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Marketing
Sometimes
referred to as “producer co-ops”, marketing co-ops are
owned and controlled by the same people that provide the co-op with the commodities, products or services that are sold by the
co-op, either as produced by the members, or, in a processed or
value added form.
These
co-ops have the mandate to obtain the best prices for their
members/producers by developing markets for their commodities,
products or services. Where practicable, these co-ops process
the commodities, products or services to add value, in excess of the
processing costs, to provide additional returns to the
member/producers.
In
Manitoba artists, crafters, seniors, farmers, harvesters, fishers,
consultants and municipalities have formed marketing co-ops to
meet the marketing requirements of their businesses. By seeking out
and selling to end users, the co-ops are able to earn and retain
for the benefit of their owners/producers, the profits previously kept
by distributors/wholesalers.
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Consumer
One
of the best known forms of co-ops, consumer co-ops are
owned and controlled by the people that buy the products and services
sold, managed or distributed by the co-ops.
These
co-ops have the mandate to acquire the products and services
required by their members at the lowest possible cost with the highest
possible quality. These co-ops can operate in three different
ways; as buying clubs where products and services are obtained by the
co-op
only when the members place an order; as retail stores
where the members come in to shop; and as service providers where
members order the service, such as cable television, internet access,
insurance, water or natural gas.
In
Manitoba there are general stores, gas bars, farm supplies, furniture
stores, funeral services, natural gas utilities, water utilities,
internet access and cable television co-ops serving the needs of
their members.
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Community Service
Community
service co-ops are owned and controlled by the people of the
community being served who wish to join the co-op and use its
service.
These
co-ops have the mandate to provide their communities with the
social, recreational, educational or health service at the lowest
possible cost at the highest possible standard keeping the good of the
community as a whole as the focus.
Communities
can be involved in the provision of their own health care through
cooperatives. An example of a health care cooperatives may be a
community health clinic offering a full range of services from Doctors
to lab
work to physiotherapy to both non-members and members alike.
The members enjoy the right to be involved in decision-making
about the kinds of services offered and fees set by the health care
facility (or facilities).
For more specific information on developing health care
cooperatives, visit the
Federal Cooperative Secretariat’s guide to
starting a health care cooperative.
In
Manitoba there are campgrounds, fitness clubs, internet services,
cultural clubs, tourism councils, health centers, community clubs,
tenants associations, day cares, preschools, nursery schools, housing
for special needs and illness support groups.
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Housing
Housing
Co-ops are owned and controlled by their resident members.
These
co-ops have the mandate to provide living accommodation for
their members. There are two types of housing co-ops under
Manitoba legislation, “not for profit” (a defined term) and all
others.
Not
for profit housing co-ops are those whose Articles of
Incorporation specify that they are not for profit, that file income
tax returns as a not for profit corporation or that have received from
the Government of Canada or the Government of Manitoba or an agency of
either one of them, a subsidy or assistance of a type that assisted
with or reduced housing costs.
These
co-ops have restrictions placed upon them including:
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They
cannot issue investment shares.
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They
must conduct at least 90% of their business with their members.
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They shall carry on
their business without the purpose of gain for their members.
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They
may not be continued under any other legislation.
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They
may not amend their articles to change to any other type of co-op.
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On
dissolution their remaining assets must be given to:
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another
not for profit housing co-op
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a
Manitoba co-op with similar objectives and limitations
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charitable
organizations with similar purposes.
Most
housing co-ops in Manitoba are not for profit and were built
with assistance from both the Government of Canada and the Government
of Manitoba to provide affordable housing for low and moderate income
families. Resident members purchase membership shares of the co-op in relatively small amounts (less than three months
housing charges) and pay housing charges to cover mortgage interest,
utilities, repairs, taxes, depreciation, management, administrative
and other operating costs. When members leave the co-op they are
entitled to have their shares redeemed by the co-op for the same
price paid by the members unless the co-op has a deficit and is
prevented by legislation from redeeming the shares.
The
other category of housing co-ops do not have the above
restrictions and set their own rules for the amount of equity required
to become a resident member and how members deal with their occupancy
rights and shares when leaving.
