Co-ops need an 8th principle


By Tony Patterson

Let me give you a little background. I was born before the last world war, in 1938. I have known about co-ops since I was a youngster. Where I went to school, a Catholic college in Montreal, Moses Coady at St. FX was the prophet and the Antigonish Movement was gospel. I knew about it but I didn’t join, went in another direction.

Then by circumstance that would take too long to explain, I moved to a housing co-op 12-13 years ago. It’s a small co-op called Catalpa, just nine units, but through it I learned something about the structure of the movement in Canada. In 2012, the UN designated Year of Co-operatives, Catalpa made a submission to the Parliamentary Committee on Co-operatives and I attended the first Co-op Economic Summit in Quebec City.

At Quebec I decided to try to do something. I knew it would take time. But I thought I’d give it five years if I was lucky enough to have that long. What would I do? Well I’d start a publication of some kind to spread the word and drive interest around what was happening in the co-op world. That notion became the Co-op Canada Accelerator.

Why did I pick this to try? Because it was clear that apart from me and a few other old spirits, very few people inside the co-op movement today could tell you who Moses Coady is and very few people outside the movement know anything about what a co-op is. Delivering information is what I know something about. Media, journalism and publishing are what I have been doing all my life. Literally. I was publishing a newsletter in grade school. I had a public affairs tv show in the early days. I was associate editor of a national newspaper before I was 30 and when I was 60 I was publishing papers across Canada in partnership with Rogers Media. I say this only to put my co-operative venture in context.

?????Accelerate was the operative word. In the spirit of the Quebec Summit, I’d try to accelerate the movement by delivering current information and opinion about it, about its problems and its opportunities. But as everyone is aware, the media sector is in a state of furious flux. Print is dying, it’s said. Television becomes cablevision and goes streaming. Podcasting is the new radio. And everything is on the internet.

I used to start magazines or newspapers but I decided to do what’s known as a blog, which is the way that a lot of journalists and their organizations have gone. It’s basically a simple log or entry on the web of each new story in chronological order, a pretty common format. Its primary strength is that it provides an interactive capability. Accelerator aimed to stimulate response and discussion.

But I really had no idea of the depth of inertia within the co-op sector. Most co-ops are insular and inward looking. Co-operatives dearly love themselves. This is a good thing. But they are too often timid, cautious and publicity shy, if not averse. This is not helpful in moving the movement forward.

It’s not totally untrue to say that co-operatism in Canada is in danger of dying, It’s almost a natural law that when a living organism stops growing, it starts to die. Co-ops in Canada have not been growing. Or if they have, it’s minutely. And that’s partly at least because the people who want to make things happen don’t know anything about co-ops. They don’t know because we don’t tell them. And when I say tell them, I mean find a way to catch and keep their attention in the midst of the million messages a day they are each processing. There are two components to success in this endeavor. The first is the message: Co-ops are the better way. The second and most important is persistence. Only persistence has any chance in the long run. A persistent message has the power to persuade.

Either we believe in the co-operative model and are willing to work for it or we’ll be steamrollered by a lot of other innovative models coming forward. We have to promote what we have, mindful that the end game is how to insert co-op principles into capitalist practice. And I dare say we might have to fight for it because a multitude of socially-constructive economic models are being proposed and tested. (Platforms, Non-profits, ESOPs)

Co-operation is a movement that has as its ultimate objective the displacing of a profit-only motivated economic system with one based on principles of human rights and dignity. Principles are the moving spirit of co-ops.

The Eighth Principle

Mauril Belanger252X176The last time I talked with Mauril Bèlanger (left), who was instrumental in creating both the Parliamentary Commission on Co-operatives of 2012 and the co-operative caucus in the House of Commons, we were together at a symposium to honour Mark Goldblatt. Mark was a lifelong contributor to the movement and its apex organizations, instrumental in forming several co-op federations and credited with helping to create thousands of co-operative housing units. Mark, who died at 62, was a good friend who well understood the importance of getting the message out. His dad had been a prominent journalist. Mauril never ceased to tell co-ops that they “would do well to market themselves better and develop more effective messaging.” Tragically, he learned he had ALS a IanMacPherson_thumbmonth after the symposium and would be just 61 when he died a year later. Both Mauril and Mark had the greatest respect for Ian MacPherson (right), who gave inspiration, mentorship and a mission statement to Accelerator, and who also died much too young at 74.

One thing in particular these giants agreed on was the need for co-ops to make themselves better known. To sum up their feelings in a word: frustration. Frustration that the giant stays sleeping, that disdain for profit motive has morphed into fear of money or of spending for anything but bare essentials. Frustration that the sector turned out its lights when one Trudeau retired and switched them back on only to mark arrival of the next. Thirty years of slow to no growth.

If we truly believe that cooperation is the answer, a cooperative capitalism that is kinder, fairer, that embraces human dignity and rights, that gradually reduces inequalities of wealth and power in the system, if this is what we believe then we’d better start telling people about it.

The bible says, Go into all the world, and preach the glad tidings to all (Mark 15:16). That’s what co-ops need to do. The thing is that this has been well known for a long while. Whether because of reluctance to fund anything but essentials, or some other reason or reasons, little gets done to address the problem. Mark, Mauril and Ian knew it. They also knew there is only one way to make anything a priority throughout the movement. It would have to be a principle. If it is to be common practice, getting out to spread the news about co-operatives must first be a principle. The eighth principle. Shout it out is a direct way to say it.

Now of course it’s no little thing to touch the co-op principles. They are at the core of the movement. But it’s no impossibility either. They’ve been altered before. More than once. Ian MacPherson was in charge of the last revision, in 1995. Of the seven co-op principles today only two are the same as the original Rochford seven.

Principles get updated every thirty years on average. Today there are less than ten years to go until thirty years will have passed since the last revision. That’s time that can be used to pound a new idea into the stuffed head of co-operatism. Co-ops are very conservative. By their very nature they conserve. But conservation and innovation are not antithetical. They can work hand-in-hand. Conservation at a time of massive global climate change absolutely requires innovation. If we want to conserve our planet we damn well have to innovate. Our movement is no different. It must move with the times, catch the wave of change, innovate for success.

Principles drive and underpin co-operatism. Anything to change the priorities or general practice of co-ops must start with the principles. Fortunately for the movement, the principles are indeed adaptable. They are man and woman made, not god given.

It won’t be easy of course and it will take some time to persuade those whom Mark Goldblatt sometimes called the grandees of the movement. By nature those at or around any apex are guardians of tradition and resistant to change. But difficulty is not defeat and time is on the side of what’s right. Confucius said it’s better to light a candle than to curse the darkness. His contemporary, Lao Tzu, put it another way: the journey of a thousand miles starts with a single step. Though hardly as old as those two, I agree with both.

I’d like you to consider lighting the candle, taking the first step, here at the Ottawa Co-op Network.

Why start here? I think most innovation in co-operation as in anything else has to come from the bottom up. At the top, innovation is a threat. At the top of Canadian co-operation everything is strictly constrained. The annual budget of CMC has not been increased in more than a dozen years and in fact has declined recently despite the merger of previously separate English and French associations.

I’ve thought about where to go with this. For all practical purposes, OCN is at the bottom of the co-operative structure. It sells nothing. Has no revenue, no expenses. Has no staff. It’s nowhere in the co-op structure. But it’s here and it cares enough to hang in doing little co-operative things year after year. I think it is precisely the kind of organization out of which change and innovation can emerge. So I’d like to throw a challenge. Since this is the only kind of place where anything can get started, let’s start something. Let’s start to incorporate an eighth co-operative principle. Let’s search for ways to make it real, to make public understanding and promotion of the co-operative model a priority.

I hope you’ll keep the flame alight and keep stepping even past my time. I am mindful of another biblical forecast, in the ninetieth psalm, that “The days of our years are threescore years and ten yet if by reason of strength they be fourscore years, this strength will bring labour and sorrow yet it is soon cut off and we fly away.”

I won’t be fourscore for another month but I’m quite a bit older now than were Ian, Mark or Mauril when they departed. I can’t say why this has happened, why I’ve lasted longer than better men. But if it was for anything, let it be to perpetuate a message to all those in this co-op generation and beyond who would like to carry the movement forward more vigorously. Shout it out.

Remarks above were delivered at a meeting of the Ottawa Co-op Network, March 22, 2018.

The Co-op Principles

Original version (set out at Rochdale in 1844; adopted by ICA 1937)

  1. Open membership
  2. Democratic control (one person, one vote).
  3. Distribution of surplus in proportion to trade.
  4. Payment of limited interest on capital.
  5. Political and religious neutrality.
  6. Cash trading (no credit extended).
  7. Promotion of education

ICA revision (1966)

  1. Open, voluntary membership.
  2. Democratic governance.
  3. Limited return on equity.
  4. Surplus belongs to members.
  5. Education of members and public in cooperative principles.
  6. Cooperation between cooperatives. [Which led to federations]

 ICA revision (1995)

    1. Voluntary and Open Membership
    2. Democratic Member Control
    3. Member Economic Participation
    4. Autonomy and Independence
    5. Education, Training and Information [Promotion and public affairs sublimated here]
    6. Co-operation among Co-operatives
    7. Concern for Community

Summit suicide. Assisted.


It was a very good year for co-ops.

In New York the United Nations declared the International Year Of Cooperatives. When the UN declares a year for your cause you know you’ve arrived.

In Belgium the International Co-operative Alliance (ICA) published a Blueprint For A Co-operative Decade. It challenged the billion co-op members around the world to build the fastest growing sector of the global economy by 2020.

In Italy the inaugural edition of the World Co-operative Monitor was published by the European Research Institute on Cooperative and Social Enterprises (Euricse). It recorded that the top three hundred co-op enterprises around the globe had revenues of more than $2 trillion.

And in Canada the financial giant Desjardins Group (No. 38 on Euricse’s Top 300) co-hosted the biggest blowout the cooperative sector had ever seen. At a cost of $10 million, more than 2,800 people came from more than 90 countries for the International Summit of Cooperatives in Quebec City.

IYCLogoHyphenless251X188The year was 2012, known still among cooperators as IYC.  The United Nations has been designating “international years” for more than half a century to draw attention to major issues and encourage action. The year for co-ops was meant to raise awareness of ways that co-ops fight poverty, create jobs and improve social integration. It would also highlight the cooperative model as an alternative way to do business. Ban Ki-Moon, UN Secretary-General, said “Cooperatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.”

The International Co-operative Alliance, formed in 1895, is at the apex of the worldwide cooperative movement. (Apex is the actual term in use for top-level co-op associations.) Responsible for the usual industrial association concerns, primarily lobbying, the apex also maintains focus on the principles that underpin all cooperative activities. There are seven co-op principles, primarily calling for open, democratic, informed and equitable operations in member-owned enterprises that run the gamut from daycare, housing and farming to renewable energy, insurance and banking. The apex is keeper of the flame with particular emphasis on the sixth principle that calls for cooperation among cooperatives. ICA claims to represent 1.2 billion members in some 2.6 million cooperatives worldwide.

At the head of ICA in 2012 was Dame Pauline Green, a force of nature who was born in a British barracks and traipsed from post to post wherever her father was stationed. With scarcely any formal education, she found secretarial work, then a spot on the police force. A determined run of adult studies culminated in an M.Sc. from the London School of Economics and an interest in politics. Leroux & GreenEditIn 1989 she won North London’s seat in the European Parliament. As leader of a socialist wing she became a strong advocate of parliamentary reform, was re-elected twice and after a decade there were rumours she would stand for Mayor of London. Instead, on New Year’s Day 2000 she became chief executive of England’s biggest consumer cooperative, leading it through a decade of merging with the second biggest and responding to 60 recommendations from an independent commission charged by Prime Minister Tony Blair with finding ways to develop and modernize the co-op sector. A decade later she would hand off this torch and pick up another in Brussels as president of ICA.

Nailing commitment for a UN-sponsored international year is not a breeze – there are lots of claimants for UN years – but Dame Pauline was no stranger to the complexities of international politics. (As well as Dame Commander of the Most Excellent Order of the British Empire, she holds honours from Greece, Austria and Cyprus.) Soon after she signed on with ICA, 2012 was designated the UN’s International Year of Cooperatives. Dame Pauline then set out to make sure IYC would be the first of the best ever years for co-ops.

The Blueprint would set the agenda, building on IYC for the decade to follow. The ambitious plan, labeled 2020 Vision, was for the cooperative business model to become not only the fastest growing form of enterprise but also the model preferred by people as well as the leader in economic, social and environmental sustainability. It was asking for a lot in perilous times. The shockwaves from the 2008 financial meltdown had hardly subsided. But Dame Pauline saw it as a moment of historic opportunity As the Blueprint put it, “With political institutions in many nations struggling to keep up with a rapidly changing world, it is essential that citizens become increasingly resourceful, enterprising and co-operative . . .

“The co-operative model is a commercially efficient and effective way of doing business that takes account of a wider range of human needs . . . Uniquely among models of enterprise, co-operatives bring economic resources under democratic control. It is an approach that works on a very small and on a very large scale.”

The Blueprint was meant to stir the troops to take the co-operative message to the wider community. To provide evidence for co-op evangelists, ICA helped launch the annual World Co-operative Monitor. Its seventh edition in 2018 surveyed more than 2,500 organizations worldwide, 40% in insurance, banking and financial services, 35% in agriculture, 19% in wholesale and retail trade and a sprinkling in industry, utilities, health, education and social care. More than 1,100 of them had turnover above $100 million in 2016.

