Presentation on theme: "Co-ops 101 & 202 CED Workshop, June 8 th, 2011 Peter Cameron, Co-op Development Manager."— Presentation transcript:
Co-ops 101 & 202 CED Workshop, June 8 th, 2011 Peter Cameron, Co-op Development Manager
Your Presenter Peter Cameron Co-op Development Manager Ontario Co-operative Association 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
WHAT IS A CO-OP? (it’s not just a work placement in school)
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.
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 C O - OPS ; 1900 L OCATIONS ; 400 C OMMUNITIES
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
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 Housing, 587 or 45%
A BRIEF HISTORY OF CO-OPS
Where do Co-ops come from? Co-ops have strong roots in both 19 th 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
CO-OPS 202 The what, why and how of co-ops:
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 Co- operative Corporations Act. You should be aware that many co-operatives are regulated under additional pieces of legislation. Day care co- operatives 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) Toll free: Fax: (416) 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-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 co- ops 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 2. Democratic Structure 1. Co-operative Values 3. Allocation of Profit
Co-ops vs. Business Corporations CO-OPERATIVES Exist to meet needs of members Accountable to members Surplus distributed to members One member one vote Board represents members; 80% of directors must be members Shares generally not traded BUSINESS CORPORATIONS 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
Co-ops vs. Non-Profits CO-OPERATIVES Always 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 NON-PROFITS Usually member controlled 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 Conseil de la coopération de l’Ontario Canadian Co-operative Association Conseil Canadien de la Coopération Co-operatives Secretariat
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, 7 th 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.”