27d • General discussion
What is a Co-op?
What is a Cooperative?FACT SHEET
Introduction
A co‑operative, or co‑op, is an organization
that is owned by its members. Co‑ops are
formed when a group of individuals come
together to meet a common need. Co‑ops
can provide almost any type of product or
service imaginable and can operate either
on a notforprofit or forprofit basis.
A co‑op operates on a democratic system
that specifies “one member, one vote.”
This ensures that all members of the co‑op
have an equal say in how the co‑op is
run, regardless of how much money they
have invested in the co‑op or how much
they use the services offered. Members do
benefit financially from the co‑op’s activities
based on how much they use the service or
products provided by the co‑op — but this
does not impact how much of a voice their
vote carries within the co‑op.
There are many different types of co‑ops
operating in many different sectors all over
the world. Co‑ops can and do offer services
of every type in Ontario, including: food
production and sale, tourism, health care,
child care, funeral services, retail goods,
housing, renewable energy, transportation,
social services, natural resources and
financial services.
History of Co‑ops
The first formal co‑operative, structured
as most of the co‑ops operating today
are structured, was formed in England in
1844. In a town called Rochdale, a group
of weavers came together to address the
terrible conditions they were subjected to
and take more control of their lives.
The weavers in Rochdale were tired of
paying high prices for poor food — so
they wanted to start a store of their own.
Individually, none of the weavers had
enough money to start the store alone, so
they, along with the other residents of the
community that wanted to be members,
started a fund. Each contributed a small
amount of money. Once the fund was big
enough, the co‑op started operations as the
Rochdale Pioneers and began selling basic
supplies and foodstuffs.
Their co‑op tracked how much each
member purchased, and distributed the
profits in proportion to how much the
member had bought. Eventually, the
Rochdale Pioneers’ store became so
successful that they were able to rent more
of the building and use it as a library and for
educational lectures.
This was the first example of a working
co‑op and became the basis for the growth
of the co‑op movement as a worldwide
economic force. Today, there are tens of
thousands of co‑operatives operating all
over the world.
Different Types of Co‑ops
There are many different types of co‑ops
that operate in Ontario. Some of these
categories have particular legislation that
regulate how they operate, but for the most
part, the categories below are distinctions
that only help define how the co‑op works.
These categories also indicate who the
members in particular co‑ops are.
• A consumer co‑op buys products in
bulk and passes on the savings to the
members. The members own the co‑op
store or must be a member to use the
services. Members make decisions about
· There are over
9,000 co‑operatives
operating in Canada.
The Canadian
co‑operative
movement has over
$330 billion in assets
and more than 18
million members.
· A federal study has
shown than health
care co‑ops have
lower percapita
health care costs
than private practice
models.
· Canadian
co‑operatives employ
more than 150,000
employees.
· Canada has the
world’s largest
percapita credit
union membership:
about onethird of
all Canadians are
members of a credit
union or caisse
populaire. What is a Cooperative? what to sell, provide, where products
come from or other key issues. Karma
Food Co‑op in Toronto is a consumer
co‑op. Most child care and preschool
co‑ops, like Peter Pan Co‑op Preschool in
Hamilton, are organized as consumer
co‑ops.
• A housing co‑op gives members access
to apartments, townhomes and houses,
which they co‑operatively own. Housing
co‑ops are formed when people join with
each other on a democratic basis to own
or control the buildings in which they
live. There are more than 580 housing
co‑ops in Ontario, making it the largest
co‑op sector in the province. Most mid to
largesized cities in Ontario have housing
co‑ops. Some examples include Toronto’s
Bleecker Street Co‑op, and Castlegreen
Housing Co‑op in Thunder Bay.
• In a worker co‑op the primary reason
for the co‑op to exist is to create
employment for its members. The
members are both employees and owners
of the company. They operate their
business together and make decisions
about important issues including wages,
production methods and finances.
