Publications

Co-operatives and the Social Economy

Prepared by
The Co-operatives Secretariat
Government of Canada

March 2004

Overview of co-operatives in Canada
Social economy defined
Co-operatives and the social economy
Conclusion

Overview of co-operatives in Canada

Types of Co-operatives: There are four key types of co-operatives, defined by the nature of the members' relationship to the organization.

Consumer co-ops are found in the financial services, food retail, housing, child care, health, community development, funeral, utilities and transportation sector. The members of a consumer co-op purchase goods or services from the co-op.
Producer co-ops include agricultural marketing, fishery, and crafts co-ops in which members produce a good or service.
Worker co-ops provide employment for their members, and operate in all sectors of the economy. Canada's largest worker co-operatives operate in Québec's forestry and ambulance service sectors. In a worker co-op, the members are the workers.
Multi-stakeholder co-ops are a new form of co-op, often formed to provide health, home care, or other community services. Membership includes different categories of partners, such as service users, employees and community organizations.

Co-operatives in the Canadian economy:

9,271 co-ops employ over 160,000 Canadians. Producer co-operatives support the livelihood of another half million Canadians, mainly in rural communities.
4 out of every 10 Canadians are members of at least one co-op. In Québec 70% of the population are members, while in Saskatchewan 56% of the population are members.
70,000 volunteers contribute to the success of co-operative enterprises, gaining leadership and management skills through their positions on boards of directors.
Canada's co-operatives hold more than $160 billion in assets; and non-financial co-operatives have annual total revenues of $29.5 billion.
Co-operatives have a higher survival rate than other forms of business. A study published by the Quebec Ministry of Industry and Commerce entitled Survival Rate of Co-operatives in Quebec shows that the long-term survival rate of co-operative enterprises is almost twice that of investor-owned companies.
Co-operatives show a higher growth rate of employment than that of the Canadian economy in general. While co-operatives employed 25 per cent more people in 2001 than in 1991, employment in Canada increased by only 13 per cent over the same period.

Social economy defined

There appears to be no absolute definition of social economy, yet there is general agreement on its key features, based on the types of enterprise that comprise this sector. A common working definition speaks of social economy in these terms:

The social economy is made up of foundations, co-operatives, mutual societies and associations that pursue activities that are both social and economic in nature.
Social economy organizations pursue social objectives that are intended to meet the needs of members or a community. Any commercial activity on the part of a social economy organization is intended to serve social ends through the reinvestment of surpluses.
The social economy is characterized by a democratic organizational structure that is based on the participation of all members in decision making.
Social economy organizations rely significantly on paid work and emphasize job creation, but they are also supported by important volunteer resources, particularly in the delivery of services.

In the Prime Minister's response to the Speech from the Throne on February 3, 2004, he spoke of social economy as “the efforts of a million Canadians working in the voluntary sector... and the efforts of the people who are applying entrepreneurial creativity - not for profit, but rather to pursue social and environmental goals.”

The Hon. Eleni Bakopanos - Parliamentary Secretary to the Minister of HRSD, with special emphasis on Social Economy - elaborated on the definition of social economy in this way: “The concept is based on values of sustainable development, equal opportunity, the inclusion of disadvantaged people and civil society. The social economy is rooted in entrepreneurship and independent community action...”

Le Chantier de l'économie sociale - the Quebec Task Force on Social Economy - works with the following definition, again characterized by the enterprises that make up the social economy:

These are association-based economic initiatives founded on the values of solidarity, autonomy and citizenship, embodied in the following principles:

a primary goal of service to members or the community rather than accumulating profit;
autonomous management, as distinguished from public programs;
democratic decision-making process;
primacy of people and work over capital and redistribution of profit; and
operations based on the principles of participation, empowerment, and individual and collective accountability.

(From: “A Review of the Theory and Practice of Social Economy in Canada,” p. 5. William Ninacs, August 2002 )

Co-operatives and the social economy

There is some debate as to whether all, or just some, co-operatives are part of the social economy. For example, in his review of social economy theory, William Ninacs distinguishes between an ‘old social economy' model which includes all co-operatives; and a ‘new social economy' model, which tends to include non-profit co-operatives in housing, daycare and health-care, but not co-operatives that are active in competitive markets.