ICA Blueprint cover233X321The Blueprint and the Monitor cost a pretty penny between them. Money is scarce at the apex of co-operatives, where there is a strong tendency always to look for ways to spend less. There’s no budget, for instance, to pay the full-time president of ICA. The president comes to office on his or her own dime, or in the case of Dame Pauline on the dime of The Co-operative Group, where she had been CEO. With its origins among people without capital coming together in groups to buy or to build what none could manage alone, spending less is in the co-op DNA.

But of course 2012 would be different. For a celebration, the sector would put its best foot forward. And whatever the costs of the Blueprint and the Monitor, they paled in comparison with the Quebec Summit. If IYC was the crowning of the global co-operative movement, the Summit was its crown jewel.

The International Summit of Cooperatives, intended to showcase the business Stephane Bertrandachievements and potential of cooperatives, took two years to organize. Engaged to lead the team and produce the event was Stéphane Bertrand (left), an imposing (>6’4”) PR pro who previously had been chief of staff to Quebec Premier Jean Charest. It featured more than 150 speakers over four days in October 2012, published 44 academic papers in a 665-page book and sponsored nine studies considered “groundbreaking” because so few studies of cooperatives had ever been done. Two-thirds of the studies were presented by the four top international consulting firms, McKinsey, PWC, Deloitte and E&Y.

There would be dozens of corporate contributors to the Summit. The federal and Quebec governments each kicked in $1 million. But the chief organizer and biggest backer by far was Desjardins Group, which housed the organizing team and absorbed a multi-million dollar loss. The executive director of Canada’s co-op apex at the time, Denyse Guy, observed that Desjardins was the only organization in the Desjardins Logocountry with the resources to back such a project. Her own institution, the Canadian Co-operative Association, speaking for 9,000 co-op businesses and 18 million members, had lived within the same constrained budget of $2 million for a dozen years. Zero annual increase. (When CCA merged with its Quebec equivalent and formed Co-operatives and Mutuals Canada, CMC, in 2014, the budget actually decreased.) Denyse Guy would later be invited to join the board of directors for the Summit.

Desjardins Group has unique status within Quebec, among cooperatives and as part of the financial sector. It’s the sixth largest financial institution in Canada with assets over $275 billion, ranking just after the big five chartered banks, and far-and-away the largest cooperative in the country, with seven million members of the eighteen million national total. (In Bloomberg’s annual ranking of the world’s strongest banks, Desjardins Group is usually among the first five. It’s unique among them in that it isn’t a bank at all. It is a caisse populaire, comme on dit au Québec, which is the same thing as a credit union anywhere else. Quite distinct from commercial banks, credit unions are part of the co-operative sector of the economy.)

The CEO of Desjardins in 2012 was Monique Leroux, 58 but looking mid-40s. Fluently bilingual, awesomely intelligent, petite and beautifully chic, she would be rara avis in any culture. Since taking the reins in 2008 she had played Desjardins to center stage of the co-operative world with the fierce determination of a born competitor and the grace and skill of the concert pianist she trained to be, before opting for accounting as a profession.

Ms. Leroux studied at the Conservatoire de musique du Québec while growing up inMonique Leroux2-161X179 a suburb of Montréal. But she says “modest family circumstances” precluded going on to Europe, the next step in a classical career. Turning to business studies she found her credits in music were of little use in a commerce course but she was accepted at a branch of the Université du Québec in Chicoutimi, a borough 450 miles northeast of Montreal. After graduation she joined Ernst & Young where she managed corporate and large business sectors and became its first female consulting partner, then transitioned to VP at the Royal Bank and had a stint at troubled printing and media giant Quebecor before joining Desjardins in 2001.

She rose to the top job at Canada’s largest co-op shortly before Lehman Brothers filed the biggest bankruptcy in history. What followed was the global financial crisis of 2008, big bank bailouts, deep and prolonged recession, car company rescues, soaring American joblessness and Europe’s sovereign-debt crisis.

Through these serial overlapping cataclysms Ms. Leroux proved herself a management black belt disguised as tinkerbell, steering Desjardins with sure and steady focus. Total revenues rose from $8 billion in 2008 to $13 billion in 2011. Assets on her watch grew from $152 billion to $190 billion. Pre-tax operating income soared to $2 billion from a scant $186 million in 2008 when Desjardins had to write off more than a billion dollars of debt acquired prior to her first term.

ICY brought Ms. Leroux to international prominence. She created the Summit of Cooperatives in Quebec City to show the world that co-operatives can work for both people and profit. It wasn’t going to be just another conference, she vowed, “It has to be not just good, but emotionally positive – there has to be a taste to come back.” In the event it drew thousands of participants to an extravaganza of Hilton light and sound in the ambiance of old Quebec that was universally judged a spectacular success. Monique Leroux and Dame Pauline made a joint presentation of a statement from the Quebec Summit to the U.N. at a ceremony in New York to conclude ICY. Costs estimated at $10 million were recovered to some extent from sponsorships and participation fees but a substantial deficit was covered by Desjardins.

It was evident that the Quebec Summit had a ring to it and could grow to mean something significant within the global cooperative movement. A successful second Summit had potential to develop into a Davos-like forum for co-ops in Quebec City, the historic birthplace of Canada and across the St. Lawrence River from Lévis, where the credit union movement had its start in North America in the late 19th century at the home of Alphonse Desjardins, founder of the company that bears his name.

The Davos allusion was advanced by Ms. Leroux herself who hasn’t forgotten where she comes from. Apart from numerous other public and co-op tasks, she sat on a council of the World Economic Forum (Davos by its official name), was a member of the Trilateral Commission and one of just two co-op CEOs on the Canadian Council of Chief Executives.

Despite the $1,700 entrance fee, let alone travel and hotel costs, the second Quebec Summit in October 2014 once again attracted 3,000 participants from over 90 countries. A Quebec Summit Declaration signed by Ms. Leroux and Dame Pauline was presented to the G20 Leaders’ Summit in November 2014. Close observers estimate the overall cost of this edition at $13 million. The extent of the shortfall, if any, is unknown outside Desjardins and the Summit board.

The third edition of the Quebec Summit, by then described in the literature as a “bi-annual event and a central organizing force in the international co-operative movement” was held October 11-13, 2016. More than one major co-op planned its AGM to coincide with the Summit, bringing directors along. It was another sellout, with “more than 3,000” participants from 113 countries, boosting awareness and providing a high level forum for cooperation globally among cooperators. Finding ways to work together is among the core principles of co-ops.

Monique Leroux was still front and centre. She was no longer CEO of Desjardins. After two terms in that office retirement is mandatory. But by remarkable coincidence her new job presented itself almost simultaneously. She was now president of ICA, replacing Dame Pauline, who had to resign in 2015 after The Co-operative Group ran into financial trouble and cut its support for her office. Ms. Leroux easily won an election to serve the remaining two years of Dame Pauline’s term. Desjardins would step up to fund its former chief in her new role.

However her new role, now based in Brussels where ICA has its headquarters, was complicated. Guy Cormier, a co-op lifer and her successor as CEO at Desjardins, signaled a different approach soon after taking over by dismissing a dozen vice presidents. Going forward with the Quebec Summit was not in his plan. Desjardins would be there for the Summit but not as primary organizer and sponsor.

This was not as big a setback as it might have been. By its third iteration in 2016 the Quebec Summit was doing better than break even. Costs had been contained while revenues were maintained. The Summit had won a reputation as a go-to event for the co-op establishment and an established client base. It had a functioning team under Stéphane Bertrand, profit in reserve and a lively prospect list. ICA was still an official sponsor. Monique Leroux was still in charge.

The hunt for a new co-sponsor for the 2018 Quebec Summit ranged far and wide. Major European co-ops, some in France much bigger than Desjardins, gave it a pass. For a while it appeared that Mohammed VI, King of Morocco (his family has run the country since 1631), was interested but in the end there was insufficient co-operative heft in the kingdom to support a summit, not to mention it would mean relocating from Quebec.

But it wasn’t long before the better alternative presented itself. When she took office at the Alliance there were already discussions underway for “an overarching solution that could bring together several co-operative initiatives.” Out of the Leadership Circle at ICA comprised of reps from bigger businesses came a proposal to create an International Co-operative Center (ICC) “from which to launch the co-operative business world to another level.”

She would champion the committee’s vision and add a critical component. To give itICC cover a push and substance from the start, ICC would embed the successful and by now self-sustaining Quebec Summit. ICC would “capitalize on the International Summit of Cooperative capabilities (tools, team, contacts…).” Moreover she knew just where such an international centre could be set up: in her home province of Quebec. Not Quebec City, where the Summit was held, but Montreal was the right place for the ICC, which would have a number of different activities and roles to advance B2B marketing among co-ops, syndicated research, a networking platform and programs. ICC would have global reach and speak to the interests of the Top 300 in the World Monitor and those that aspire to get there, including many of the 3,000 participants crowding the Quebec Summit every two years.

Even before the proposal was ready for the ICA board, she was pitching the concept at the highest levels. Connections were good enough that two-thirds of the $30 million in projected startup costs for the ICC was soon pledged by the provincial and federal governments. The timing wasn’t bad – Montreal was about to celebrate 375 years and feeling expansive. A grant of $5 million was under active negotiation with the city.

In June she took it to the board of CMC, the apex of Canadian co-ops. A director who was present says “CMC’s board did not have a lot of enthusiasm, I think because they thought that seeking resources for this centre would hurt the chances to obtain CMC logo-237X61federal resources for co-op projects that were higher priority. . . [Nevertheless] the board decided eventually they would support it if . . . it was to be part of ICA’s new strategy.” Canadian co-ops would follow CMC’s lead. Rob Wesseling, CEO of The Co-operators Insurance company, who was a big supporter of the Quebec Summit for “creating opportunities for leadership in the sector,” says “we decided that the Canadian apex was the right place to get a decision” on ICC.

Not everybody would be so reluctant. Ms. Leroux would soon be able to report $1.5 million in confirmed commitments for ICC from “private partners, mostly co-ops”, with another $3 million “of declared interest.”

The Summit now was incorporated in the Center. Or was the Center a creation of the Summit? It wasn’t entirely clear. The draft 42-page business case for the ICC circulated September 11, 2017 has three logos on every page. One is for the Alliance and another for the Summit. The third identifies the primary author of the report, Ernst & Young, an active Summit participant from the start and one-time employer of its chief protagonist, Monique Leroux.

But where is she? To the surprise and consternation of the co-op world, she announced September 5 she “would not be putting my name forward again” for the ICA presidency, a decision she said she was making “for important personal and family reasons.” To say this was a shock to the system would be to understate it. Alongside Pauline Green she had helped launch a new age for co-ops with IYC. She had provided team members and support to produce the ICA Blueprint for a Co-operative Decade and the World Co-operative Monitor. She had created and sustained the Quebec Summit, which had become a signature global event.

Moreover, because she was filling in for Dame Pauline, she had completed only two years of a term that usually runs for four. It was universally assumed she would carry on with her own mandate, including ICC, a bright new star in the co-op constellation. Re-election was certain if she ran.

During her brief time at the helm she had scored in a handful of key areas: globalization, sustainable development, interco-operation, innovation and gender and youth equality and inclusion. In each catgory she could list a half dozen or more specific achievements or events that gained a yard if not a goal. On each list the 2016 Quebec Summit was featured

The ICA annual meeting is held in Malaysia in the fall of 2017. On November 13 the retiring board meets in Kuala Lumpur to hear an upbeat presentation about ICC from outgoing President Leroux, including reaffirmation that Canadian governments have committed more than $20 million to the project. On November 17 the incoming board meets with the new president, Ariel Guarco of Argentina. ICC is not mentioned. It’s a crippling blow.

Buried in the footnotes of the ICC proposal by E&Y is a caveat. “The Canadian Public funding comes with the following expectations: that the ICC is headquartered in Montreal and that a public announcement is made in November/early December 2017.”

There won’t be another ICA board meeting until January 2018. At that meeting there’s a lively discussion of ICC, much of it favourable, but for some new directors it’s the first they’ve seen of the proposal. Ariel Guarco suggests it be taken up again at the next meeting to give everyone time to read and reflect on the plan. Agreed. But it was too late for ICC. A month later she pulled the plug.

Monique Leroux had resigned but she wasn’t gone. How could she leave? The Quebec Summit was her invention. ICC was being developed and promoted by the Summit team she led, based in Montreal. Monique Leroux was involved in all of it, for better or for worse. It was going to be worse.

In a letter addressed to Ariel Guarco on February 27, 2018, she wrote, “I regret to inform you that we will not be going forward with the Center at this time.”

Why not?

“Despite the will of the governments of Quebec and Canada and the city of Montreal to proceed,” not all the conditions for launch were in place.

And the Quebec Summit?

“You will appreciate that this [decision] . . . compromises future editions of the International Summit of Co-operatives since their funding was partly included in the financing” for the Center. In a follow-up letter March 5 she confirms that the Summit is no more. This is six months to the day after she quit. It’s over. The energy, passion, the tens of millions of dollars, the sponsors from all sectors, tens of thousands of participants from all nations, the visitor bonanza for Quebec City, the injection of unique co-op IP, networking, interco-operation, learning from world leaders, all gone. The Summit has committed suicide. Assisted.

Monique Leroux3In her resignation letter Sept. 5 she wrote, “Due to some very particular personal circumstances, I am forced to limit my activities outside Canada.”

Those very particular personal circumstances concerned her mother, who was in her mid-90s, hadn’t been well and was made anxious by her daughter’s frequent trips abroad (40 countries in three years). She gave up the job to cut back on travel to comfort her mother.

Did she have any inkling when she made this decision that all she had created and nurtured was going to implode as soon as she departed? She vehemently denies it, insisting until the day she stepped away that more than two-thirds the required start-up capital for ICC was committed.