Generally, members must be individuals
and employees of the co‑operative;
however, some co‑ops do allow the
employment of nonmembers on a
limited scale. Planet Bean, a fair trade
coffee roastery and wholesaler in Guelph,
is owned by a worker co‑op. TeamWorks
Co‑op, operating the Simply Fine Wines
store in Waterloo, and the AgriCultural
Renewal Co‑op in Elmwood also operate
as worker co‑ops.
• A producer or marketing co‑op allows
members to share processing and
packaging equipment and pool their
marketing to reach more customers. It
sells the products of members who may
be producers or service providers. Gay
Lea Foods is an example of a producer
co‑op operating in the dairy industry,
while Quinte Organic Farmers Co‑op
provides marketing and distribution
services to its organic farmer
members in the Quinte region.
• A multistakeholder co‑op includes
different types of members, with the
rights of each class of membership set
out in the co‑op’s bylaws and articles
of incorporation. For example, a market
co‑op may bring together farmers,
customers and workers as members in
the same co‑op.
• A financial co‑op, often called a
credit union or caisse populaire, is a
provinciallyregulated, deposittaking
financial institution which operates on
co‑op principles, is member owned, and
is only permitted to conduct business
with its members. A caisse populaire is a
credit union which conducts its business
2 principally in French. Other co‑operatives
also operate in the financial sector and
offer insurance and investment services,
either directly with members, or to other
co‑ops operating in Ontario or Canada.
Meridian Credit Union, Alterna Savings
and FirstOntario Credit Union are some
of the larger credit unions operating in
communities throughout Ontario, while
The Co‑operators is a financial services
and insurance co‑operative operating
across Canada.
The Seven Co‑operative
Principles
The seven cooperative principles were
partially defined by the Rochdale Pioneers
who started the first modern co‑op in
1844. Since then, the principles have been
refined and adopted by the International
Co‑operative Alliance, and in turn by the
Canadian Co‑operative Association and the
Conseil canadien de la coopération et de la
mutualité at the national level. In Ontario,
both the Ontario Co‑operative Association
and the Conseil de la coopération de
l’Ontario have adopted these principles
and use them in their work representing
the co‑operative and credit union sectors
throughout the province.
FACT SHEET FACT SHEET
· A 2008 study in
Quebec found
that 62 percent
of co‑operative
enterprises were
still operating after
5 years, compared
with 35 percent
for other business
corporations.
· Studies show that
co‑operative housing
costs 71 percent less
than public housing
projects.
· The global
co‑operative sector
has more than one
billion members
in more than 90
countries.
· It is estimated
that co‑operatives
account for more
than 100 million jobs
around the world.What is a Cooperative? The Seven Co‑operative
Principles
Although co‑operatives can operate
in many different sectors and either
as a forprofit or notforprofit
enterprise, there is one thing that
every co‑op has in common: Co‑ops
around the world are organized
according to the seven international
principles of co‑operation.
1. Voluntary and open membership
2. Democratic member control
3.Member economic participation
4. Autonomy and independence
5. Education, training, and
information
6. Cooperation among
co‑operatives
7. Concern for communityMembers and the Community
Benefit from Co‑operative
Business Enterprises
In addition to meeting economic objectives,
co‑ops often also seek to meet social
and environmental goals. This is often
referred to as the “triple bottom line.”
While the financial viability and stability
of a co‑operative is very important, one of
the primary objectives of membership is to
maintain access to the product or service
supplied by the co‑op, not solely to increase
the rate of return on their investment.
Co‑ops are, by definition, autonomous and
independent organizations. Co‑op members
are responsible neither to outside owners,
nor to government owners. However, in
following co‑op principle number six,
co‑op members recognize that their co‑op
operates as part of the larger economic,
social and environmental framework that
affects people’s daytoday lives in their
community.
Therefore, co‑op members also appreciate
that there is value in their resources and
dollars staying in the community where they
reinforce the local economy.