One can certainly argue that all co-operatives combine social and economic objectives, since each co-op is designed to serve the common needs of its members within a community. Sometimes the need is for housing or health care. Other times members need their co-op for access to products or services, employment, or a sustainable livelihood - often in Canada's rural communities. In all cases, the democratic structure of co-operatives gives priority to people, not capital. The system of one member - one vote is a key instrument to serving the common good, and the end result of co-operation is almost always citizen empowerment and member and community well-being.

The seven principles that govern co-operatives also help ensure that they serve social as well as economic objectives:

voluntary and open membership;
democratic member control;
member economic participation;
autonomy and independence;
education, training and information;
co-operation among co-operatives; and
concern for the community.

The following sections will explore the wide range of ways in which Canada's co-operatives contribute to the social economy - providing examples for others who seek creative solutions to social challenges, and demonstrating the potential for innovation and growth in use of the co-operative model to meet the social and economic needs of Canadians.

Co-operatives Serving Community Needs

The co-operatives outlined here are generally described as ‘social' co-operatives rather than business co-operatives, since they tend to operate outside market forces. Many of them work in tandem with public funding programs for health, housing and child care, and they have proved to offer a very cost-effective model of service delivery, while providing significant additional benefits to the members they serve. Other social co-operatives operate on a smaller community scale, driven solely by the collective resources of their members.

Housing Co-operatives

Over 2,000 non-profit housing co-operatives provide good quality housing to over a quarter million Canadians, with the highest concentrations in Québec, Ontario and British Columbia. Because of their democratic structure these co-operatives provide much more than a roof over people's heads. They provide a community of belonging and mutual support - often to socially marginalized groups - and an opportunity for all members to create the type of community they want and need. Many housing co-operatives offer innovative health, education, social and employment programs for their members, demonstrating the potential contained within such communities to meet a wide range of social needs for Canadians - applicable to immigrant, aboriginal, senior and other groups.

The Canada Mortgage and Housing Corporation (CMHC) financed co-operative housing development for almost thirty years, but cancelled this program in 1993. It continues to provide rental subsidies for low-income residents within these mixed income co-operatives, but provides no financing for new development. With the implementation of federal-provincial Affordable Housing Agreements in 2002, many provinces are now supporting new affordable housing by providing capital subsidies to developers to reduce the cost of building new rental housing. This approach does not allow room for the traditional model of social co-op housing - where members collectively own and control the co-operative while they live there, but do not build personal equity in the enterprise. However, these agreements may offer potential for equity model housing co-operatives, which best serve those of moderate income levels. Of all the Canadian provinces, it appears that Québec offers the most consistent support to co-operative housing development.

Child Care Co-operatives

Canada's approximately 500 child care and nursery co-operatives empower parents and families by giving them a say in the care of their children and an opportunity to help shape the co-operative through involvement in committees, the board of directors, and operational activities. Parents also gain new skills and knowledge of early childhood development through education programs, and they often build informal family and social support networks with other members of the co-operative. The bottom line is about quality care for children, delivered in a cost-effective way.

Ontario, Saskatchewan and Manitoba have the largest concentration of child care co-operatives, with almost 400. Many of these co-operatives arose through a period of development in the 1970s and 1980s. Today, they form an important part of the early childhood education sector, providing child care for almost 30,000 families. As non-profit organizations, the majority of their operating revenue pays salaries and wages, which is more than $40 million annually.

Health Co-operatives

Canada's health co-operatives are serving communities in a number of important ways:

Seven co-operative health clinics operate in Canadian communities, with the majority in Saskatchewan. They form part of the network of ‘community health centers' that provide a holistic approach to care based on the needs of the communities they serve. Their focus on health education, promotion and disease prevention often alleviates the need for more expensive medial care, and their democratic structure ensures that they are accountable to the members they serve. This model of health care has proved to be cost effective and responsive to community needs, and in inner-city communities these clinics play an important role in integrating the socially excluded into the broader social system.
Another 25 co-operatives provide health promotion and prevention services to their members and communities through a range of programs and facilities. Examples include a seniors residence and care facility in Prince Edward Island; a health promotion network in Nova Scotia; a Diabetes Complications Prevention Co-operative in Ontario; and various forms of co-operative health facilities in Québec communities.
Immigrant groups in at least two Canadian cities have established health co-operatives as a way to provide culturally appropriate services to their members. For example, the Rainbow Community Health Co-operative serves the South Asian community of Surrey-Delta, BC., providing the first point of entry to the health care system, and acting as a center for information and referral. Specific needs within the community led to prevention programs related to substance abuse, AIDS education, cardio-vascular and cancer prevention, mental health and family and youth services.
One of Quebec's six ambulance / worker co-operatives provides services to at least 70 municipalities, and it is said to consistently outperform both government and privately owned ambulance services in quality and cost of care.
Home care co-operatives are also a significant element of Québec health care, with 37 of them providing quality care to seniors in their own homes. Communities in at least three other provinces are now setting up home care co-operatives.