But she also knew a large chunk of the commitment was time sensitive. The feds, for reasons inscrutable, required an announcement of ICC by early December at the latest. When the new board with a new president failed to take it up at its initial meeting in November, which was the last one in 2017, the writing was on the wall – going, going. After the January meeting when ICC was punted forward for more discussion, it was gone. And after all was said and done, that was the reason Monique Leroux gave for the collapse of the Center, carrying with it the Summit. The ICA did it in.

Her letter canceling the Center despite the will of governments to proceed, says “not all conditions for launch were in place.” But she specifies only one unmet condition: “a timely commitment by the International Cooperative Alliance” wasn’t forthcoming. An ICA official endorsement of the plan was essential. It would stiffen public funding for ICC and bring along laggards at the apex like CMC with their big co-op members, some of which dominate the provinces where they operate.

The chance to solidify that commitment fell between regimes over four days in November. The outgoing president failed to bring it to a vote. The incoming president failed to take it up in time. Left unsaid was that outgoing and incoming might have been seamless and the same had Monique Leroux wanted it so.

She makes appearances to distribute the remaining proceeds of the Summit, a couple of hundred thousand here, a few hundred thousand there. There was no Quebec Summit in 2018. But mirabile dictu, wonder to tell, it has $650,000 left over from prior years to be sprinkled among co-op projects deemed worthy.

Mostly though she tends these days to the business of a Montreal-based international wealth management firm that has rocketed from zero to handling $129 billion in less than fifteen years, where she’s a “special advisor,” and she chairs the board of directors at Investissement Québec, the province’s economic development agency.

When last I spoke with Ms. Leroux late in August she said her mother was feeling much better.

Wasting Time At Government’s Take-Out Window


The question posed in the previous post (Co-op Apex Tries Second Hail Mary Pass) was how Co-operatives and Mutuals Canada (CMC) has come to believe that Ottawa would or should provide $50 million, or any millions, to help build co-op businesses? At the most charitable, it’s a simple and direct request, but some would say unsophisticated. Naïve. Could this be because CMC put its in-house lobbyist out to contract in early 2014 and didn’t bring a new one on board until this month (February 2016)? Not really. That’s more a symptom than a cause.
The benefits co-ops will provide for such munificence are not self-evident and the public, including its government, is largely unaware of what they might be. Some would say, I would for instance, that this is a high hurdle to surmount. Surely awareness has to precede assistance. The Hon. Mauril Bélanger, who has been a champion for co-ops on Parliament Hill and was founder of the Parliamentary co-op caucus, has said more than once, “They would do well to market themselves better and develop more effective messaging,” MPs at one caucus meeting told co-ops to be conscious of the fact that they are just one sector of many approaching government for financial assistance.
There are 9,000 co-operative enterprises in Canada. Co-operatives provide nearly 900,000 full-time equivalent and spinoff jobs. Their operations contribute more than $22 billion directly to Canada’s GNP. Through spinoffs the overall impact is more than doubled to $55 billion. The numbers are from 2010, the latest available.
Most co-op enterprises are small and medium sized (SMEs) just like other corporations. In Ottawa, where I am, I know of a chocolate maker, specializing in fair trade cocoa and sugar, an engineering consultancy building apps for mobile devices and an alternative energy company that has raised $5 million from members to install solar panels on school and housing rooftops. But some grow to substantial size. In the province of Quebec, there are just three mega financial institutions that underpin and overarch the entire provincial economy. One of the three is a co-operative, which is also ranked by Bloomberg as the strongest bank in the west but that’s another story. The biggest business in Saskatchewan is not potash. It’s an agricultural and energy co-operative.
?????The largest sporting goods retailer in Canada is a co-operative. More than a quarter million Canadians live in housing co-ops in every province and territory. In Manitoba, co-ops are of such moment that the provincial government got involved in the battle of the hyphen that rages between the U.S. and Britain (cooperative vs co-operative) and opted to go hyphenless in defiance of the national adoption of Britain’s co-op dash. A third of Canadians belong to at least one credit union, a co-op by another name. More than half of all Calgarians carry a Calgary Co-op card for groceries and fuel supplies.
How is it that so little of this, if any of it, has seeped into public consciousness? Co-op is a word often enough heard but devoid of any meaning or significance in public discourse about how things should be done. Co-ops are seldom if ever on the agenda when the powers-that-be convene to decide. Why is it that a form of enterprise that throws up provincial champions and commercial heavyweights doesn’t get a seat at the table?
The blame has to lie squarely at CMC’s door. Eschewing the more familiar ‘association’ label, CMC is styled the ‘apex’ of the co-op sector, with a mandate to promote the sector and lobby government on its behalf, among a host of other services it must provide for its members. Like any conventional association, it is dependent on member dues for its operations. And while it claims to represent 9,000 enterprises (with 18 million members, a ludicrous estimate based on much double counting, more likely fewer than six million individual members), in fact there are only about half a hundred members of CMC. (The 9,000 are rolled up into regional and sectoral groupings that are then allowed into CMC — hundreds of credit unions are represented by a credit union association; a quarter million residents of housing co-ops speak at CMC through the Co-operative Housing Federation of Canada.) Among CMC members, only a couple of handfuls actually count. If the 1% is a bugaboo for the population as a whole, the co-op sector takes it down an order of magnitude. About 0.1% of co-op enterprises in Canada, a few from agriculture, a few from retailing, a few from financial services, pay most of the freight and call most of the shots at CMC.
And this directorate keeps a very tight rein. For the past dozen years the budget of CMC has scarcely moved from $2 million annually. There was a slight uptick this year but it’s uncertain that it will stick, since one of the biggest players and payers has taken umbrage at its upwardly revised fee. Basically, once the relentless impact of inflation is calculated, CMC has been able to do less and less every year with the budget allowed.
A tightwad approach is pretty well intrinsic to the co-op world. Their focus is almost entirely inward. In some ways, despite their success, they are more like self-help groups than businesses. This is partly a matter of history and tradition. The origin of co-ops in England in the mid-19th century and in Canada not long after, was among people whose interests were not being served by capitalists or protected by governments. So they banded together to help one another, volunteering their time, talents and sweat in place of capital. And where it was tried, it often worked. Not always. But then there isn’t anything that always works. By one measure, co-ops work better than the rest. That measure is longevity. Ten years after startup, only two of ten conventional corporations are survivors. More than twice as many co-ops survive that long. How is it that nobody knows this? Because CMC has no resources to get the word out and nobody else in the sector has the platform.
There was much applause back in 2012, which not entirely coincidentally was the U.N.-declared Year of Cooperatives worldwide, when CMC announced the $20 million Canadian Co-operative Investment Fund (CCIF). Three co-ops leapt aboard as founders, pledging a total of just over $10 million. And then . . . then . . . then not much. Seldom was heard an encouraging word. By 2013, when the fund was supposed to be operating, three more co-ops were in and pledges had crept up to almost $14 million. By the end of 2014 the total in the fund was still shy by a whisker of the original goal, at $19.35 million. This was still the total in the business case published in April 2015, which reported that the number of founding partners then stood at eight. One of these, The Co-operators insurance company, has since doubled its commitment to $10 million, bringing the total to just shy of $25 million, of which The Co-operators has pledged more than 40%.
CCIF still has not put out Investment #1 and, as the previous post notes, some potential supporters are still waiting to see what the government does. And of course there is many a slip between a sponsor’s pledge and a sponsor’s cheque. After four years it’s still a wait and see proposition.
Canada’s own Ian MacPherson, solon of the sector for many years and responsible for the 1995 update of co-op principles, wrote that “outsiders will not readily learn about a movement that does not broadly project into the public square what it is and why it is important.” Until CMC marshalls resources enough to do this projecting and get its investment program running, it’s just wasting time hanging around the government’s take-out window.

Co-op Apex Tries Second Hail Mary Pass


It’s not exactly a secret that Co-operatives and Mutuals Canada (CMC) has asked the federal government for $50 million. Not a secret but not widely publicized, either. CMC directors knew of it, a few others, but not altogether easy to defend and a bit embarrassing actually. It was a pre-budget submission e-mailed to Finance Minister Bill Morneau on January 18, 2016. The same request was made of the previous government back in 2014. It was ignored by Conservatives. Odds on it will get the same non-response from Liberals.
When the pitch was first made two years ago, I wrote a scathing report. I didn’t publish it, much now to my regret. If I had, perhaps the second cap-in-hand approach to the feds could have been avoided. You can get a sense of what I didn’t print in 2014 from the opening:
Puerile. That’s the word that best describes the co-op sector’s pre-budget submission in Ottawa last month (Oct. 2014).
The presentation starts with nothing short of bravado and follows with one bold request.
“Today,” says the rep from Co-operatives and Mutuals Canada (CMC), “I’ll be speaking directly to the topic of how the Canadian co-operative sector can increase the competitiveness of Canadian enterprises through research, development, innovation and commercialization.”
(I don’t name the rep because this embarrassing incident was a team effort by senior management.)
It was a wow of an opening, involving just about every buzzword, every hot button, every call to action that commands government attention. Research, development, competitive, innovation, commercialization. Who could ask for anything more?
Fortunately nobody did ask for anything more because there is no scintilla of evidence in the submission that CMC has ideas on any of these topics. In fact four of the five words never recur in the presentation. The word that does recur — development — is cleverly transformed from economic development, the notion first introduced, into the core ‘ask’ of the submission, development of “our own national investment fund.”
Then CMC gets right to it. Thirty seconds into its presentation it’s asking the federal government “to provide concrete support to co-operative development by investing $50 million in our Canadian Co-operative Investment Fund (CCIF).”
I admit my prose was somewhat over-the-top (perhaps the reason I didn’t publish at the time), but the most recent submission basically repeats the rationale of the first, and includes a similar, though not exactly the same, set of numbers. The entreaty to Minister Morneau reads:
“The Canadian Co-operative movement has committed over $25 million to the Canadian Co-operative Investment Fund, to loan capital to co-operatives.”
Let’s stop for a moment. If I may employ the most parliamentary of terms, this is a terminological inexactitude. CCIF had slightly less than $25 million in pledges, not over $25 million, and had been stuck there for many months as potential investors waited to see whether and what the government might provide.
The brief to the Minister continues:
“With a $25 million initial contribution, it is anticipated that CCIF will positively impact approximately 180 enterprises by providing $45 million in capital investment over a ten year period. If the fund secured a total of $75 million in pledges, it would positively impact 720 co-op enterprises with a cumulative contribution of $180 million to the sector over the same ten year period.”
The numbers are derived from a business case for CCIF produced in April 2015 (written about here). The biz case says (Morneau numbers in brackets) that $25 million would provide 232 (180) loans worth $58 million ($45 million) over ten years while $70 million would provide 688 (720) co-op enterprises with loans worth $172 million ($180 million) over the same decade.
It’s obvious in the first place that the pitch to Morneau lowballs what can be achieved if CCIF has to soldier on alone. The numbers are simply lowered, without explanation, from one presentation to the next, raising a real question of how CMC arrives at its estimates. Not so obvious is the shift skyward in results when government aid is factored in. The reason it’s not obvious is because CMC changes the bottom line from $70 million in 2014 and the biz case of 2015 to $75 million in the Morneau presentation. The net result is that the co-op sector looks weaker by itself in 2016 than it appeared in 2014 and stronger if government would just say yes.
So what if the numbers are fudged? A lot of numbers are fudged, aren’t they? There are professions dedicated to fudging numbers. But other questions arise.
Even if the numbers can be explained, why should the government provide funds? If the investments are meant to pay a return, why are co-op financial institutions not more involved? (Why has it taken years longer than predicted to get the fund to near-operational?) If the co-op sector really needs taxpayer assistance, what’s the case for it, what are the public benefits? Of course jobs will be created, but more jobs than the same investment in profit-churning enterprise would create? Better jobs? By what measure? The benefits are not self-evident and the public, including its government, is largely unaware of what they might be.
How CMC has come to believe that Ottawa would or should provide $50 million, or any millions, to help build co-op businesses, I do not know. Actually I have an idea but I’ll leave that to another post.

Leroux’s dues paid to succeed Green at ICA


UPDATE Nov. 13, 2015: To no-one’s surprise, Monique Leroux was elected today as president of the International Co-operative Alliance at its global conference in Antalya, Turkey, the first Canadian and second woman to hold the post.

