Posted on Wednesday December 13, 2017

The cooperative: a sustainable business model

Cooperatives (also known as co-ops) are a key driver of the New Brunswick economy. Responding to both social and economic imperatives, they're grounded in values that serve everyone's interests: their own, of course, to ensure their continuity, but also those of their members. A look at a singular business model that's stood the test of time.

Once upon a time . . .

The caisses populaires (credit unions) were born of the Acadians' will to take their destiny in hand. A handful of visionaries dreamed of setting up enterprises owned and controlled by the people they served and offering services customized to their users' needs. From this dream emerged a proud, entrepreneurial cooperative movement with a vigorous fighting spirit. Crucially, the co-ops filled the gap left by the banks who, reeling from the Depression, had stopped granting loans to finance traditional industries like fishing.

The instigators of cooperatives like UNI and its roughly 7,500 Canadian counterparts have this in common: they gave themselves the means to achieve their goals and participate more fully in the economic vitality of their region, province and country.

A tried-and-tested business model

To understand the co-op's unrivalled capacity for withstanding hard times, we first need to examine how the model works. Cooperatives are in fact based on two kinds of organizational structure:

• Associative, where people voluntarily unite to meet their economic, social and cultural needs through a jointly owned and democratically controlled business. Founded on the principle of participatory governance, such a business is run by its owner/members, who make all the key decisions, notably at general meetings. For example, members will vote on who to elect to the board of directors. Essentially, the company's future is in the hands of its customers.
  
  
• Entrepreneurial, similar to private enterprise in its business hierarchy (a senior management team plus administrative divisions responsible for different operations ? finance, marketing, product development and so on).

Another distinctive feature of the cooperative model? Equity. Profits are set aside and prudently managed in compliance with regulations, then ?returned? to the members in ways that vary from donations and sponsorships to discounts, cashbacks and exclusive rates. Added to this is community financial support. Indeed, contributing to local vitality through such intiatives as philantrophic partnerships, grants  and scholarships is one of the model's core values. A far cry from businesses that hand over their profits to foreign investors!

Advantages all around

Over the decades, New Brunswick has repeatedly cycled from boom to bust and back again. Such a climate would be tough on the financial health of even the most robust industry. Co-ops, however, have consistently fared remarkably well, at least according to the International Labour Organization (ILO). Being owned by their members generally makes for greater prudence. Less susceptible to the ?profit at any cost? maxim ruling most publicly traded companies, co-ops keep risk at bay.

The model also has a number of competitive advantages:

• Financial stability: the fact that co-ops are less exposed to market fluctuations and aren't tied to the stock market protects them from risks that could undermine their financial health.
  
  
• A strong sense of social responsibility: created first and foremost to serve their members, co-ops support local projects through recurring financial aid. In revitalizing the local economy, they also strengthen the social fabric.
  
  
• Legislation regulating collective decisions and protecting member interests: for instance, a co-op cannot be sold off to line the pockets of just a few.

What about the future?

For UNI, there's no doubt as to the revelevance of the co-op model. Better yet, it's the model of tomorrow. Co-ops are a facet of the collaborative economy, which is driven by the shared production of value. The rising popularity of emerging concepts ? the sharing economy, the peer-to-peer marketplace, crowdsourcing and so on ? is sufficient indication that the ecosystem of collaboration is gaining ground in every area of activity today.

UNI is a key player in this economy. To revitalize its operations, our cooperative, which was formed by the merger of 15 Caisses populaires acadiennes and their Fédération, streamlined its business model to create a more agile and efficient decision-making process that better meets its members' needs.

Adopting a federal charter has also generated substantial savings, thanks to different liquidity and capital requirements. By doing so, UNI has put itself on equal footing with its main banking competitors while complying with the stringent standards of the Canadian financial system, known as the world's most reliable.

The result is a model that maximizes the benefits of each approach. Backed by the spirit of cooperation that has guided our decisions from Day 1, we have the means to assure our growth and thus ensure our sustainability.

Choosing UNI means choosing to take a stand in favour of a collective undertaking driven by community values.