Community Service & Development Co-operatives

These co-operatives take many shapes and forms, depending on the specific purpose they are designed to serve. Here are some examples:

Community service co-operatives typically set up to serve a diverse group of social agencies, which all share common needs for supplies, services, technology, human resources, training, etc. The United Community Service Co-operative in British Columbia was the first example in Canada. Its 70 member agencies provide essential community services such as women's shelters, child and family services, literacy and training support, to name a few. The shared service co-operative allows these agencies to reduce costs through group purchasing, capital pooling, and other cost-saving measures. The co-operative also provides a means for information sharing, networking and a united voice in negotiations with government and other agencies.
Community development co-operatives operate in a number of provinces, with most based in Saskatchewan and Québec. They foster local leadership, enable grassroots participation in problem solving and innovation, and promote the effective development of local communities.
Nearly 300 recreation co-operatives operate across Canada, with the largest concentration in Saskatchewan. They are engaged in various activities, including the management of community centres, skating and curling rinks, golf courses, campgrounds and swimming pools. One group of co-op members in British Columbia even shares the use of sailboats. A combination of member share capital and volunteer labor are the essential ingredients to helping these members meet their recreational needs.
A new ‘community co-operative model' emerged in the Muskoka region of rural Ontario in recent years, following the amalgamation of municipalities. It is a type of multi-purpose, umbrella co-op that aims for an integrated approach to social and economic development by bringing together the many groups within a community to create local solutions, as well as to form partnerships with other organizations, political bodies, and funding agencies. This community co-operative approach was intended to give smaller communities a voice within the new municipal framework, and to prevent issues from falling through the cracks, while avoiding costly duplication of services and resources.

Co-operatives Serving Target Populations

The following examples look at some new areas of opportunity for co-operative development, as Canadians explore ways to meet the social and economic challenges of different social groups.

Aboriginal Communities: Canada's aboriginal communities face a host of social and economic challenges, producing quality of life conditions that were described as ‘shameful' in the recent Speech from the Throne. Health, education, governance, and urban aboriginal conditions are a few of the issues to be addressed if First Nations communities are to share equally in Canada's good fortune.

Based on the success of Canada's northern aboriginal co-operatives, and several urban initiatives, there is seen to be strong potential for co-operatives to help improve the quality of life in aboriginal communities, both on reserve and in urban settings. As seen in the north, the democratic nature of co-operatives can serve as an important building block for self-government, while providing a tool for individual and community empowerment and ensuring accountability to members.

A process of research and dialogue has begun between the co-operative sector and First Nations leaders. Discussions are in the early stages, but there is a clear will to explore how the co-operative model can help improve health care, child care, housing and economic opportunities in aboriginal communities.

Immigrant Communities: Immigrant groups face a wide range of challenges as they attempt to integrate into Canadian society. Challenges include transferring professional credentials to Canadian workplaces, and preparing children, youth and seniors for the realities of Canadian society. Too often, these issues are complicated by poverty, language barriers, a lack of culturally sensitive support systems, and limited access to organizational structures that allow these communities to help themselves. Yet, many immigrant groups are demonstrating a strong desire to create their own solutions to challenges, and they are showing interest in the co-operative model as a way to achieve their goals. For example, an African community in Toronto is looking at how a co-operative can help address the needs of their seniors and youth, and foster inter-generational transfer of knowledge and culture for the benefit of all members of their community. A group of landed immigrant families from South America, already familiar with the co-operative model of self-help, is using it to meet their social and economic needs in Canada. Numerous opportunities exist in this area as immigrant groups begin to identify their specific needs and explore ways to meet those needs through a process of mutual self-help.