As a result, co‑ops tend to be stable
structures that grow with the community,
and contribute to community
sustainability. They allow the decisionmaking process to remain with those that
need and use the co‑op services and will
benefit from co‑op success and positive
contributions to community life.
In many communities, co‑operatives
have stayed to serve their members long
after other businesses have fled to more
profitable locales. For example, there are
numerous communities in Ontario where
credit unions are the only source of financial
services. Studies have shown that co‑ops
3 also have a success rate that is twice as high
as other forms of business.
Co‑operative Legislation
There are many organizations that may
choose to operate in a co‑operative manner
or follow the seven co‑operative principles,
even if they do not formally call themselves
a co‑operative.
In Ontario, in order to legally call your
business enterprise a co‑operative and
use the word “co‑operative” in its name,
the organization must be incorporated
as a co‑operative under federal or
provincial legislation. “Incorporation” is a
formal process, overseen by government,
sanctioning the operation of an organization
as a co‑operative and providing status and
legal rights that allow an organization to
accumulate assets, take on debts or raise
capital. There are unique incorporation
processes in place for each of forprofit
enterprises, notforprofit organizations and
co‑operatives — at the national level, and
usually within each individual province.
There is specific legislation, both federally
and in Ontario, which dictates how co‑ops
can operate and what is required in order to
be considered a co‑operative under the law.
In Ontario, this legislation is called the
Co‑operative Corporations Act, and it is
often referred to by those working in the
co‑op movement as “the Act”.
FACT SHEET
· Financial
co‑operatives are
the largest providers
of microfinance
services to the poor,
reaching 78 million
clients living below
the poverty line of
$2 per day, and an
estimated total of
857 million people
worldwide — 13% of
the global population.
· The world’s 300
largest co‑operatives
have revenues in
excess of $1.1 trillion,
slightly smaller than
the size of Canada’s
economy.
What is a Cooperative? 4
FACT SHEET
The Ontario Co‑operative Corporations
Act is available online: ontario.ca/laws
Ontario’s Co‑operative Corporations
Act provides instructions and rules for
co‑operatives to follow, including how to
select the proper name, how to offer and
manage investment in the co‑op, board
representation and member rights, and how
to maintain co‑operative status. From time
to time, the Act is amended, as happened in
2009.
Credit unions and caisses populaires are the
only type of co‑op governed by different
legislation. They are incorporated and
regulated under Ontario’s Credit Unions and
Caisses Populaires Act 1994 rather than the
Co‑operative Corporations Act.
OCA has produced a plainlanguage guide
to the Act, as part of its series of co‑op Fact
Sheets and resources.
Role of Articles and Bylaws
The co‑op’s Articles of Incorporation set
out the general parameters of how a co‑op
operates and is organized. A co‑op also
requires bylaws, which contain additional
details about membership requirements,
authority and responsibilities for the board,
members and staff, and in some cases,
mission and mandated activities for the
organization. Both of these documents are
required parts of effective and official co‑op
operations. The co‑op usually creates a
series of policies and procedures as well.
How Are Co‑ops Structured?
Co‑ops are simply another form of business
enterprise, with particular differences
in their governance structure. These
differences put the power of a corporation
in the hands of the people.
Co‑ops utilize a democratic structure
that consists of a volunteer board of
directors, (elected from the membership)
committees and members. The board and
associated committees govern the co‑op,
oversee management and report to the
members via annual general meetings or
member meetings. There is generally also
a management or business structure that
consists of the staff of the co‑op, reporting
to the Board of Directors, which oversees
the daytoday operations of the co‑op.
Some smaller or less mature co‑ops may
not put a management or business structure
in place immediately upon beginning
operations, and some co‑ops do not hire
managers at all.
FOR MORE
INFORMATION,
CONTACT
Ontario Co‑operative
Association
Phone: 519.763.8271
More resources are
available at:
CoopZone Network
This is one of a series
of FACTSheets created
by OCA providing
general knowledge,
best practices, and
sector‑specific
information.
Get the full list of
FACTSheets online at
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What is a Co-op?
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