Frequently Asked Questions (FAQs)

Do you have a question about co-operatives or the co-operative movement? Here are some of the most frequently asked questions?

What is a co-operative?
A co-operative is a democratic organization, owned and controlled by its members. It is created to meet the common economic, social, or cultural aspirations of like-minded individuals through a jointly owned and controlled enterprise.

Why should I be interested in co-operatives?
Co-operatives and credit unions put people first. They recognize the importance of individuals and communities defining their own needs and working together to meet those needs. They are a powerful and democratic way to put decision-making into the hands of those who use the services. Co-operatives have both community and economic goals and can be a powerful force for change. As businesses, they successfully compete in the marketplace, embracing values and principles that set it apart from many traditional commercial ventures. Co-operatives and credit unions are run locally and financed locally, with surplus profits returned to the members.

Are there advantages to forming a co-operative rather than a traditional company or society?
They offer a proven legal framework for governing collective decision-making and for protecting individual's best interests. Co-operatives care about member's needs, not just financial gain. When a core group of individuals willing to work together on a common business idea come together, the co-operative option can often be the best legal choice.

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Does a co-operative perform as well as a traditional private enterprise?
Yes. In some studies comparing co-operatives and credit unions with private enterprises operating in the same economic sector, co-operatives have been shown to survive significantly longer and offer better quality products and services. That's because members know that the business belongs to them. They understand their local community and local needs. The more support members generate for the co-operative initiative, the greater the surplus at the end of the year, and the more they can increase their income.

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How many people are needed to form a co-operative in Nova Scotia?
Provincial legislation requires from three to seven members to form consumer, service, producer, or worker co-operatives within Nova Scotia.

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Do you have to purchase shares to be part of a co-operative?
Some co-operatives require individual members to purchase shares; some however, require only payment of a membership fee.

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Is a co-operative always non-profit?
A co-operative can be either 'for-profit' or 'non-profit'. In either case, the venture must generate sufficient revenue to cover expenses and ensure its growth. In general, surpluses are returned to members once a general reserve has been established and capital required for financing expansion of the business is in place.

For-Profit Co-operatives - In these ventures, member may redistribute any surpluses among themselves based on a method determined by the membership that considers returns proportional to their business transactions with the co-operative during the fiscal year.

Non-Profit Co-operatives - In these ventures, any operating surpluses must be returned in their entirety to the co-operative's general reserve

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Is it difficult to start a co-operative?
The start up planning process for a co-operative or credit union can be more complex than that of an existing business as it usually requires many people to work together to create the business plan. A co-operative operates based on articles and by-laws that are much like a government's constitution. They constitute a legal document an may only be amended by a majority of two-thirds of the members at a general meeting. The Nova Scotia Co-operative Council can assist in all aspects of incorporation and the drafting of by-laws.

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Are there risks in starting a co-operative?
There are risks in any business venture. Being a member takes time, money, and commitment. It requires individuals to work together in a group setting and make decisions according to the rules established by the membership. For most members, the reward of working with a dynamic group on a venture of common interest often outweighs any drawbacks.

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What are the co-operative values?
Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

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What are the co-operative principles?
Co-operatives are guided by seven principles as defined in legislation and agreed to by co-operatives around the world. The International Co-operative Movement formally adopted these principles at its congress in Britain in 1995. These principles are:

Voluntary & open membership
Democratic member control
Member economic participation
Autonomy & independence
Education, training, & information
Co-operation among co-operatives
Concern for community

Three good reference articles include:

If you have further question, please don't hesitate to contacts us at either one of our offices or by e-mailing us at info@nsco-opcouncil.ca

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Co-operative Council CEO Dianne Kelderman answers questions about the co-operative movement in Nova Scotia

How innovative are Nova Scotia’s Co-ops?

Kelderman – There are 402 co-operative businesses in Nova Scotia. We’re encouraging a culture of innovation in the co-op sector, and it’s amazing how many co-ops themselves have jumped on the bandwagon and have actually looked inside their organizations. They’re asking two things ‘is there something that we’re doing that we could be doing better… a new process, a new system, that kind of thing’ or ‘is there a new opportunity for commercial innovation – so can we create a new product or service’. So, that kind of a culture change is happening right across the sector, from credit unions to completely new lines of business. One of the lines you will hear more about in the future is health care.