Disabled Groups: Organizations serving disabled groups are using the supported worker co-operative model as one way to help meet their clients' need for training, employment and general integration into society. In Ontario and British Columbia, for example, disabled workers are becoming owners and stakeholders in manufacturing and service enterprises, while other stakeholder groups offer support to the effort. As in all co-operatives, the democratic process empowers these members, allowing them to create an enterprise that is flexible enough to meet their needs, while providing unique opportunities for personal growth and skill development through member ownership and control.

Low-Income Communities: Organizations like Quint Development Corporation in Saskatoon have demonstrated some of the ways to address the needs of inner-city neighbourhoods - using innovative social financing models to create housing and neighbourhood improvement co-operatives, and other means of opportunity for low-income residents. Their approach is based on partnership with credit unions and other CED organizations, and relies heavily on the sweat equity of members who are able to help themselves through co-operation. Neechi Foods Co-operative in Winnipeg is another example of an inner city aboriginal community meeting needs for employment, family nutrition, education, and other economic and social opportunity within the context of a co-operative. In Ottawa, the Centretown Laundry Co-op provides a chance for clients with psychiatric problems to access affordable laundry services, as well as build confidence and skills by working in the co-op's contract laundry service for community clients.

Youth Services: The Core Neighbourhood Youth Co-op in Saskatoon provides an excellent example of a training / work-based centre for inner city at-risk youth. It offers learning and earning opportunities in the context of a gardening and recycling business, and it empowers its young members in more ways than could ever be measured by their weekly pay check. In Quebec, a fairly new program has seen the launch of almost 150 youth service co-operatives, where young people between the ages of 14 and 17 help create their own enterprises from top to bottom - from decision-making structures to the actual delivery of services to their community. It is a valuable and intensive exercise in collective entrepreneurship that provides participants with life-long skills in democracy, business management and the working world.

Co-operatives Serving People in the Market Economy

The social objectives of some of today's larger co-operatives may not be obvious to the casual observer, since these organizations appear to have blended into the general landscape of Canada's business success stories. Yet, theirs is very much a case of success driven by the needs of people. The competitive edge of these co-operatives was shaped by the needs of Canadians who otherwise were not well served by the market economy. Their entrepreneurial creativity was born of necessity, and it has provided the means to serve hundreds of thousands of members - especially in rural Canada - who collectively can enjoy equal opportunity in Canadian society.

Canada's business co-operatives have typically formed in response to social need and disadvantage that result from imbalances in the market economy. They have provided one of the most effective means to promote fair trade in the marketplace, and have empowered ordinary people in the face of economic disparity and injustice. Within the free market economy, co-operatives serve the interests of people, not capital, and they provide communities an important tool to help themselves. Here are some specific roles that co-operatives play in the marketplace, while serving the interests of people and communities:

Correcting Market Imbalances: Co-operatives have been used to correct imbalances such as a monopoly or unfair pricing in the marketplace. For example, the consumer co-operatives in Canada's Arctic communities were in large part a response to the monopoly of the Hudson's Bay Company. The community owned co-operatives not only gave members some control over prices; they gave them control over any surplus generated by the enterprise, which members re-invested in new services to the community.
Filling Market Gaps: Co-operatives fill essential gaps in the marketplace and provide goods and services to thousands of hard-to-reach Canadians, often when other forms of enterprise don't find it profitable enough to do so. Many of Canada's credit unions arose for this reason - to provide credit to farmers and other low-income Canadians that the banks refused to serve. Today, credit unions are the only financial service provider in over 900 Canadian communities, and they continue to develop new products and services for disadvantaged groups. Together with consumer and farm supply co-operatives, these types of enterprises are essential to the sustainability of many small communities.
Empowering the Little Guys: Co-operatives have provided a key bargaining tool for small producers, allowing them a means to compete in the marketplace. As individuals these producers were powerless in the face of market forces, but collectively they were able to build successful marketing enterprises, many of which are leaders in their fields today. Producer and marketing co-operatives continue to serve over a half million Canadians - in agriculture, the fishery, forestry, and arts and crafts industries. They provide sustainable livelihoods, and help maintain Canada's rich cultural landscape.