There are three things maybe you don’t know about the strongest bank in the west. It’s Canadian. Its CEO is a woman. And it’s not a bank.
It’s not so surprising that it’s Canadian. As Bloomberg notes, Canada “dominated the 2012 ranking . . . and Canadian Imperial Bank of Commerce is the only North American bank to appear in the ranking” for five years running. But CIBC is ranked only 18th this year (based on 2014 results). Desjardins Group is 5th, stronger than all others in North America and Europe, outranked only by four banks in money pits Hong Kong, Singapore, Japan and Saud Arabia.
Nor is it so unusual for there to be a boss lady. The very strongest bank in the world, according to Bloomberg, is Hong Kong’s Hang Sheng Bank, which is run by 62-year-old Rose Lee. Rose is just a year older than Desjardins Group’s Monique Leroux.
But Desjardins Group is unique among the world’s strongest banks in that it isn’t a bank at all. It is a caisse populaire, comme on dit au Québec, which is the same thing as a credit union anywhere else. Quite distinct from commercial banks, credit unions are part of the co-operative sector of the economy. And therein hangs a tale that, if the stars are properly aligned, is about to carry Ms. Leroux to the apex of co-operatives as president of the International Co-operative Alliance (ICA).
Monique Leroux would be rara avis in any culture. Fluently bilingual, awesomely intelligent, beautifully chic, she has played Desjardins to center stage of the co-operative world with the fierce determination of a born competitor and the grace and skill of the concert pianist she trained to be, before opting for accounting as a profession. Since she took over in 2008, Desjardins Group’s annual income has grown from $8 billion to more than $15 billion and assets from $150 billion to $230 billion. Prior to joining Desjardins, she had been a senior vice-president at the Royal Bank of Canada and before that managing partner at Ernst & Young, in charge of corporate and large business sectors.
Leroux & GreenEditMs. Leroux (left in photo) is the only woman among four candidates for the top job at ICA, succeeding Dame Pauline Green (right) of the U.K., who is the first woman ever to head the 130-year old organization. Dame Green’s main claim to fame was the International Year of Cooperatives proclaimed by the United Nations in 2012. ICY gave the co-operative sector, which is enormous and pervasive but feels greatly underappreciated, an unprecedented boost in global self-esteem.
It was ICY also that brought Ms. Leroux to international prominence. She created the International Summit of Cooperatives in October 2012 in Quebec City. The meeting would show the world that co-operatives can work for both people and profit. It wasn’t going to be just another conference, she vowed, “It has to be not just good, but emotionally positive – there has to be a taste to come back.” In the event it drew more than 3,000 participants to an extravaganza of Hilton light and sound in the ambiance of old Quebec that cost an estimated $10 million and was universally judged a spectacular success. Ms. Leroux and Dame Green made a joint presentation of a statement from the Quebec Summit to the U.N. at a ceremony in New York to conclude ICY. Costs were recovered to some extent from sponsorships and participation fees but a substantial deficit was covered by Desjardins.
In the Canadian context, this was a massive commitment. To put $10 million in perspective, Co-operatives and Mutuals Canada (CMC), the apex of Canada’s co-op sector, and its predecessor the Canadian Co-operative Association, operated on the same $2 million annual budget for a decade.
It was evident that the Quebec Summit had a ring to it and could grow to mean something significant within the global cooperative movement. A successful second Summit had potential to develop into a Davos-like forum for co-ops in Quebec City, the historic birthplace of Canada and across the St. Lawrence from Lévis, where the credit union movement had its start in North America at the home of Alphonse Desjardins, co-founder with his wife, Dorimène Roy Desjardins, of the company that bears their name.
The Davos allusion was advanced by Ms. Leroux herself who hasn’t forgotten where she comes from. Apart from numerous other public and co-op tasks, she sits on a council of the World Economic Forum (Davos by its official name), is a member of the Trilateral Commission and is one of just two co-op CEOs on the Canadian Council of Chief Executives.
Though it might be characterized as a blowout for the co-operative elite who can afford the $1,700 entrance ticket, let alone travel and hotel costs, the second Quebec Summit in October 2014 once again attracted over 3,000 participants from more than 90 countries. A Quebec Summit Declaration signed by Ms. Leroux and Dame Green (ICA is nominally a co-sponsor) was presented to the G20 Leaders’ Summit in November 2014. Close observers estimate the overall cost of this edition at $13 million. The extent of the shortfall is unknown outside Desjardins.
Naturally the municipality, which is also the provincial capital, has an interest in the event. Most of those millions are spent in Quebec City, plus hundreds of thousands more by 3,000 visiting shoppers. The province stepped up with $1 million to defray costs for the first Summit. The extent of its contribution to the second is not known.
ICA is an important co-sponsor for the Quebec Summit. It bestows credibility and access, reaching into every corner of the world to potential paying guests at the Summit. But ICA hasn’t any money of its own. In fact the post that Ms. Leroux is reaching for, “historically has been self-funded and the ICA president was required to attract independent or host country funding for travel, any support staff, and any honorariums.” Based in Brussels, custodian of the seven principles of co-operation, the office employs less monetary clout than moral suasion. But it is solidly grounded in the real world of economics and politics. ICA’s president speaks for enterprises worldwide that employ 250 million people. The 300 largest co-ops alone generate US$2.2 trillion in revenue annually.
(A request to CMC, official Canadian member of ICA and ostensibly the nominator of Ms. Leroux, for information about how these expenses are to be covered if she is successful, had not been answered by post time.)
The third edition of the Quebec Summit, now described in the literature as a “bi-annual event and a central organizing force in the international co-operative movement” will be held October 11-13, 2016. Desjardins and ICA have jointly announced this. But by then Dame Pauline Green will be retired from the field. And Monique Leroux? One thing only is known for certain. She won’t be running Desjardins in 2016. The company’s bylaws don’t allow for more than two terms and her second is up.
In its unwavering and substantial support for the Quebec Summit, Desjardins has been doing a community service by promoting the business opportunities of co-ops. It also gains momentum as a mover and shaker in the world of co-ops. It’s a great combination. And for now, guided by the sure-handed Ms. Leroux, it’s a sound business decision to backstop the Summit. That may not be the case forever; who knows what might happen if both prime movers were to leave the scene simultaneously?
If she doesn’t take over ICA, Ms. Leroux could go anywhere, she’s that rare and valuable. She could even be, God forbid, lost to co-ops. So it’s nothing less than providential that Dame Green decided to resign, even though her mandate had another two years to run, just as Ms. Leroux had to move along. The election will take place at the ICA AGM in Turkey on Friday the thirteenth of November 2015.

Co-op Enterprises: A Model That Works For Everything


A different way to build for the future in today’s economy will be on the table October 15 when the Ottawa Co-op Network hosts a free and open panel discussion at Ottawa City Hall.
The Learning Event, scheduled for a 7:00 p.m. start, will explore a business model that provides an advantageous alternative to the conventional corporate structure. Reflecting “The Co-op Advantage” theme of International Co-op Week (Oct. 12-17), the audience will hear and engage with the proposition that now is the best time ever to build on the co-op advantage.
Denyse Guy will chair the panel. Denyse is Executive Director of Co-operatives and Mutuals Canada, the apex association for the Canadian co-op sector. Panelists include co-op members Reide van Melle of Brierwood Design Co-op, Kelly Storie of La Siembra Co-operative Inc., Céline Carrière of Your Credit Union and the Co-operative Housing Association of Eastern Ontario and Kim Scott of Ottawa Renewable Energy Inc.
More than half of all Canadians are members of one or another credit union or co-operative, the unique and democratic way of organizing a business or social activity. There are about 9,000 co-operatives in Canada, employing about 155,000 people. They are exceptionally stable enterprises. A 2008 Quebec study, subsequently confirmed in Manitoba, found 62 per cent of co-ops still operating after 20 years, compared with 44 per cent from other businesses.
A co-operative is a business owned and controlled by the people who work there, use its services or purchase its products. They all turn a profit although profit is not their primary goal. Many are modern prosumer-type organizations with both worker-producers and client-consumers as members.
Co-operatives exist in every sector of the economy and can grow with the best of them — some of the biggest in Canada include the sixth largest financial institution in the country (Desjardins), the largest enterprise in Saskatchewan (Federated), Co-operators Insurance, Mountain Equipment and Home Hardware, a national dealer-owned retail co-operative. Co-ops are involved in wheat pools and health care, finance and renewable energy, apartments and houses, sporting goods, farming and food stores, internet software, child and day-care, mobile apps, insurance, fair trade coffee, funerals, car sharing. The list is virtually endless.
The Learning Event at Ottawa City Hall October 15, 2015 is free and open to the general public. It is being held in memory of Ottawa co-operator Mark Goldblatt, a nationally recognized co-op leader, visionary, and innovator who left his stamp on almost every co-op sector. Goldblatt died in February 2015. His last project was as volunteer president of the not-for-profit Funeral Co-operative of Ottawa, which opened in 2013.

Investment fund releases business case


The Canadian Co-operative Investment Fund (CCIF) has released its business case.

CCIF is the showcase venture capital initiative of Co-operatives and Mutuals Canada (CMC). The fund was launched three years back with a plan to gather $20 million of investment to support the growth of co-ops in Canada. This didn’t seem much of a stretch. The Canadian cooperative sector is a pretty big space. According to CMC, “co‑operatives, including credit unions, have an estimated $415 billion in assets. Non-financial co‑ops do nearly $36 billion a year in business. There are about 9,000 cooperatives and mutual insurance companies in Canada that employ 187,000 people of whom over 88,000 are in non-financial co‑ops.” Desjardins Financial is the sixth largest financial institution in Canada, the largest after the federally coddled and protected big five banks. Federated Co-operatives is the largest company in the province of Saskatchewan. Calgary Co-op is one of the largest retail co-ops in North America. Mountain Equipment Co-op has more than four million members. That’s the kind of clout that should nail $20 million in development funds pretty quick. You would think.

Then there’s the co-op I live in, a little boutique of nine units in Ottawa that has just 12 members and operates on a budget well under $100,000 a year. Of the 9,000 co-ops in Canada, mine might be one of the smallest but there aren’t a whole lot of biggies like those above. Most of the 9,000 would be small and medium-sized enterprises, co-opsmes. Their need for capital has long been evident. Co-ops have had difficulty getting funds for development or expansion from the usual sources since they began to be created in colonial days. It’s not that co-ops are riskier than other enterprises. Far from it. Several studies maintain that co-ops have a better survival rate than corporate startups. They are sustainable through hard times, closer to the communities they serve with more loyal customers and workers. But conservative bankers prefer not to understand the democratic governance feature of co-ops. Venture investors have no interest in businesses not built to maximize profit. Co-ops respect the need for profit but they don’t make it their religion.

There was much applause back in 2012, which not entirely coincidentally was the U.N.-declared Year of Cooperatives worldwide, when the grandees at CMC, the apex of the sector in Canada, announced the $20 million fund. Three co-ops leapt aboard as founders, pledging a total of just over $10 million. And then . . . then . . . then not much. Seldom was heard an encouraging word. By 2013, when the fund was originally supposed to be operating, three more co-ops were in and pledges had crept up to almost $14 million. By the end of 2014 the total in the fund was still shy by a whisker of the original goal, at $19.35 million. This was still the total in the business case published this month (April 2015), which also reports that the number of founding partners now stands at eight.

In the meantime, the goal has been increased to $25 million because, on inspection, it became evident that the lower amount would not have generated sufficient returns to provide adequately for management and administration of the fund.

CMC presents this business case as a restart, a new beginning for a fund that stumbled out of the gate three years ago. That’s fair enough. It puts a lot of numbers on paper which always makes financial people happy, though it goes far-too-far with financial projections reaching out a decade. It describes the potential gain for investors in the fund. The founders aren’t philanthropists. They want a return. This document presents a credible scenario. It’s a 45-page sales tool.

But toward the end it takes a different turn, a what if turn. What if the federal government were to add $50 million to the sector’s $20 million (down from $25 million in this scenario because there would be no need for the bump to pay overhead)? Well then CCIF would have $70 million to help develop co-ops in Canada. This would be a little less than three times $25 million. And what would it achieve? It would provide 688 loans worth $172 million over 10 years instead of 232 loans worth $58 million, or a little under three times as many loans worth a little less than three times as much. The argument is simple. Give us more money and we’ll do more of the same. The only major difference would be return to investors. The $25 million scenario will pay 3% dividends starting in six years and generate $137,420 in retained earnings after ten years; the $70 million scenario pays 5% dividends after four years and accumulates $6,678,988 (how’s that for precision?) after ten.

How CMC is persuaded that the feds should, could or would cough up $50 million I do not know. They asked for it in a pre-budget submission last October. They didn’t receive it from Finance Minister Oliver’s presentation this month. With the business case they’re venturing again, Hail Mary. But co-ops in the queue that started forming in 2012 have not been looking to government for support. The promises made and still unpaid came from the sector itself and that’s where they ought to be settled.

Canada’s co-op investment fund stalled


The newborn Co-operatives and Mutuals Canada (CMC) has tried to put a smile on it (see annual report, page 9) but no amount of grin can disguise the dismal non-performance of its Canadian Co operative Investment Fund (CCIF).
It has been aiming for $20 million, a woefully inadequate amount for a whole host of reasons, many of which are hashed here, but has succeeded in raising just $13 million. That number hasn’t moved in many months, a lapse the annual report doesn’t mention.
Of course ‘raised’ is the wrong word. Pledged. None of the $13 million is actually in the hands of CCIF. As CMC puts it, “It is expected that the fund will launch when $20 million has been pledged.”
This fund, meant “to support the development and expansion of individual co-operatives,” was originally scheduled to launch in 2013, when the $20 million was to be in the bank (pardon me, the CU/CP). It was being created under the “leadership of the Canadian Co-operative Association (one of CMC’s founding partners) with the support of a dedicated task force representing co-ops and credit unions across the country.”
It turns out the task force wasn’t so dedicated. The project manager in Vancouver soon proved difficult to reach (in fact Accelerator was never able to get updates from this source, despite five attempts). Apart from the three supporters — Vancity, The Co-operators and the Canadian Worker Co-operative Federation — that ‘pledged’ to launch the fund, there have been only three new ‘pledgers’, all western credit unions, in two years since.
CCIF is an initiative prompted by the sixth of seven basic cooperative principles, which says that co-ops “serve their members most effectively and strengthen the co operative movement by working together . . .” The idea was to help out by providing “access to capital that might not be available to co operatives elsewhere.”
It’s particularly embarrassing to note that the original intention was for the fund to launch “with between $20 million and $40 million in pledged sector support.” Even this was somewhat niggardly, given that a sectoral convention a few years earlier called for a fund of $70 million, leading ultimately to $200 million by 2020. That was then. Co-ops (or their leaders) apparently have grown more conservative since.
The CCIF result so far is dismal. CMC would do well to acknowledge it and find out what’s wrong instead of pretending that peelings are potatoes. If this mega-billion dollar sector can’t cough up $20 million for startups and growth, it can hardly be called a movement at all, except in the most anal sense.

