Co-operative Impact on the CommunityAnalysis of the co-operative impact on community well-being.
Co-operative Impact on the Community
Check back in summer 2015 for summaries of the projects, as well as a collection of other Canadian research on co-operative community impacts.
Co-operatives for Sustainable Communities (Gordon Nembhard, Hammond Ketilson)
Several chapters of Co-operatives for Sustainable Communities (the free MCDRN e-book) focus specifically on the measurement of community impact. These chapters include reviews of recent research on the impacts of co-ops on their communities. We highlight some of the most interesting findings below.
Co-ops help develop human and social capital in their communities
Co-op members develop general business and industry-specific skills, as well as leadership skills and team building. In participating in “joint action by a social group sharing a collective identity” (Borzaga and Galera 2012, 11; also see Gordon Nembhard 2014), co-operative members deepened their ties to the community while gaining valuable experience. This is particularly true for youth who are involved in co-ops, who gain confidence, general and technical skills, motivation to learn, and incentive to go on to pursue post-secondary educations. Gordon Nembhard (2004b, 2008c) (ch.11)
Co-operative businesses often help create other co-operatives by donating money to co-op revolving loan funds, and/or investing in co-operative development. (Nembhard 167 ch11)
Members of co-operatives form stronger connections to their communities. The work of running the co-op—attending meetings, making financial decisions, solving problems together—builds trust, social connections, the ability to work in teams, and more collectivist values. Borzaga and Galera (2012, 11), Fulton and Hammond Ketilson (1992, 36.)
Co-ops help to stabilize local communities
Co-operatives act as business anchors in a community—distributing, recycling, and multiplying local expertise and capital. Most co-operatives are owned and controlled by local residents, and their explicit mission is to keep funding, distribution of benefits, responsibility and accountability in local users’ hands. As a result, their values and organizational structure allow them to respond more effectively/appropriately to local social and economic problems, promoting community growth instead of investor profit. (Zeuli, Freshwater, Markley, and Barkley 2003a, 1).
Day-to-day use of co-operatives have a large impact on the well-being of the community. For every $1,000 spent at a US food co-op, $1,606 goes to the local economy — translating to 17 percent more money recirculating in the immediate community (Yes! Magazine 2013, 23). (ch. 11).
Co-operatives ‘ensure the continued economic existence of smaller communities’
Fulton and Hammond Ketilson find that “co-operatives play a critical role ensuring the continued economic existence of most of the smaller communities” in Saskatchewan by providing goods and services at competitive rates, and by ensuring that local businesses are managed with community interests in mind. (1992, 36). (ch. 11). By pooling resources or buying supplies together co-operatives allow for business that typically require a larger consumer base to exist in many smaller communities.
Different set ups of rural/small town co-operatives
- Credit unions are more likely to provide loans to develop small community business.
- If a community values a service such as day care or farmer’s markets, but does not produce enough demand to provoke entrepreneurial interest, they can create a co-operative to ensure its existence despite potentially low revenues on the business itself. These types of co-operatives create systems for growth elsewhere in the community by allowing parents to work or giving a space for farmers to sell their goods.
- Co-operative federations can lower costs of services by being able to pool resources with other industry in the area in areas of overlap
In a survey performed by Bhuyan, Leistritz, and Cobia (1998), of 162 non-agricultural co-operatives, 44 percent of the respondents said they could not have opened their business had it not been organized as a co-operative. These factors allow for more diverse services to be provided to communities that may not otherwise have private interest or public support to establish them.
Co-operative businesses are more financially stable than corporations.Williams (2007) cites World Council of Credit Unions data that demonstrate that only about 10 percent of cooperatives fail after the first year, compared to 60 to 80 percent of traditional corporations.In Alberta conventional business have a survival rate of 35% which doesn’t hold up to 92.1% of co-operatives. (Stringham, Richard; Lee, Celia. Co-op Survival Rates in Alberta, ACCA, 2011 p.10) In Quebec 62% of co-operatives survive the first 5 years (compared to 35% of other businesses) and 44% survive 10 (compared to 20%) (Report by the Ministry of Economic Development. Innovation and Export in Québec: Survival Rate of Co-operatives in Québec, 2008)
Generate jobs and income for marginalized residents, allowing them to accumulate assets
Co-op structures can be particularly supportive for racially marginalized or immigrant entrepreneurs. Enterprises owned by minority groups that are systematically underfunded and face competition from hostile white businessmen and financiers can remain viable through the support from co-op members and their immediate community. (Gordon Nembhard 2014).