Here are further examples of how co-operatives contribute to social objectives and foster healthy communities, while providing economic opportunities for Canadians.

Credit Unions and Caisses Populaires: These community-based financial institutions provide services to 10 million members in hundreds of Canadian communities, both urban and rural. They provide 60,000 jobs, and they are significant contributors to the well-being of their communities - providing staff volunteers and millions of dollars in cash to support every type of community effort across Canada. More and more credit unions are actively involved in community and social enterprise development - supporting innovative projects in housing and business development for disadvantaged groups. VanCity Credit Union in Vancouver is a recognized leader in corporate social responsibility, and Canada's leading example of how co-operatives can invest their profits for social purposes. This credit union invests millions in social housing development, provides numerous programs and services for immigrants and disabled groups, and invests substantially in social and environmental projects. One of VanCity's latest initiatives is the annual $1 million VanCity Award, used in 2002 to create a 25-km greenway that provides a safe travel route for walkers and bicyclists in the lower mainland area. VanCity's members vote for the recipient of the award, and in 2003 they voted to construct a safe house for sex trade workers in Vancouver's East Side.
Northern Aboriginal Co-operatives: Since 1960, co-operatives have been an important social and economic development tool for aboriginal communities in northern Canada. The co-ops began as a way to market the arts and crafts of local producers, and by the 1970s they were also providing essential goods and services to their communities. Today, these co-operatives provide food supplies, fuel delivery, housing, hotel, cable television, internet and other services in the most remote Canadian communities in Nunavut, the Northwest Territories and northern Québec. Their success has hinged largely on the formation of two co-operative federations - owned by the community co-operatives - which create economies of scale and management systems that make the entire system viable. The federations also market the work of northern artists and craftspeople throughout the world, and in the western territories, they are helping build an Arctic tourism industry by promoting Inns North - the largest aboriginal-owned chain of hotels in North America. The 36 co-operatives in the western Arctic region provide employment to 700 people, and support the livelihood of hundreds of producers in the region.
Worker Co-operatives: These co-operatives address a fundamental need for more than 12,000 Canadians - the need for employment. It is a creative form of entrepreneurship that allows economically marginalized people to pool their skills and talents to create a viable business enterprise. Members not only gain jobs. In the case of smaller co-operatives, they also gain skills of personal empowerment and leadership by learning to jointly manage and govern the enterprise. The level of job satisfaction and quality of work in these co-operatives tends to be much higher than the norm, given the members' pride of ownership.
Producer Co-operatives: Thousands of Canada's artisans, fishers, agricultural producers and others could not pursue their livelihood without membership in a co-operative. Producer co-operatives allow these people to maintain their rural lifestyles, pursue meaningful livelihoods, and contribute to Canada's rich cultural landscape, while effectively competing in a global economy.
Arts and Culture Co-operatives: At least 30 arts groups across Canada use the co-operative model as a way to pursue their art. Some provide a marketing outlet for their members' art products. Others develop the means for their members to create art - such as film-makers co-ops, art schools and others that provide shared assets such as equipment and facilities.
Other Examples of Co-operative Social Contribution: Canada's business co-operatives invest their profits in a number of ways. First and foremost, they invest in the co-operative to ensure its continued viability and to expand services for the benefit of members. Sometimes they return a share of the profits to members, which creates local wealth and contributes to overall community well-being. Without fail, they contribute a large share of profit to the communities they serve - investing substantially in youth, community health and recreation, environmental projects, and meeting the needs of many disadvantaged groups. Here are some further examples of how Canada's co-operatives exercise the 7th co-operative principle, which is Concern for Community:
- The Co-operators Insurance Group invests at least $200,000 annually in community and co-operative development projects through its CED program funds. They are also a leading investor in public safety education, especially for children, youth and seniors.
- Mountain Equipment Co-op grants at least $500,000 a year to environmental projects, invests heavily in creating environmentally friendly buildings and healthy workplaces for its employees, ensures fair labor practices and living wages in all its manufacturing supply facilities, and provides top-notch service and supports to Canadian outdoor lovers.
- Co-op Atlantic in eastern Canada has helped create a major fundraising program to support emotionally and physically challenged children in the Atlantic region. Called GIFT Atlantic, they have gained the co-operation of the entire grocery industry in the area to provide a half-million dollars a year to benefit disadvantaged children.