Decade of penny pinching endorsed by new apex of co-ops


“Out with the old, in with the same old” Is the brave declaration of the brand new Co-operatives and Mutuals Canada.
I speak primarily from my English side. I haven’t been on the job long enough to know the history of Conseil canadien de la coopération et de la mutualité (CCCM), the French equivalent of the former Canadian Co-operative Association (CCA). These are the two apex organizations that have emerged as CMC. A segment of CCA has continuing existence as the international development arm of Canada’s co-op movement, funded primarily by government.
CMC logo-237X61The old CCA hasn’t had a budget increase in more than a decade. CCCM may have been more aggressive, though that’s hard to imagine given the outcome of their marriage. That outcome is a “more of the same less is enough” approach to co-op development.
At the start of a new era of co-op unity in Canada, in the wake of the International Year of Cooperatives (2012), the overwhelming success of the Quebec Summit (at a hyped cost estimate of $10 million) and the challenge from the International Co-operative Alliance to make co-ops the fastest growing form of enterprise by 2020, CMC is poised for a great leap nowhere. The CMC budget for this year is $2,167,865. The CCA budget alone for 2013 was $2,344,525. For 2004, ten years before, it was $2,141,418. The operation has been in stand still mode for at least a decade.
Co-ops “would do well to market themselves better and develop more effective messaging,” says the Hon. Mauril Bélanger, co-chair of the parliamentary caucus on cooperatives.
It’s no secret, nobody denies, that the co-op sector has failed over many years to enter the mindscape of the general public or get onto the public policy agenda. Yet there’s great reluctance to address the obvious shortcomings of attempts to get there. Those looking for causes of the failure need look no farther than this. Co-ops put no money where their ambition is. If the piper must be paid, others will dip into their pockets sooner and deeper.
The union of CCA and CCCM was long past due. But it’s not sufficient by itself to get government policy, programs and regulations aligned with the goals of the cooperative movement. Co-ops have not been at the federal government table for generations. They’ve not been in the room. They’ve not been anywhere in sight.
As for development, the much ballyhooed Canadian Cooperative Investment Fund has been stalled for over a year at 65% of its goal of $20 million, which in itself is an amount so modest that it advertises how niggardly the sector behaves.
Undoubtedly there are co-op members who believe that two million dollars a year is just the right amount to be spending on member education and engagement programs, government relations, research, communications and development, which now are all the responsibility of CMC. That has been the view of CCA’s directors – at least the bigger dues payers among them, who control the agenda – as far back as anyone can remember. But it comes as something of a shock and disappointment that it continues to hold sway for CMC in the new day.


UPDATE Dec. 2, 2015: Originally posted in July 2014, this description of the good work on behalf of co-ops by Mauril is reposted as tragic news of his ALS diagnosis becomes known, just six weeks after he was re-elected as MP for Ottawa Vanier, now a member of the governing Liberal Party.

An obscure member of the third party in Parliament is leading the co-op movement in Canada. His name is Mauril Bélanger.
Mauril Belanger252X176The Honourable Mauril is not obscure among Liberals. He was a junior cabinet minister in both the Chrétien and Martin governments, responsible for official languages among other things. He was co-chair of the party’s 2012 biennial convention. He has been elected eight consecutive times by the voters of Ottawa Vanier, which is far from a record (Herb Gray won 13 in Windsor) but is pretty impressive to the political class. It doesn’t ripple a great wave in the coast-to-coast public pool, though. “Mauril qui?” would be the usual response of most Canadians away from Parliament Hill.
But think again. There are 18 million* members of co-operatives in Canada. To this crowd, Mauril has become champion. From coast-to-coast and all stops between he’s in demand. He speaks to annual meetings and conventions in Moncton, Ottawa, Calgary, Edmonton and Vancouver. Why is an opposition member of a downtown Ottawa riding going to speak to farmers in Alberta and fishers in Nova Scotia? He puts it this way: “As Liberal Advocate for Co-operatives, I think it’s important to meet with representatives from different associations and to be present on the ground to witness the reality lived by cooperatives around the country.”
Advocate for Co-operatives. It’s a novel political title, invented by Mr. Bélanger himself and officially granted by Bob Rae while he was interim leader of the Libs. He’s not a critic. There’s no government position on cooperatives and therefore nothing to criticize.
But it was the UN’s International Year of Cooperatives and the first thing the newly minted advocate did, back in the summer of 2012, was to call for parliamentary hearings on the status of cooperatives in Canada. Much to his astonishment, and everyone else’s, the government agreed to the hearings. Not much came of them, but all at once cooperatives were in play on the Hill. This year the political process picked up the theme when an all-party caucus on cooperatives was convened, with Mr. Bélanger as co-chair along with reps from the Conservative and NDP parties.
Mr. Bélanger is a long serving member who knows the nooks and crannies of Parliament as well as anybody. He’s particularly adept at locating or creating niches where co-ops can find friends and empathy on the Hill. His helping hand may be even more in demand now that Cooperatives and Mutuals Canada has been formed from the English and French segments of the Canadian movement, shedding the full-time government relations manager of the Canadian Co-operative Association in the process.
That may be saying too much about his role. But this much is fact. Until Mauril picked up the torch, the last politicians who knew anything more about cooperatives than how to spell it (even this is never clear, between co-operative and cooperative), were in the Trudeau cabinet in the 1970s (background here). Before Bélanger co-ops hadn’t been heard in Ottawa for half a century. Now they’re here. How high and how fast they move on the government agenda is entirely in the hands of voters. Whenever enough of these across the country opt for a new Trudeau government, it’s a good bet that Ottawa-Vanier will once again return her favourite son and the Honourable Member for Cooperatives will be chomping at the bit to lead his herd to the promising land.
* 18 million isn’t quite bogus but it must be noted that double counting of members who belong to more than one co-op inflates this number and that about half of the impressive total are members of just two co-ops, Desjardins and Mountain Equipment. Ten million individual members may be nearer to reality.

Canadian co-ops elevate casual to new level


In Canada it takes a little longer.
Enough has been said about taking more than a century to bring together French and English players in the movement, finally accomplished this year (April 1, 2014). Now the target of the newly minted Co-operatives and Mutuals Canada (CMC), the apex of cooperativism in Canada, is to create “a world-class environment for co-operatives and mutuals to grow and thrive” — by 2024.
CMC, which claims to represent 18,000,000 members* in cooperatives, credit unions and mutual insurance companies across Canada, has a strategic plan. It hasn’t had much time to think for itself, much consumed as it has been with biculturation for the past couple of years, so it has gratefully adopted the Blueprint of the International Co-operative Alliance. As it says in its annual report, “The CMC Strategic Plan aligns with the five pillars of the ICA Blueprint — participation, identity, capital, legal, sustainability.” All very well. But 2024?
The ICA Blueprint calls for making co-ops the “fastest growing form of enterprise by 2020.” The decision of the new Canadian apex organization to give itself a four year extension to this deadline is unexplained.
Unexplained and inexplicable, with all the givens the movement has enjoyed recently. It got the first part of the action plan proposed by Accelerator almost by default, when Desjardins and the International Co-operative Alliance agreed to repeat the Quebec Summit for co-op business executives. This is a critical success for Canada, but apart from the singular involvement of Desjardins CEO Monique Leroux, who has her own agenda, it can’t be said to proceed from the Canadian movement, let alone CMC. Which doesn’t mean it can’t be used to advantage here. Of course it can and should and will be. But it’s a deal done by others.
CMC is also the beneficiary of whatever residual glow continues from 2012, the UN’s International Year of Cooperatives. A parliamentary committee emerged by surprise that year to give co-ops their first political nod in a half century. A $1 million research project to “measure the cooperative difference” came from Social Sciences and Humanities Research Council to a consortium of universities centered at St. Mary’s in Halifax.
CMC can’t claim credit for any of this but it all provides something of a head start on the goals set by IAC for 2020. That’s the world deadline. In Canada it takes a few years longer. 2024 or bust!
* 18,000,000 isn’t quite bogus but it must be noted that double counting of members who belong to more than one co-op inflates this number and that about half of the impressive total are members of just two co-ops, Desjardins and Mountain Equipment. Ten million individual members may be nearer to reality.

Deputy PMs to face off?


Monique Leroux2-161X179Nobody in the Canadian co-operative movement draws more attention or more speculation than Monique Leroux (pictured left). The vibrantly attractive CEO of Desjardins Group, which bestrides Quebec with $212 billion in assets, $1.5 billion in after tax profit, 45,000 employees and six million members, with more tentacles all the time extending en dehors la belle province, evidently wants the world as her oyster.
The rush of Desjardins to take the world by storm has been described here. Most recently, the giant caisse populaire has acquired the Canadian arm of U.S. insurer State Farm Life Insurance Co., in a move that will transform Desjardins into Canada’s second-largest property and casualty insurer, nearly doubling its annual premium income to $3.9-billion.
Readers of Accelerator will know that Ms Leroux has been our odds-on choice to lead the co-op movement in Canada, which has been sorely lacking creative leadership for decades. But our choice doesn’t appear to be hers. Those who are close to her say she’s more likely to be heading abroad once her current (second) tour as CEO of Desjardins ends next year.
Some believe she may have Pauline Green’s role in view. Britain’s Dame Pauline, who is five years older, is the head of International Co-operative Alliance, the apex organization that represents almost a billion members worldwide, more than a quarter of them in the United States. ICA, based in Geneva, is co-sponsor with Desjardins of the International Summit of Co-operatives, a Davos-like gathering of co-op business leaders that’s holding its second event in Quebec City this October. The first edition, a highlight of the UN’s International Year of Cooperatives in 2012, drew 3,000 participants to an extravaganza that cost a hyperbolically estimated $10 million and was universally judged a spectacular success.

The Quebec Summit has allowed Ms Leroux to host nobel laureates (Robert Shiller), international diplomats (Madeleine Albright) and public intellectuals (Jeffrey Sachs) among hundreds of other leading lights. Following its initial triumph, she was elected a director of ICA, joining there the CEO of Co-operators Group, Kathy Bardswick, another member of the sorority that dominates the financial co-op sector in Canada (five of the seven largest financial co-ops are headed by women). Also prominent at ICA is Nicholas Gazzard, CEO of Co-operative Housing Federation of Canada, who leads the Alliance’s co-op housing subcommittee. This vanguard is supported by a phalanx of Desjardins’ officers, including Stéphane Bertrand (pictured left), who runs the Quebec Summit and was a member of the working group that wrote ICA’s “blueprint for a co-operative decade” to 2020; and Éliane O’Shaughnessy, special advisor to Ms Leroux, who is on the international steering committee for ICA’s World Cooperative Monitor.
Those who see ICA in Ms Leroux’s future think she may be following the path of public service plowed by Mark Carney, who left the Bank of Canada last year to take over the Bank of England. There are others, though, who think she’s more likely to emulate Matt Barrett, who went from CEO of Bank of Montreal to Barclay’s Bank in Great Britain at the turn of the century. Desjardins already partners in a $50 million high tech venture capital fund with Crédit Mutuel, the fifth largest bank in France.

Jean Charest

Rt. Hon. Jean Charest

Assuming that she does move to the global scene, who else is in view with what it takes to reinvigorate the Canadian co-op movement? At the apex of the capitalist party of property in Canada today as CEO of the Canadian Council of Chief Executives (of which Ms. Leroux is a proud member, shading her co-op allegiance) is John Manley, a former deputy prime minister. Oddly enough, a coincidental connection to new co-op leadership may well run through Ms. Leroux’s cabinet. Before Stéphane Bertrand took on the Quebec Summit for her, he was chief aide to former Quebec Premier Jean Charest. Therein, some find hope for the future. Mr. Charest, who is another former deputy prime minister and a couple of years younger than Ms. Leroux, has renounced politics and is languishing in a big-law office in Montreal these days. If he gets the call to cooperate, who knows?, he might answer.

CP/CU sorority has to put more in


Belanger&othersMPs and cooperative caucus members at a gathering on Parliament Hill in support of a campaign by the Co-operative Housing Federation of Canada for continuation of subsidies for low income co-op members. From left to right, Mauril Bélanger, Brad Butt, Hélène LeBlanc, Djaouida Sellah and Marjolaine Boutin-Sweet
Co-ops were chanting their usual dirge about lack of capital at the last meeting of the all-party parliamentary caucus on cooperatives in June. They were told by the MPs — sympathetic MPs or they wouldn’t be in this caucus — to be conscious of the fact that co-ops are just one sector of many approaching government for financial assistance. “They would do well to market themselves better and develop more effective messaging,” according to caucus chair Mauril Bélanger.
What is this capital problem that co-ops are so sensitive to? The problem isn’t that they can’t issue shares on the stock market. Stock issuance isn’t the way most business capital is acquired. Most capital is borrowed. Debt rather than equity is far the greater portion of business capital invested. In fact the problem for co-ops is less financial than it is attitudinal.
Why can’t co-ops borrow? It depends. If they’re very small and/or very new, a startup in other words, who’s going to lend to them? Just like all startup SMEs, they’ll have to tap family and friends and max their credit cards. There’s no other way and never has been until you get bigger and can go to a bank or a CU/CP – there’s not much to choose between them at this stage – where they’ll lend you whatever you can afford and are willing to give personal guarantees for. It’s the same for both corporate and co-op clients and nobody wants to comply, sign away life itself. But the passion of entrepreneurship as well as the lure of great profit will tempt more biz types than co-operators, for whom the risk-benefit ratio is less appealing. This is where the capital/credit bottleneck lies. Federated, Féderée, Agropur, Co-operators, Calgary Co-op, MEC, Desjardins aren’t suffering lack of capital. Are you hearing cries of capital shortages there? It’s the SME co-op that’s stranded and will continue to be, until the CP/CU sorority puts more of its money into its beliefs. Most credit unions owe their very life to one of the principles that guides the movement (#6, cooperation among cooperatives). Why shouldn’t it be up to these financial guardians of the movement to devise a way of valuing the co-op difference that makes it easier to borrow? I don’t say more risky, they must be prudent, but I do think it’s up to the movement to help heal itself and the nursing stations are well marked.
The guests at the June caucus meeting were from funeral co-ops. They reported “some issues around capitalization as credit unions and banks (including the Business Development Bank of Canada) have demanded 100% guarantees on loans. They have sought creative ways to find capital but what is needed is dedicated funding for start-up co-ops . . . they are discussing the idea of building a national fund.”
Building a fund among co-ops with a common interest makes good sense. Often, enthusiasm and engagement can be aroused more readily in a business community where communication naturally flows. As we’ve pointed out in another post, there’s no use waiting for the Canadian Co-operative Investment Fund. CCIF is either stalled or stopped, depending on who you can or can’t talk to. Read all about that right here.

