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•June 19, 2023
•1 minute read
Understanding the Different Types of Cooperatives
Coopérative
Kickoff
Governance
The cooperative
model is flexible. It can be adapted to group size, business ecosystem and economic sector, among other criteria. Most
importantly, it is conducive to developing businesses able to meet a variety of needs. Here is a brief description
that will help you understand the different types of cooperatives, depending on their economic
objectives.
The five types
of cooperatives
In Quebec, cooperative businesses can take five distinct
forms, regardless of their field of activity or the sector in which they operate. The type
of co-op typically depends on the needs of its core members. They
include:
- Consumer cooperative
- Producers cooperative
- Worker cooperative
- Worker shareholders cooperative
- Solidarity cooperative
Are you thinking of going into business as a cooperative?
Great! Now, you just have to figure out which type suits you best.
CONSUMER
COOPERATIVE
The aim of this type of cooperative is
to provide members with goods and
services for their personal use. You
can find these cooperatives in a wide range of sectors, including food, housing, education,
cable distribution, funeral services and leisure. This type is appealing to customers who
want to have their say in defining services or products. Since members are involved in
decision-making, they can be assured that the business will be attentive to their needs. The
benefits of a consumer cooperative include:
- Providing access to and savings on locally sourced products or
services - Limiting members’ financial responsibility to the capital
contributed to the cooperative - Offering collective ownership, which often ensures the business’
longevity - Redistributing surpluses to members in proportion to their use of
the cooperative’s services
Have you heard of Ici
Coop? This network brings
together more than 75 consumer cooperatives that operate grocery stores under different
banners or as independent stores. The same goes for Coopsco, which unites nearly 60 cooperatives operating nearly 200 retail
stores in schools across Quebec and Ontario.
PRODUCERS
COOPERATIVE
The aim of a producers cooperative is to provide its
members with the goods and services for the exercise of their profession or the operation of their
business. Members benefit
economically by obtaining what they need from the cooperative. This type of co-op can be
found in industries such as taxi services, agriculture or business services. This model is
particularly advantageous for organizations or selfemployed workers who want to build a
network where unity is strength. The cooperative becomes an extension of the individual
company, which is maximized through the collective of producers.
Its other benefits include:
- Increasing profit margin
- Reducing costs
- Leveraging a structure that combines profitability and a social
mission - Providing access to tax incentives that promote
capitalization
Have you ever heard of Citadelle? This Quebec-based producers cooperative promotes and markets
maple, honey and cranberry products. The cooperative offers services such as collection,
storage, marketing and global export services.
WORK COOPERATIVE
Providing employment to its
members lies at the heart of this
type of cooperative. Members control all activities as both owners and employees. This model
is found in the forestry and wood processing sectors, as well as in business services, IT,
microbreweries or ambulance services. Since they are involved in the management of the
company, workers have the opportunity to enhance their business acumen. Research shows that
work cooperatives are as productive as their capitalist counterparts and that members enjoy
a high quality of work life.
The other benefits of this type of co-op
include:
- Reducing sources of cultural, political and economic inequalities in
the workplace - Finding or maintaining decent employment
- Being considered on equal footing within the
enterprise - Prioritizing people, not capital, in making business
decisions - Reducing inequality in wages and surplus
distribution
For example, La
Barberie became Quebec’s
first worker cooperative microbrewery in 1997.
WORKER SHAREHOLDER
COOPERATIVE
In this type of cooperative, worker shareholders hold
shares in the business that provides
work for its members. This
investment allows employees to take an active part in the development of the business.
Sectors that often adopt this type of cooperative include business succession planning,
manufacturing, IT, transportation, new technologies or multimedia. Given the opportunity to
become shareholders, workers have a natural incentive to enhance and sustain the
business.
Other benefits of this type of cooperative
include:
- Closely collaborating with management
- Getting people involved in achieving business objectives and
proposing new ideas - Ensuring a pathway for business succession
- Boosting workforce retention
- Improving organization capitalization
For instance, take Robotiq, a global network of
robotics experts based in Saint-Nicolas, Quebec. This co-op fosters collective success by
inviting all employees to join the cooperative, which holds shares in the business
capital.
SOLIDARITY
COOPERATIVE
In a solidarity cooperative, various members join forces to
achieve their shared goals. This type of cooperative can include up to three distinct types
of members:
- Users of products or services
- Workers employed by the cooperative
- Individuals or companies interested in supporting
the cooperative’s mission, known as support members
In a solidarity cooperative, workers, users and any other
individual or company interested in the business’ goals can collaborate to fulfil their
needs and aspirations. These cooperatives are commonly found in sectors like home services,
the environment, sustainable development, tourism, catering, childcare and local or
neighbourood services.
Its advantages include:
- Efficiently uniting people with a shared cause
- Getting people involved in achieving business objectives and
proposing new ideas - Ensuring a pathway for business succession
- Boosting workforce retention
- Improving organization capitalization
For example, Vallée Bras-du-Nord is a solidarity cooperative that brings together employees (worker
members), tourism service providers (user members) and landowners (support members) to
collectively ensure the sound management and quality development of local tourism
infrastructure.
Interested in a particular type of
cooperative?
In short, approximately 3,000 cooperatives and mutuals are
active in Quebec, bringing together 8.8 million producers, consumers and workers. Thanks to
the pooling of their members’ resources and expertise, cooperatives have a 44% higher
survival rate than other business models.
Did you know that the CDRQ can help you with your
start-up? Click here to find out
more!