With the advent of government social safety nets, why would you say the co-op movement is still relevant?

Kelderman – I think the co-op model is more relevant today than it was two or three decades ago. We still face, particularly in rural communities; economic and social challenges. People in those communities want to solve their own problems and face their own challenges. I think we’ve come to the conclusion that government doesn’t have all the answers or all the money. We’re in a time when people are looking for their own answers. I think there’s also a change in the psychology of Nova Scotians. We’re starting to say ‘why can’t we do it for ourselves… why can’t we keep our money here at home’. People are starting to invest in their own projects.

How much growth is the co-op sector experiencing as a result of that new attitude?

Kelderman – The fact that the Nova Scotia co-op sector is growing, on average, by 24 new businesses each and every year would indicate that there’s lots of room and potential for growth and movement into new industries.

So, is there competition between traditional businesses and the co-op model? Is there an ‘us versus them’ attitude?

Kelderman – I think there’s just a fundamental business principle difference. In a private enterprise, it is generally about profit and the benefit going to a few people who own the business. In a co-operative enterprise, the focus is on people first and profit second. So there’s a real focus on protecting community assets and reinvesting in communities and people. Education and training is also a key priority. The biggest difference is that all of the money that’s earned in a local co-op business stays right in that local community. In a lot of private businesses, the money leaves the community and doesn’t necessarily come back.

When it comes to accessing capital, how are co-ops and credit unions different?

Kelderman – The key difference from banks is that credit unions are financial institutions that are owned by the local people. The managers of the credit unions are local people. They make most of the local decisions. In fact, ninety-nine percent of the time, they actually know the person applying for the funding. They can make decisions based on the character of the person; based on if they know the family, they know the market, they know the community environment. The biggest difference is that the decisions are made locally. They’re not made by somebody sitting in an office in Toronto or Montreal or New York who doesn’t know the community or the environment, and frankly, probably doesn’t really care.

What are credit unions doing to achieve growth?

Kelderman – Credit unions are always looking for new ways to service their members. So, that’s our small business finance program that provides high-risk financing for worthy business projects. We have a micro credit initiative that provides financing up to $10,000 and there’s a real focus on young people. And then there are always all kinds of unique community-based programs that they’re supporting.

What portion of the market do Nova Scotia credit unions hold?

Kelderman – Credit unions have, over the last few years, become the number one commercial finance player in Nova Scotia. In 34 communities in Nova Scotia, a credit union is the only financial institution. Clearly, in communities where they’re the only game in town, they’re getting all the business. But, in larger communities like Halifax, Truro, Sydney, and other areas of Cape Breton, even though there’s lots of competition from big banks and governments, credit unions have emerged. That’s because they’re willing to invest in people and invest in the character of people.

The new book, Made in Canada Leadership, heaps high praise on the co-op sector. What is the co-op movement doing to create the next generation of financial managers?

Kelderman – Well, we are educating and mentoring and promoting from within. So key people in credit unions, for example, are the focus of future growth opportunities. They’re being mentored and trained to become financial leaders. But, it’s not only happening in the finance sector. Co-ops generally have a real focus on engaging and mentoring more young people.

Is part of that found within what you call the ‘provincial youth initiative’?

Kelderman – That’s part of it, yes. What we want to do is to give our young people a reason to stay in their communities. So if they can get connected and sit on a board of directors, for example, they can have that leadership connection and hopefully have an interest in staying.

Tell me more about the youth initiative.

Kelderman – We’ve just launched it province wide. We’re taking 15 young people from rural areas and we’re putting them through some intensive leadership training. We’re putting them into a youth co-operative where they can feel and touch and see what it is to actually run and own a co-operative business. After that, they have an opportunity for an internship or a volunteer placement in their local co-op or credit union. We’re also allocating seats on our boards of directors for youth representatives, so that they can be on the board and bring a youth perspective to the table and hopefully influence the products and services being offered so that it become more relevant to them. We’re proud of that, and outside of Quebec, we’re an unparalleled development agency according to a recent study by Simon Fraser University. We’re 402 businesses strong, worth $5 billion dollars in assets, so as a development agency, we believe we have a role and a responsibility to protect what we have and to move into new territory and industries as well.

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