Because co-operatives are owned and controlled by their members, and their explicit mission is to keep responsibility and distribution of benefits in members’ hands, co-ops can help support economic independence from mainstream society if necessary, which can be particularly important for people marginalized by race, gender, language, etc. (Gordon Nembhard 2004a, 2014). (ch. 11)
In the past several decades between 25-45% of new immigrants workers were considered to be low-income, which is nearly 25% higher than that of Canadian born citizens.
Worker cooperatives and other employee-owned enterprises generally pay better than local prevailing wages (with profit sharing, bonuses and dividends) and tend to offer better benefits than conventional companies. This leads to greater economic security and greater possibility for wealth creation among its members. (Much of this comes from Gordon Nembhard, 2008a; also see Gordon Nembhard 2013 and 2014.) (ch. 11).
New Co-operative Development in Canada (Duguid, Tarhan, Vieta)
In the project New Co-operative Development in Canada, Fiona Duguid, Mumtaz Derya Tarhan and Marcelo Vieta reviewed the experiences of recently incorporated non-financial Canadian co-operatives.
The researchers looked, in particular, at how these co-ops made use of the co-operative model to meet their members’ and communities’ social, cultural, environmental and economic needs. They also looked at innovative approaches these co-ops took to overcome challenges, in order to offer their members and communities new and better ways of meeting their needs.
The report found that most new co-ops in Canada are strongly driven by broader social objectives rather than being primarily or exclusively focused on the interests of a small group of like-minded members. Co-operative founders and members identified services lacking in their communities and this drove the development of their organizations.
“Really making a difference in people’s lives [is core to our co-operative]. [W]e are satisfying a need in our community. We are helping people access more local food every day and we are doing this successfully and for more people all the time.” – New Co-operative Development in Canada, p.10
62% of the new co-ops surveyed were motivated by the goal of providing services such as:
The report also noted a recent tendency towards social entrepreneurship in Canada. 36% of the new co-operatives in the sample were what researchers termed “social mission-driven co-operatives”— firms that rely on some market activity to sustain their operations, but have strong social missions.
This study also found that informal learning and “learning-by-doing” was prominent in new co-operatives:
“At the beginning, many people didn’t understand at all what co-operative is — and they can now accept it and explain our co-op and our choice to others after having been here.” – New Co-operative Development in Canada, p.47
Participants observed that by working together in a collective framework, they acquired many of the skills, values, and practices needed to run a co-operative, and engage with their social missions and the community.
Co-op-to-co-op collaboration was also cited as an important resource for new co-ops with social missions. For example, Toronto’s Big Carrot worker co-op’s Carrot Cache program was a source of early funding for two other food co-ops.
Co-operatives building knowledge in the community (Hancock)
In the project The 5th Co-operative Principle in Action: Mapping Co-operative Educational Initiatives in the Canadian Co-operative Movement, Erin Hancock undertook a nationwide study of the various types of educational initiatives offered by and for the co-operative movement, to increase knowledge and skills among their stakeholders.
The fifth of the seven international co-operative principles asserts that:
“Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.”
This project sought to increase our understanding of how Canadian co-operatives are applying the 5th principle, by undertaking a preliminary scan of such initiatives across the country. In total, 55 organisations were identified offering a total of 180 initiatives.
The results of the project answered 4 important questions about how the the 5th co-operative principle is applied
1. What type of education is offered to Canadian co-operative business community (all stakeholders from members to board directors)?
2. Do co-operatives operating in certain sectors of the economy tend to offer more educational initiatives than co-operatives operating in other sectors?
|Type of Co-operative||% of total initiatives offered||% of type of co-op to total co-ops in Canada|
|Associations and federations||38%||1%|
3. Which stakeholder group is most often targeted by these initiatives?
4. How is information delivered?
|Delivery System||Number of times used||%|
|Seminars and workshops||103||49%|
|Conferences and symposia||17||8%|
|Webinars and teleconferences||17||8%|
|Retreats and camps||7||3%|
Check out the full study here.
Other Research in Canada
Organizational Form in the Social Sector
Community-Based Home support Agencies: Comparing the quality of care of cooperative and non-profit organizations – Catherine Leviten-Reid and Ann Hoyt
A study by Catherine Leviten-Reid and Ann Hoyt compared home support services provided to by 9 co-operative and 9 non-profit organizations in Quebec. Researchers asked consumers about their service satisfaction and the quality of care they received, and examined whether the organizational form (i.e. cooperative vs. non-profit) made a difference. The results indicated that greater consumer participation on the board of the organization increased overall quality ratings for consumers, and that more worker participation on the board meant greater consumer satisfaction with services.