Screwball Letters 4


Jim to Tony: Creating jobs, raising incomes
There’s been a lot of media noise lately about a book called Capitalism in the 21st Century by the French economist Thomas Piketty. [Most people won’t read it, even the ones who say they did, but in this case it’s hardly necessary. The work has been so thoroughly reviewed in so many places that only the very unread will escape some understanding of it.] He attributes growing income inequality almost everywhere to the inherent tendency of capitalism to deliver higher returns on capital than it does on labour. Owners of capital, both cash and hard assets, get richer much faster than workers, who sometimes go????? backwards in purchasing power even as capital assets keep appreciating. He advocates things like a global tax to fix this, but a recent NY Times Magazine article suggests a better remedy — co-operatives. The fundamental democracy of worker co-operatives militates strongly against capital returns flowing to the top. In worker co-ops when the business grows so do worker incomes. The opposite actually happens often in typical capitalist enterprises; outsourcing increased production, for example, slashes local jobs, while boosting returns to owners. Of course, the co-op model doesn’t work for all businesses, especially ones with high start-up costs or other major barriers to entry. But there are lots of labour-intensive businesses with low start-up costs that have little or no need to innovate or pursue risky development strategies. All many have to do is manual labour, like sweeping, washing or driving trucks. The NYT article cites several cases in U.S. cities where groups of hospitals and universities have banded together to fund the creation of co-ops which then become their providers of services such as laundry, cleaning, and fresh produce deliveries. The co-op services are competitively priced, and the workers are better paid than workers at owner-operated alternatives. As anxiety about income inequality continues to escalate, this looks like a promising opportunity for the co-op movement. The new apex organization (Co-operatives and Mutuals Canada) should publish a manifesto and distribute it to institutions of all kinds, outlining the ways labour-intensive co-ops could create local jobs, raise manual worker incomes, and offer a little counter-balance to prevailing inequality trends. It will do nothing to solve the problem at the top, but it offers some relief to those who can use it most at the bottom. It’s time for the co-op movement to focus on the kinds of bottom-tier businesses where worker democracy can have the most beneficial effects. Isn’t that where the movement began?

Tony to Jim: Interesting fit with Lonergan
You’ll remember from days of yore Bernard Lonergan SJ, CC. At the time I first encounteresd his work I wasn’t aware that he had some history as an economist, or economic analyst I should say since economics is one degree he didn’t have. But he delved deeply into economic thought and what he came up with isn’t far off the NYT trail. From a bio of the great philosopher that I recently updated on another site: “Lonergan’s interest in economics was stimulated by social disruption in the first instance and, in the second, by the quandaries that the profession was experiencing. These instances were separated by some forty years. ‘When I came back to Canada in 1930,” he said, “the rich were poor and the poor were out of work. The rich were trying to get money selling apples on the street. Many theories were floating around.’
His response was to identify two separate but interactive levels in the economy that produce wealth and income in different ways. The surplus sector produces goods for further production, e.g. rails for railroads. The basic sector produces goods for consumption. As well, when prices rise, workers demand more and the wage-price spiral begins. When prices fall, producers pull back from investing and recession begins. The result is often panic and “panic doesn’t get you anywhere; it is just stupidity, loss of nerve.” He proposes an economic policy based fundamentally on a strategy of education, generating widespread understanding of the way these cycles work and the natural interconnection between them.
This isn’t far from the conclusion that persuaded Moses Coady at St. FX in Nova Scotia to lead the Antigonish Movement. Coady thought a local economy could be revitalized if the right type of learning was cultivated by ordinary people: especially critical thinking, scientific methods of planning and production, and co-operative entrepreneurship.
Lonergan was far from embracing socialism, “which doesn’t work very well.” He believed that “the trouble with the welfare state is that it crowds out investment, and if you crowd out investment the economy goes to pot.” But he favoured creation of benevolent enterprise, small-scale industries that employ people who can’t be taught much, or who can’t find jobs elsewhere. Also, “If you can have government deficits to conduct wars, you can have government deficits for a war on poverty, a war on ignorance, a war on ill health, and so on.”

Jim to Tony: Co-ops against income inequity
I like the idea of co-ops as counters to capitalism’s tendency towards income inequality for two reasons.
One, it shows how co-op democracy delivers a key benefit regarding income equity by favouring labour over capital. Democracy is a necessary aspect of the co-op model, but one that can often hamper or warp decision-making. That can be a major weakness in some industries (such as management of co-op housing?), but there are many others where labour-biased democracy is clearly beneficial and only marginally harmful.
Two, it focuses on the stable, labour-intensive businesses that don’t suffer from democratic management’s inability to innovate. Co-ops belong in sectors where they can thrive under worker ownership because they don’t need much visionary management. Beyond agriculture, retailing and finance, where co-ops are broadly established, there’s a broad range of service occupations, from babysitting infants to emptying wastebaskets to embalming corpses, that fit this description. They all ought to be organized into co-ops that deliver most of their revenue to the workers, because it isn’t needed anywhere else. There are no new products to develop, or bells and whistles to be added; the workers themselves are the product, so their earnings ought to belong to them. Under capitalist ownership, there’s a built-in incentive to minimize the payroll and maximize the bottom line; co-op ownership reverses this situation.
The following links will take you to Screwball Letters or Screwball Letters 2 or Screwball Letters 3 or Screwball Letters 5.

Cannabis legalization is unique co-opportunity


By Jim Hynes and Tony Patterson
Jim Hynes ( is a writer, artist and consultant in Toronto; Tony Patterson (, in Ottawa, is editor and publisher of Co-op Canada Accelerator.

The process of legalizing marijuana in the U.S. has begun, and will likely spread into Canada within this decade, leading federal governments in both countries to revise existing laws. This won’t create a new industry; it will move an existing one out of the shadows, allowing it to take its proper place within our economy and society. It will also put an end to the incarceration of countless people for simply possessing small amounts of a substance that is now widely acknowledged to be medically useful and clearly less harmful than tobacco or alcohol.
?????Ending the demonization of pot will correct some existing social evils, especially with regard to medicinal uses, but may fail to correct others, if it isn’t handled well. The key question posed by the prospect of legalization is: who should own and run the legal industry? Will we end up with well-managed, socially responsible producers, distributors and retailers, or will the industry remain in the hands of the dubious operators who are in it now?
This isn’t a hypothetical question, it’s a real one; the cannabis industry is already a well-established feature of the economy in both Canada and the U.S., and most of it is made up of scattered, marginal operations, with distribution sometimes controlled by criminal organizations. Legalization will allow a currently haphazard industry to reorganize, and adopt modern agricultural techniques and retail distribution methods. However, this won’t happen automatically. The existing illicit industry will not go away unless it is replaced by a licit one that is better—more efficient, more reliable, more consistent, more responsible, more convenient, more socially acceptable.
Achieving this will take some major agricultural and retail expertise; an industry now run mainly by amateurs will have to be transformed by professionals. In Canada, this is an opportunity that might well be seized by the co-operative movement. Helping to transform a needlessly demonized industry into a socially responsible one is both an attractive business opportunity, and a very appropriate challenge for the co-operative movement to take on. A well-organized initiative by the co-operative movement could lead the way to a cannabis industry in this country comparable in every way to today’s wine industry.

A Government Problem
One possibility is that the federal government will retain control, and regulate the cannabis market after passing enabling legislation. This is the starting position of the Liberal Party of Canada, which is the primary political mover at this time. But it’s more likely that once the federal law has been repealed, cannabis will become entirely a provincial responsibility, as alcoholic beverages are now. Either way, those responsible to take up the challenge will be required to deal with an awkward period of transition, as the existing illicit industry is converted into a new, legally-regulated form. Changes will be inevitable, because legality will make possible major improvements in both production and distribution, with important economic consequences. Scattered, small-scale farms and grow-ops will be consolidated into larger, more efficient ones, and erratic distribution patterns will be rationalized into cost-efficient networks. Marketing methods will also change; an industry that has deliberately kept itself invisible will suddenly become evident in the marketplace.
potleaf (u. sask)244X248How the industry’s transformation is managed will determine who will own and operate it in its fully legal form. Just as prohibition drove the beer and liquor industries into the hands of criminals back in the 1920s, the illegal status of the cannabis industry has caused it to be infiltrated by criminal elements. However, low barriers to entry have also allowed many other people into the business who are criminal by circumstance only. Some of these people might convert their existing operations into legal enterprises, but most lack the capital and expertise to make this transition successfully. As matters now stand, the least desirable players in the illegal market are the most likely to survive legalization. Preventing the industry from being dominated in the future by criminal organizations must be a key objective of the legalization process. Governments have a major interest in getting their plans and policies right about this, for both practical and political reasons.

Co-ops As Strategic Partners
Now is the time for the co-operative movement to address this issue by arranging some informal meetings with government officials in Ottawa and provincial capitals. These discussions should examine the challenges raised by legalization, and explore the possibilities of co-op participation in a reorganized cannabis industry. With its long experience and expertise in the agriculture and retail sectors, the co-operative movement is uniquely well-equipped to address the needs and seize the opportunities legalization will create. Co-op participation could offer the surest way for the industry to decisively shed its criminal connections, and quickly emerge in a socially responsible form. For many governments, the assurance of co-op involvement might help to shape the regulatory regimes they will adopt.
Government will have little opportunity to impose regimes that aim to limit availability or raise prices. Unless legal distribution is made convenient and competitive with existing illegal sources, the underground industry will simply continue to operate. Decades of trying have shown that governments and police forces are unable to prevent this, so legal producers and distributors will have to exceed the standards set by illegal alternatives in order to replace them.
This might be done with government-owned production facilities, but that would be the most costly option. Privately owned facilities are much more likely, making co-ops an attractive possibility. Co-ops might even be mandated by governments; new cannabis laws in Uruguay specifically allow co-ops to grow 99 plants each for personal use, effectively removing their participants from the illicit market. Whatever form the legal regime takes, the goal must be to enable efficient legal producers to outperform existing illegal ones, driving them out of the business. This is a key reason to bring co-operative expertise to bear on setting up legal cannabis businesses.
Officials in governments across Canada are watching closely as cannabis laws change elsewhere, and this becomes increasingly likely here. In considering policy alternatives, they should see the co-op movement as a constructive ally in shaping a legal cannabis industry. Governments will certainly prefer to see the industry in the hands of democratic co-op enterprises, rather than under the control of less reputable entrepreneurs.
Governments will also appreciate the positive public image that co-operative involvement will bring to the industry’s transition and transformation. This could be a crucial factor in creating a legal industry that enjoys public acceptance. Decades of propaganda have succeeded in demonizing cannabis in the minds of many people, despite an almost complete absence of supporting evidence. Unfounded fears still cause many to resist legalization, and some controversy is sure to surround the process as it unfolds. The assurance that legal cannabis enterprises will be in the hands of responsible organizations could play an important role in achieving their integration into the legal economy.

The Co-operative Advantage
Government will need help in transforming the cannabis industry effectively, enabling it to discard its criminal connections and assume a fully legal, socially responsible form. No one is better equipped to help achieve this than the co-operative movement. The co-operative business model is particularly well suited to the challenges presented by legalization of cannabis.
From the outset, involvement of co-operatives would improve public perceptions of the existing industry, and expectations about its future behaviour. And once full legalization comes, well-established co-operative expertise in production and distribution would enable the rapid development of efficient, responsible enterprises, pushing dubious operators to the margins. The resulting industry would ultimately be integrated into the legal economy in the most socially acceptable manner possible.
Taking the initiative to transform the cannabis industry in this positive way would enhance the public profile of the co-operative form of enterprise in Canada, boost economic development and stimulate the co-operative movement as a whole. It would be making full use of that foremost among co-operative advantages: trustworthiness.

