successful was this gathering of dignitaries, scholars and leaders of co-operative enterprises in Quebec City, that organizers have turned it into a regular biennial conference – wryly dubbed the Davos of co-operatives.

The International Year of Co-operatives brought the co-operatives together and boosted awareness of the model as a mainstream and attractive way to structure business. Two examples help demonstrate the legacy of the year.

In 2012, the co-operative sector worked to found a National Co-operative Investment Fund to help existing and new co-operatives obtain patient capital. Expected to launch this year, the fund will help co-operatives overcome institutional and structural obstacles to capital, in addition to what they can already obtain from credit unions.

Similarly, Manitoba credit unions and co-operatives partnered with the University of Winnipeg business school to establish the country’s first Chair in Co-operative Enterprises to strengthen the co-op movement and support socially responsible entrepreneurs.

In Canada and internationally, people celebrated the history of the global co-operative movement and reflected – given the recent dramatic examples of corporate enterprises failing to meet societal expectations – on the current relevance of this form of enterprise. The legacy of the International Year of Co-operatives will be measured not today, but in the years ahead, as more people look to the co-operative model to meet their needs for products and services, as well as our collective need for a more democratic and socially-oriented economy.

Image credit: http://www.flickr.com/photos/dullhunk/7403757590/

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