In
most instances the exiting member gives the prescribed notice and on
the exit date is no longer responsible for the housing charges and
receives the acquisition price for the membership shares upon
redemption less any pro rata portion of any capital impairment. In
some of these co-ops the share capital is modest and similar to
the not for profit housing co-ops, and the co-op and the
members cash flows are not significant. Others equity requirements are
higher and members can reduce the monthly housing charges by
increasing the share capital investment. However upon leaving, the
housing co-op may have to increase its mortgage, as the incoming
member may not be able to invest as much in share capital as the
exiting member. In these cases the exiting member may have to wait
some time before being paid for all the shares redeemed. This can also
put stress on the co-op if the mortgage holder does not feel the
cash flow of the co-op is sufficient to warrant additional
financing.
Others
are set up so that the exiting member is responsible for the housing
charges until a replacement resident member is found. The new member
pays the exiting member market value for the right to occupy the
housing unit and the housing co-op records the transfer of
equity and charges the new member an initiation fee. The housing
co-op, although it still must approve the new member, is
impacted favourably by the transfer fee and does not have to concern
itself with the redemption of shares.
There
are about 60 housing co-ops in Manitoba.
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Worker
Worker
co-ops are owned and controlled by their employees.
These
co-ops have the mandate of providing employment for their
members. They differ little from other businesses, except that instead
of profits going to unconnected shareholders living anywhere, they are
shared among the owner/employees.
In
Manitoba, worker co-ops are in printing, nursery schools,
farming, cleaning, consulting, delivery, groceries, sewing, machine
shop, furniture manufacturing, and food services.
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Financial
These
special types of co-ops often come under legislation developed
for the uniqueness of the financial services being provided to their
members, deposit taking, loans, trust services, and insurance. Credit
unions / Caisses populaires are the most recognizable or best known of
the financial co-ops. Like other co-ops democratic control
is in the hands of their members / owners.
These
co-ops have the mandate to provide their members with financial
services at the lowest possible cost and the highest possible return.
These services include a variety of deposit vehicles, mortgages,
loans, lines of credit, safety deposit boxes, financial planning,
estate administration and insurance.
In
Manitoba credit unions and caisses populaires are incorporated under
the Credit Unions and Caisses Populaires Act of Manitoba while the
trust co-ops and insurance co-ops are incorporated under
federal legislation.
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New
Generation
New
Generation Co-ops are the latest buzzwords in the co-op community describing a variation on the traditional
co-op, yet,
retaining the critical co-op principles.
These
co-ops are owned and controlled by the people who have supplied
the required equity in return for the responsibility to deliver to the
co-op the required raw commodities processed by the co-ops into marketable products.
These
co-ops have the mandate to provide their members with market
prices for the raw commodities delivered and profits from the
processing and marketing of the resultant products. By vertically
integrating through the new generation co-op the producers can
effectively control the raw commodity from production to retail sale.
These co-ops are
referred to as new generation because of four distinct variances from
traditional co-ops:
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The
focus is on the value-added processing or manufacturing of raw
commodities delivered to the co-op by its members and the
marketing of the resulting products.
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A
significant equity investment is required by each member, with the
total initial equity contribution being a major portion of the
gross project costs.
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A
two-way contract between the member and the co-op requires
each member to deliver, and the co-op to accept, an
agreed-upon amount of the raw commodity for each delivery right
(special investment share under Manitoba legislation) owned by the
member.
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Membership
is limited to the number of special investment shares (delivery
rights) required to be sold by the co-op to its members in
order to meet its processing capacity.
Brochure
on New Generation Cooperatives
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Innovative
Applications
Co-ops
can be adapted to fit any situation where the eligibility criteria for
membership can be clearly stated. With the enabling legislation in
place in Manitoba the only limitations are the limits of your
imagination.
As
with any business enterprise, in some instances a particular ownership
model may be more suitable to the situation and the personalities of
the people involved. Whether a traditional business arrangement or new
generation co-op model is being considered, due diligence is
required.
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