Atrophy in Canadian housing co-ops challenges CHF leadership to innovate


Quebec CityA656X226Co-op housing in Canada is disappearing up its own association. After a kickstart by the Trudeau government in the 1970s and some scattered one-off entrepreneurial efforts in a few provinces over the years, it has been virtually a no-growth sector for almost a half century.
There are 250,000 members living in 2,200 housing co-ops in Canada with 90,000 units, many of them falling apart. Almost every co-op built before 1985 needs capital repairs to maintain it. “Many can’t wait for their present mortgages to expire,” according to the Co-operative Housing Federation of Canada (CHF).
How this came to pass is a sad story, and what the CHF is (and isn’t) doing about it today is raising some serious questions.
One of the principal current activities of the association is the Co-operative Housing Refinancing Partnership. The short of it is (the whole of it is on their website here) that most co-ops in Canada were set up about 35 years ago with government mortgages that are about to be paid off. As CHF says, many of these co-ops will want to refinance in order to renovate their aging properties. But lenders, who know that their whole history has been under government supervision and tutelage, are uncertain about what newly privatized co-ops will do with new money.
Enter CHF, which pledges that it will supervise borrowing co-ops to ensure they meet the conditions of a loan from a credit union. It might be called a moral guarantee. It certainly can’t hurt. For any co-op that scores less than AAA on the credit check it might make all the difference (only one of 12 in process has got through all hoops so far, with another three expected to close before year-end). And after a while, after a few CHF-secured loans have been made it could become the fast lane to the CU mortgage wicket. Needless to say, it’s a lane with a toll on it.
A few years on, when a number of these CHF-bolstered co-op mortgage loans have been successfully negotiated, will all lenders be asking co-ops, “Is CHF behind this?” and backing off if it’s not? That’s not the intention, but it may be inevitable. While CHF doesn’t offer security, it does offer comfort, and financial institutions have always preferred being comfortable.
In another arena a year ago, a senior CHF executive acknowledged that “the ability to form co-ops has atrophied over the years.” He was describing rationale for the Social Purpose Development Partnership that has since been announced in Vancouver, bringing together CHF-BC, a credit union (VanCity), a developer and the city to build separate but connected rent-to-income and co-op housing projects. The connection comes through an element of cross-subsidization, with co-op members subsidizing rent-to-income tenants. This is very close to a core principle of cooperation, to help others in the community. But unfortunately, as the CHF exec put it, “it means somewhat less member involvement.” CHF-BC is in the driver’s seat even before ignition. It will determine how much of co-op member fees goes to subsidization. It may not appear to be of much importance, but in fact it’s no little thing. It flies counter to the very first item in the “overarching agenda” for the cooperative decade now in progress, which is “to elevate participation within membership and governance to a new level.”
?????Finally, there is the Bridlewood story (told in this post). This co-op near Windsor was facing bankruptcy last year (2012) because members kept their unit fees much too low for much too long and then attempted to privatize their units at distress prices. CHF fought the rogues in court, won, and bought the place for a bargain $6 million. So CHF is now landlord of a 131 unit low-income housing development. Some tenants will be former co-op members, paying 50% more per month for their units than previously, but the Bridlewood Co-op per se has been dissolved. CHF absolutely did the right thing here. The alternative was to see the development taken out of the social housing sector altogether and exploited by commercial interests. But CHF itself has now removed these homes from the co-op sector, and has said nothing about how, or indeed whether, Bridlewood will be restored to co-op status.
All of this is incremental. It’s impossible to believe that there’s any ulterior motive involved or even conscious deliberation. But the tendency is clear. CHF isn’t just leading the sector. It’s taking over.
That strong and visionary leadership can work for the co-op housing sector has been clearly shown south of the border. Public-private partnerships in the U.S. have built an average of 10,000 co-op housing units each year for the past 25 years. If this were ten times the Canadian average it would be as expected. But it’s a hundred times more, or more than a hundred, because there is no such growth here. There are no PPPs for co-op housing in Canada.
It’s up to CHF now to show what it can do with the power it’s accumulating. So far, the association’s efforts have bent mostly to preserving what we’ve got. This is necessary for the sector’s survival, but it’s not sufficient for it to thrive. For that to happen, for co-ops to lead the market for affordable housing in Canada, CHF will have to lift its sights much higher.

Quebec Summit needs more cooperation


Blue Inukshuks 500X213There are five parts to Accelerator’s Action Plan for a Co-op Nation in response to the 2020 Challenge issued by the International Cooperative Alliance (IAC). The two that raise most questions are the coalition we propose to advance the cooperative agenda with government and our enthusiastic endorsement of the International Summit of Cooperatives, the Quebec Summit.
The other suggestions Accelerator puts forward are no-brainers. Now that they’ve achieved the long overdue merger of the various co-op groups divided by language, cooperators should
A. Establish a list of priorities. The eight recommendations that came early last year from the special parliamentary committee on co-operatives is a very watered-down agenda framed by government and reflecting little consultation let alone consensus within the movement. It’s long past time to come together to define what co-ops really need or want
B. Strengthen alliances with complementary interests (progressive politics, unions, academia, religious organizations, social networks). Is it too much to hope for anything as progressive as the Labour-Cooperative candidates in Britain who did so much to further the movement while Tony Blair was in power? Mr. Mulcair might be reminded that the NDP started life as the Cooperative Commonwealth Federation
C. Raise a significant development fund to help make the cooperative form of business, as ICA challenges in its 2020 Vision, “the fastest growing form of enterprise.” CCA’s current target of a $20 million fund is far short of what’s needed. $20 million doesn’t get much done. A favourite illustration is the Canadian Museum of Nature. The building is a couple of blocks away, along the street in Ottawa where I live at the Catalpa housing co-op. It recently (2010) completed a five year renovation at a cost of $250 million. Well spent, of course, because the Museum of Nature is in the historic Victoria Memorial Museum Building, the birthplace of all of Canada’s national museums and home of Canada’s Parliament for four years after fire destroyed the Parliament Buildings in 1916. It’s a large building but not huge. Just four storeys above ground. Of course it’s old, built in 1905, and needed a lot of electrical, water, heating and ventilation upgrades, as well as structural reinforcement “to ensure the building meets seismic codes.” Still, a quarter of a billion dollars!! Now that’s a lot of money. $20 million for co-op development coast-to-coast is risible.
The coalition question is dealt with here. The co-op movement has been frustrated in dealing with Ottawa for more than a century. It speaks with too many voices, not usually in chorus. If it wants to compete effectively for its place and share of the infrastructure, it has to learn the power game.
Establish priorities. Stengthen alliances. Raise money. Lobby effectively. Four parts of the Accelerator Action Plan.
?????The fifth part is actually the first of the plan to be activated and may serve, if properly cultivated, as something of a binder for all the others. The fifth part is to embed the international cooperative summit in Quebec City as a biennial mix of the best and brightest of the co-op sector with global opinion leaders and decision makers.
In January ICA confirmed that its board had unanimously agreed to a second summit, given the resounding success of the pilot edition in 2012 that attracted nearly three thousand co-op leaders from around the world. A month later, primary sponsor and co-host Desjardins Group announced the date: October 6-9, 2014. And place: Quebec City.
Accelerator has put the Quebec Summit front and centre of the 2020 Action Plan for good reason. Properly managed, nothing will draw as much attention to the movement in Canada as will the Summit.
It will draw public attention by providing an event to attract media coverage. It should also become a venue where the Canadian business and political establishment meet with co-op leaders and become familiar with opportunities provided by cooperation.
The Quebec Summit has a ring to it. It could easily grow to mean something significant within the global cooperative movement. That’s certainly the hope of ICA and Desjardins and the two CEOs there – Monique Leroux at Desjardins and Dame Pauline Green at IAC – who have made common cause in shaping the event. A successful second Summit has potential to develop into a Davos-like world leadership forum for co-ops in the historic birthplace of Canada and just across the river from where the movement had a start in Canada at Lévis, Québec.
The chance to be there shouldn’t be missed by anyone focused on ICA’s 2020 Challenge. If all goes well, there will be four Quebec Summits between now and then, culminating in October 2020. Each will be a marker, a milestone in the efforts to achieve ICA’s objectives for a “cooperative decade”. And by then, one hopes, it will be a tradition with a large following and a long future.
But to build the Quebec Summit successfully isn’t going to be a simple task. Last year’s event was a smash hit but it had the advantage of a launch during the UN’s International Year of Cooperatives and even then it didn’t make any money. Desjardins picked up the loss and is willing to do it again next year. Desjardins is doing a community service, certainly, but it also gains advantage as a mover and shaker in the world of co-ops, which make it a principle to deal with one another. So for a time it’s a sound business decision to backstop the Summit. That may not be the case forever. ICA hasn’t any money. If the major corporate sponsor should change its direction or its CEO and pull away, there are always opportunists lurking with intent to snatch a good thing. We had an object lesson this month when Qatar made an abortive bid to pluck the HQ of the International Civil Aviation Organization away from Montreal, its home since 1947. There are many organizations in the co-op world with the resources to take over the Quebec Summit if need be. But they might well convert it into the Paris Summit or the Boston Summit. That would be a loss for Canada’s co-op sector.
The first Quebec Summit was successful in itself but failed dismally to attract public attention. There was virtually zero media coverage apart from local French-language outlets covering provincial ministers who used the Summit platform to make announcements. This was despite big bucks spent on advertising (at least two Globe and Mail supplements) and media relations.
The Quebec Summit must be more than a blowout for the international co-op elite. It’s the opportunity to create a stage where achievements can be showcased and players from all sectors in Canada can talk co-op comfortably. It’s the opportunity to use the Summit as a driver for co-op development in Canada.
The event is tightly controlled by its lead sponsors. This is as it should be, since the risk is theirs. But Desjardins is primarily focused in Québec and ICA is far away in Geneva, not necessarily the best connected either in the world of modern media or the larger segment of Canada’s cooperative sector. They could use some help to ensure that a great idea with a good start grows strong and enjoys a certain future. In short, the Summit needs more cooperation and participation from the sector itself. Finding a format that broadens support for the Quebec Summit within the Canadian co-op community should be one of the early goals of the apex organization that emerges from the joint June Congress.

Coalition to make Canada a co-op nation


Jill Kelly, president (2012-13) of the Canadian Co-operative Association (CCA) sent this note on LinkedIn:
Hi, Tony
I found this article interesting. I’m wondering why you recommend a new national organization for lobbying in addition to the existing national organizations, as opposed to our current work to replace CCA and CCCM with a new organization.—Jill

Jill Kelly

Jill Kelly

Jill is referring to Accelerator’s action plan for a co-op nation where we called for the sector to establish “a new and highly visible coalition of cooperatives.” This would be an addition to what now exists. Its focus would be on government. All major cooperative enterprises, including Ag producers, mutuals, CUs, caisses, worker co-ops, retailers, manufacturers, health and social service providers,  and the various apex organizations would be invited to join the coalition and help deliver high level contributions to current policy questions and, when appropriate, speak to power with a united voice on substantial questions.
The potential rejigging of the CCA and Conseil canadien de la coopération et de la mutualité (CCCM) into a new Canadian apex organization to support co-ops is not going to do this or anything like it. If it comes to pass it’s not creating anything new. It will be somewhat larger, somewhat more representative of the Canadian co-op mosaic, somewhat more bilingual. But it will be essentially a bigger version of the same animal. It will divide its resources as it always has and as it must, first and foremost to provide services to existing co-ops, then to assist in the development of new co-ops and finally to influence public opinion and policy.
The union of CCA and CCCM is long past due. But it’s not what’s required to get government policy, programs and regulations aligned with the goals of the cooperative movement. Co-ops have not been at the federal government table for generations. They’ve not been in the room. They’ve not been anywhere in sight.
Let me qualify. I’ve counseled some of Canada’s large corporations from time to time on their relations with governments; created and produced (in Ottawa, Toronto, Halifax) seminars on dealing with governments in Canada; developed and led collocutions among industry, labour and governments in Ottawa and all provinces except PEI and Nfld and helped bring more than 4,000 participants up to speed on government policy. This was all long ago. I’ve been a journalist for the past twenty years, as I was for the first twenty out of school. But I haven’t forgotten much about how government is influenced.

Eugene Whelan

Eugene Whelan

The best-ever champion for the co-op sector at the federal level died this month (March 2013). Gene Whelan, the minister in the green stetson, was a giant with the common touch. But he left the political stage thirty years ago. Whelan, who had worked for a co-op, created and sheltered the Cooperative Secretariat in his department while he was Minister of Agriculture for a dozen years from 1972. That marked the heyday for co-ops in Ottawa. The federal cooperatives act was passed in 1970. Housing co-ops got the biggest boost ever from the feds in 1973 and the years just following. The father of today’s emerging Liberal leader was Prime Minister then, you might recall, and that was the last time that co-ops were taken seriously by the federal government. Pierre Trudeau, Eugene Whelan and André Ouellet (Urban Affairs Minister) were the last players of any importance to give second thought to co-ops. Forty years ago. Oh, and Allan MacEachen. A finance minister and the nation’s first deputy prime minister in the course of a long and distinguished career, MacEachen was a graduate of St. Francis Xavier University at a time when that school was a hotbed of co-op fever. St. FX housed the Antigonish Movement founded and steered by the priest-cousins, Moses Coady and Jimmy Tompkins.
They were also the first feds to pay attention some sixty years after the movement organized itself. CCA’s precursor was born in 1909 in direct response to the failure of “efforts to secure effective legislation for the development of co-operatives in Canada,” as Ian MacPherson writes in A Century of Co-operation. “Those failures severely limited the capacity of the national movement to influence federal government policies and to create a well-integrated national program for co-operative development and growth.” Co-ops in Canada live with the consequences of this failure. It should be an uppermost objective of today’s co-op leadership to ensure that members a century from now don’t say the same.
The co-op secretariat has languished in Agriculture until now. The government said in January that it would be moved to Industry Canada, which was something CCA asked for and considers a victory for its lobbying efforts. But there’s been nothing said since, so it might still be in some departmental limbo while bureaucrats bargain about moving chairs.
In any event, it’s not such a victory, given the consistent ripping away of the past several years. The secretariat is moving alright but it was already crippled by cutbacks in 2011. The $4 million annually the Secretariat once had to get new co-ops underway, is gone. The move to Industry Canada may turn out to have value, but it costs nothing and might not mean anything. On the co-op housing front, there is continuing uncertainty about subsidies for lower income members as federal mortgages, to which the subsidies are tied, get paid out. CMHC has appeared to back away from draconian mortgage refinancing penalties. But there remain some extra hoops that any hopeful co-op will have to jump through if they want to shuck a CMHC mortgage.
?????Those two concessions — moving the secretariat and easing mortgage penalties — were the main items out of a week of parliamentary hearings in the heat of summer. The hearings were a Liberal inspiration but proved a godsend to Conservatives, who point to them as an observance of the UN International Year of Cooperatives while using them as a forum for self-congratulation. The 2013 budget cut a tax benefit that credit unions had enjoyed for years, while leaving it intact for other forms of enterprise. These are not friendly acts. It’s not that co-ops are being targeted. Co-ops are just collateral damage. Co-ops are not visible in the big picture.
And then, they keeping shooting themselves in the head with ill-concealed contempt for the government we happen to have. To hear Mr. Harper’s name pronounced in an average co-op meeting is to hear a loud exhalation of groans and various slurs. It arises, of course, from self-identification with the aims of cooperation, fairness, community and social justice. Cooperators are good guys is the subtext. But this is an incredibly self-mutilating way of looking at the Conservative government. It doesn’t seem to have occurred to co-ops that this government is open for business.
It’s particularly odd. If there’s one thing that the co-op movement wants to get across to the rest of the world it’s that it builds sustainable businesses. Co-ops are all in business of one kind or another. If there’s one door to this government that readily opens when approached, it’s the business door. But rather than camp around that door repeating day after day, need after need, ear after ear, “there’s a co-op for that,” the co-op movement bemoans the closure of other doors.
Cooperatives are proved alternatives. They work economically and they throw off social benefits. That needs to be understood at the highest levels of national decision making and incorporated as a matter of course in legislation, regulation, policy and programs.
It will have to happen if co-ops are to make their potential contribution to resolving many social concerns in areas such as housing, health, employment, child and elderly care, benevolent enterprise, local harvesting and supply, community services and economic development.
It will have to happen if the movement in Canada is going to rise to the challenge that ICA has laid down. IYC 2012 provided a surge of momentum that needs to be nurtured and built upon through 2020 to make cooperatives the fastest growing form of enterprise and have the co-op model acknowledged as the leader in economic, social and environmental sustainability.