Co-operatives Creating Strong Community Foundations

Co-operatives worldwide are committed to the concept of mutual self-help. This makes them natural tools for social and economic development, and provides significant additional benefit to communities and social systems. In recent years, the United Nations and other leading world institutions have recognized the role and significance of co-operatives within a global economy, and now actively promote their development. Here is how co-operatives are seen to create strong community foundations and contribute to the larger social landscape:

Building Social Capital and Promoting Democracy:

Co-operatives promote citizen engagement, social cohesion and trust by providing ordinary citizens a chance to influence the decisions that affect their lives. The democratic process allows for inclusion and empowerment of all social groups, providing an equal say and equal opportunity, and often bringing marginalized people into the mainstream of a nation's economic and political life.
Co-operatives provide informal schools of entrepreneurship, offering business and leadership training for groups who would otherwise have limited access to such opportunity. Through the democratic process, members learn about good governance and accountability. All of these skills become general assets to the community, since members are inclined to exercise their new skills and knowledge in other areas of social endeavor.
Co-operatives have the capacity to reduce social conflict by providing a means to equitably distribute resources, decision-making power and economic benefits.

Promoting Sustainable Communities:

Co-operatives provide essential goods and services in communities where other forms of enterprise will not operate because the profit margin is too low. Credit unions, co-op stores, and farm supply co-operatives often form the life blood of many small communities.
Co-operatives generate and retain local wealth. Sometimes they return a portion of profits to their members. They invest profits into the well-being of their communities, and they always re-invest in the co-operative to ensure quality services to their members.
Many co-operatives in small communities work through co-op federations and networks, which allows them to meet local needs while achieving economies of scale and improved operating efficiencies. This form of entrepreneurial creativity allows co-operatives to compete in the marketplace and provide local alternatives to foreign-owned trans-nationals.
Co-operative businesses are self-sufficient, community-based enterprises that provide quality employment and economic opportunities for local people. They are rarely susceptible to pull-out or take-over, since they are guided by the interests of local stakeholders, not outside investors.

Conclusion

After 100 years of history in Canada, the co-operative model of enterprise has clearly proven its worth as an instrument of social, technologic and economic innovation. With almost 10 million Canadians now members of co-operatives, it is also a form of enterprise that people know and trust.
The greatest strength of the co-operative model may well be its adaptability to meeting the needs of people, complete with a governance structure that ensures member accountability. The co-op model is not a static entity, nor a thing of the past, but a flexible tool that continues to evolve in response to the needs of people and communities. Co-operatives were first used by farmers and rural communities, but as urban Canada grew, so did co-operative solutions to the needs and challenges of urban people.

This document has illustrated today's innovative uses of the co-operative model in addressing some of the toughest social and economic challenges in our communities. It shows co-operatives as a key component of Canada's social economy - with a long and successful history, a clear track record in social innovation, and vast potential yet to provide creative solutions to Canada's social challenges.

Further Research Underway
Many of the innovations outlined in this paper are the result of local efforts across Canada, not all of which are well documented. However, efforts are underway to ensure that co-operative success stories and best practices are readily available to other Canadians who wish to replicate or adapt these and other types of initiatives.

The Government of Canada's Co-operative Development Initiative (CDI) is a new program supporting innovation and growth of co-operatives. It is administered by the Co-operatives Secretariat, which also plays a key role in co-operative research and knowledge sharing. As CDI innovation and research projects unfold across Canada, the key learnings and best practices resulting from these projects will be documented for the benefit of all Canadians.

The Co-operatives Secretariat is also undertaking a larger research strategy, to address knowledge gaps relating to the contribution of co-operatives, including social economy initiatives, and to make existing research more widely available to Canadian innovators.

For More Information
To learn more about co-operatives in Canada, please visit the following websites:

Co-operatives Secretariat

Canadian Co-operative Association
(see Co-op Links to provincial and sector associations, and co-op education resources)

Le Conseil Canadien de la Coopération (in French only)

British Columbia Institute of Co-operative Studies

Centre for the Study of Co-operatives, University of Saskatchewan

Institut de recherche et d'énseignement pour les coopératives de l'Université de Sherbrooke (IRECUS) (in French only)

March 16, 2004