Research showed that residents in the experimental group (who used the Eden alternative) felt less helpless, depressed and alone than those in the control group. (pg.109). By challenging hierarchical administrative structures present in institutions and encouraging resident involvement in decision making, the Eden alternative’s goal of improving quality of life appears to be a viable one. Additionally, staff at the co-operative care agencies was given greater opportunities for professional development and leadership (p.109)
However, overall, cooperative home support services were no more highly rated in terms of consumer quality or satisfaction than non-profits.
Organizational Form, Parental Involvement, and quality of care in child day care centers – Catherine Leviten-Reid
This study by Catherine Leviten-Reid compared cooperative child day care centers to for-profit and non-profit centers, and asked whether organizational form made a difference in parental involvement in operations, governance, or in quality of care. Findings show that parents at cooperative centers are more involved in the center’s operations (such as fundraising, physical care of the center, and social events) than in for-profits or non-profits. Parent control of the board—which is more likely to happen in cooperatives—predicted the quality of care provided. The researchers commented that the transparency that comes from key stakeholders predominating in decision making ensures that childcare centers are focused on producing high-quality services for families instead of making financial or operational decisions that may benefit managers or owners.
This research points out that the inherent values of co-operatives business are closely aligned with the necessary characteristics for supporting solutions to climate change. It highlights progressive co-operatives that are making strides towards sustainable operations. It also provides recommendations and strategies for governments to use a co-operative model to pursue environmental changes more effectively (p 13). This piece acts as both an informative way to see the overlap of co-operatives and environmental issues as well as a call-to-action and guideline for those that want to pursue this model.
Including Women and Other Under-Represented Groups in Co-operatives
The co-operative sector has the potential to bridge the boundaries to people from marginalized group such as Aboriginal peoples and people with disabilities.
Here are two success stories of co-operatives bridging community boundaries from the paper “Networking diversity: including women and other underrepresented groups in co-operatives” by Myfanwy Van Vliet.
Considering the large, and increasing, Aboriginal population in Canada, it is vital that co-operatives promote diversity by involving Aboriginal peoples in their organization.
Aboriginal Co-operatives in Canada: Current Situation and Potential for Growth (2001), reveals that Aboriginal co-operatives are concentrated primarily in the retail sector and are also found in the housing, credit union, and fisheries sectors, but not a gap that exists in social services such as health care and child care.
Like other co-ops, Aboriginal co-ops have developed from a need in the community. The Kahnawake First Nation, near Montreal, where the traditional banks were not meeting the needs of local residents, is one example. Hammond Ketilson and MacPherson report that the banks had “little or no awareness of Aboriginal laws and culture, and had been reluctant to do business in the community” (39). Additionally, lending criteria were based on employment expectations that were unrealistic for people living in a community where employment is often seasonal. With the establishment of the Caisse Populaire Kahnawake, the new lending criteria “recognized the cultural realities of the First Nation, thereby providing a mechanism to support personal and business loans, assisting with economic development in the community” (39–40). This is just one of the growing number of examples that demonstrate how co-operatives can be established to meet the needs of diverse groups of people and help build stronger communities.
Social Solidarity Co-operatives
Social solidarity co-operatives cover a broad category of organizations that serve a diverse membership with needs such as housing, employment, food, and education. Membership is composed primarily of people who are usually marginalized in society, and these co-ops have been especially successful in serving the needs of people with disabilities, both mental and physical.
A successful example is Winnipeg’s l’Avenir Community Co-operative, which was es-tablished with the purpose of providing “the supports which will enable people with mental and/or physical disabilities to live with dignity, fulfillment and security” (Wetherow 2000). This housing co-operative grew out of the desire of people with disabilities to be more involved in the decisions being made about their daily lives. When it became apparent that the combined housing and service provider was not meeting their needs, they started a co-operative.
Innovative policies such as allowing “children with disabilities and adults who face extensive communication or decision-making challenges [to] share a joint membership with family members or other designated representatives” (Wetherow) enable a more diverse membership to be involved in the co-operative. On a larger scale, this organization demonstrates that the co-operative model can meet the needs of many diverse people and can be modified to include even more.
2015 Credit Union Community and Economic Impact Report
In 2015, Credit Union Central of Canada produced a report highlighting the impacts of the credit union system in Canada in 2015. Its sections – Strengthening Canada’s Economy, Keeping Money in the Pockets of more than 5 million Canadians, Helping Main Street and rural communities Prosper, Putting People before Profits, and Partnering for Public Policy Solutions provide insight and data into the credit union’s impacts on the community.
Lou Hammond Ketilson
Fellow in Co-operative Management, University of Saskatchewan
Ph.D Candidate, University of Saskatchewan
Biography available soon.
Consultant, Duguid Consulting
Mumtaz Derya Tarhan
PhD Student, University of Toronto
Assistant Professor, University of Toronto