Tom d'Aquino

Tom d’Aquino

Professor MacPherson, a former CCA president and the pre-eminent historian of the movement in Canada, observes that Canada’s cooperators “are challenged with deciding whether they want to create a distinctly different economic system operating according to principles and goals different from private or government enterprise, or want merely to own a series of companies operating in those areas where, for historical and social reasons, they have happened to emerge.”
Timing is everything and there’s nothing so powerful as an idea whose time has come. It’s hard to imagine a moment more fortuitous than right now, on the wings of IYC and with the need for better approaches to economic and social development so evident on all sides, for the cooperative movement to make a great leap forward. Accelerator’s assumption is that Canada’s cooperators will opt for MacPherson’s first challenge, to create a better system, in which case they’ll want to see some changes made. I won’t get into what those might be. Accelerator’s action plan for a co-op nation includes provision to discover what cooperatives really want. That’s the topic for another article. If what they want is to go for the gusto, as the ICA is challenging them, it’s not going to happen by following the old path, even broadened. It needs a focused force to overcome government inertia.

John Manley

John Manley

Of course it’s asking superhuman sublimation of self-interest for the leaders of the current apex organizations to embrace any such notion. This was precisely the reaction of corporate leaders in the manufacturing and exporting associations and the Chamber in the mid-1970s when Tom d’Aquino was engaged to form the Business Council on National Issues. They all joined later, of course, along with a constantly refreshing 150 of the largest companies in Canada. BCNI was renamed the Canadian Council of Chief Executives in 2001 and then a few years ago Tom was succeeded as the corporate sector’s primary link to government by the Rt. Hon. John Manley, former deputy prime minister.
If you ask some of these people you’ll hear they had a lot of influence on matters such as Canada’s participation in the North American Free Trade Agreement.
Do Canadian co-ops want that kind of clout? Do they need it? Yes. If they trust in their model strongly enough to envision Canada as a co-op nation, yes they do.

For Desjardins the time is now


Desjardins Group and its dynamic CEO have seized the moment.
The time for cooperatives is now.
Now, when credit gridlock and near collapse of the global financial network are still vivid in memory. Now, when fears and passions bring people to march the highways, camp in tents in public squares and go hungry to get a meeting.
Now, when the powers that be and people in the street could use good news about sustainable development on a sustainable planet, now is the time to press for cooperative economic and social enterprise.
Desjardins isn’t waiting. Canada’s largest member-owned credit union and the biggest financial institution in the country after the Big Five banks is emerging from its large and solid base in Québec to launch itself into the fastest growing markets in the rest of Canada and onto the main stage of the global cooperative movement.Desjardins Logo
Monique Leroux is determined to position co-ops front and centre when new and improved ways to manage the economic system are being decided. “What the cooperative model brings is really a connection of people and the economy,” she says. “The cooperative model emphasizes the importance of the equilibrium between human capital and financial capital.”
Reappointed last March (2012) to a second four year term as Desjardins’ chair, president and CEO, Ms. Leroux came to the top job at Canada’s largest co-op shortly before Lehman Brothers filed the biggest bankruptcy in history. What followed was the global financial crisis of 2008, big bank bailouts, deep and prolonged recession, car company rescues, soaring American joblessness and Europe’s sovereign-debt crisis. Monique Leroux4
Through these serial overlapping cataclysms Ms. Leroux, a management black belt disguised as tinkerbell, steered Desjardins with sure and steady focus. Total revenues rose from $8 billion in 2008 to $13 billion in 2011. Assets on her watch grew from $152 billion to $190 billion. Pre-tax operating income soared to $2 billion from a scant $186 million in 2008 when Desjardins had to write off more than a billion dollars of debt acquired prior to Ms. Leroux’s first term. Now, with the company on course, she’s got a second wind. First she’ll take Alberta. Then she’ll take the world.
Always up for a challenge, Ms. Leroux thought she might be a concert pianist, studied at the Conservatoire de musique du Québec while growing up in a suburb of Montréal, but switched to business, became an accountant, the first female consulting partner at Ernst & Young, VP at the Royal Bank, and had a stint at troubled printing and media giant Quebecor, before joining Desjardins in 2001. She’s hovering just under 60 but appears closer to 40.
In her expansionist ambitions she channels the company founder, whom she captured in a compilation of quotes and thoughts published last year as Alphonse Desjardins: A Vision for Today’s World. The company has never been a stay-at-home. In over a century of operation, starting as a small credit union (caisse populaire) in Lévis, across the river from Quebec City, it has assembled several outposts away from its provincial core, mostly to serve communities with significant French Canadian populations in Manitoba, New Brunswick and Ontario, but also in New England. In 1908 Alphonse Desjardins himself formed the first credit union in Ottawa, where he worked for a quarter century at the House of Commons. He helped draft legislation governing co-ops in Massachusetts and New York, was invited to a co-op conference in Washington by President Taft and is generally acknowledged to be the founding father of the North American credit union movement. The company has three branches in Florida today to serve Quebec’s snowbirds. Most of these initiatives have been relatively easy targets of opportunity primarily serving francophones.
Further afield Desjardins has a distinguished forty year history as one of the world’s leading microfinance providers. It anchors a network of microcredit unions operating in 2,500 locations in 30 developing nations. With a modest budget of about $20 million annually, it oversees a structure serving some nine million clients with total deposits of about $2.5 billion and total loans outstanding about the same amount. The average loan is for just over $500. This is not a business. It’s an NGO and its culture is different. Its funding is different, arriving from CIDA and other aid agencies. It’s different from Desjardins, but not unconnected. The substantial commitment Desjardins makes to community and social development is not unconnected to its long range development objectives.
The Blueprint for a Cooperative Decade that the International Cooperative Alliance (ICA) delivered at a United Nations ceremony in New York late last year challenges co-ops to become “the fastest growing form of enterprise” by 2020. Ms. Leroux was there to brief the UN on how the International Year of Cooperatives (IYC) had gone. She had much to do with IYC in 2012 and with kicking off the “cooperative decade” running to 2020.
“At Desjardins,” she says, “we are committed to creating new ways to spur growth and innovation every day to aid the development of the cooperative movement.”

Stéphane Bertrand

Stéphane Bertrand

In fact Desjardins is taking one of the seven basic principles of cooperation to a higher level. That would be Principle Six, Cooperation among cooperatives. “Cooperatives serve their members most effectively and strengthen the cooperative movement,” says the principle, “by working together through local, regional, national and international structures.” Desjardins is emerging as the most cooperative co-op anywhere. It designed and delivered one of the peak performances of IYC, the International Summit of Cooperatives in Québec City in October 2012. It’s said this conference cost $10 million to produce, a number the company concedes is in the ballpark. Even with the $1 million sponsorship cheque presented by the feds with much fanfare, another $1 million from the province, counting minor sponsorships and revenue from ads and showcases and assuming that a good slice of the 2,800 participants paid full entry of $1,700, there’d still be a significant shortfall. Not only did Desjardins suck that up, it’s expected to do it again in 2014. At a board meeting during its AGM at Manchester late last year, ICA endorsed the repeat summit and reported that “Desjardins is moving forward positively on a follow-on in Québec City in October 2014.” It’s not farfetched to suggest that a successful second Summit has potential to develop into a biennial world leadership forum, a Davos for co-ops in Québec’s capital, a stone’s throw from where the movement had a start in Canada and historic birthplace of the nation itself. If the reality comes anywhere near the vision, it may be a sound investment indeed.
At the UN’s IYC closer, ICA presented two documents. The first is the co-op decade “Blueprint” with its ambitious plan for the co-op business model to become the “acknowledged leader in economic, social and environmental sustainability (and) the model preferred by people,” as well as the fastest growing, by 2020. Dame Pauline Green, president of Geneva-based ICA, chaired a five person work group to help prepare this seminal document. A member of the group was Stéphane Bertrand from Desjardins, who also serves as executive director of the Cooperative Summit.
The second document presented to the UN was the World Cooperative Monitor, a fresh cut at statistical analysis that reveals the largest 300 co-ops in the world have a joint annual “turnover” of $2 trillion (Desjardins is the largest of a handful on the list from Canada). That’s about 20% higher than Canada’s annual GDP. On the international steering committee for the Monitor, which is being produced in Italy, is Éliane O’Shaughnessy from Desjardins, who is “strategic advisor” in Ms. Leroux’s office.

Eliane O'Shaughnessy

Eliane O’Shaughnessy

There’s no doubt that Desjardins is finding distant shores appealing. It has established a €5 billion bond program to “implement liquidity and asset management strategies and diversify capital sources” and last year issued US$1.5 billion of covered bonds, only the second time it has issued bonds in the United States. The company is proud and protective of its admirable capitalization, anchored by member commitments, that provides a ratio of 19% overall of which by far the most (16.5%) is Tier 1 (long term) capital. These are far better ratios than prevail at the Big Five and place Desjardins in the top score of best capitalized financial institutions globally.
Overseas, it has entered an agreement with Crédit Mutuel, a financial co-op about twice its size in France. This foothold in the European market, which Ms. Leroux pledged to follow up as one of the priorities of her second term in office, has begun with a $50 million investment in a new high tech VC fund that is expected to grow in the near future as new partners sign on. Apart from joint ventures, the arrangement contemplates mutual accommodation for Crédit Mutuel’s members (‘clients’ to conventional banks) with needs in Canada and Desjardins’ members with needs in Europe. Desjardins also opened an office in Paris a year ago.
It’s clear that cooperating with cooperators can pay off internationally. Ms. Leroux owned the podium at the Summit in Quebec City, at ICA’s AGM in Manchester and at the IYC presentations at the UN in New York. The co-op world is paying attention, which can’t be anything but good for Desjardins because of that sixth principle. When the like of Crédit Mutuel are looking for compatible partners in Canada the big green D is hard to miss.
And what about those parts of Canada where the culture is different and the other official language prevails? Ms. Leroux has already spent not far off a half billion dollars ($443 million) to buy Western Financial Group based in Joe Clark’s home town of High River, Alberta, telling one reporter, “we want to continue to expand slowly but surely . . . across the country.” Western Financial isn’t a bad starting point. The group provides financial services but the bulk of its business is insurance. In this respect it’s square into territory Desjardins mastered long ago, the merging of banking and insurance. More than 40% of Desjardins’ income flows from life, health and property insurance premiums, business permitted them by provincial charter but long denied and still restricted to federally incorporated banks. Western Financial is the largest property and casualty insurance brokerage in western Canada with half a million clients and a fistful of offshoots, including “Canada’s oldest and largest pet insurance provider.”
Western Financial is not a co-op but a strategic investment that gives Desjardins a lookout on the territory. It doesn’t replace the continuing application of Principle Six. In that regard Ms. O’Shaugnessy says, “It’s the beginning of something, not the end. The west is definitely the main growth market in Canada. We’re very active in the region developing partnerships with established credit unions.”
Because of its origins and growth pattern, Desjardins is not nearly as well connected to the co-op sector in English Canada as it is in Québec. Its basic community and culture are Québecois. However the company operates bilingually in many English-speaking centres. And it’s about to enhance its position nationally. Ms. Leroux and team are key participants in current negotiations to integrate the Canadian Cooperative Association (CCA) with Conseil canadien de la coopération et de la mutualité (CCCM). It’s hoped to bring a proposal this summer to the AGMs of both associations to form a unified nationwide agency that will support and speak for co-ops of all kinds in both official languages. The traditional two Canadian solitudes have already begun to merge operations, sharing office space in Ottawa and convening joint annual conferences. Desjardins, which has not been a member of either but is a “sponsor” of CCCM, intends to be a more prominent player in the new entity it is helping to design. A VP and staff of a half dozen already provide advice and assistance for cooperatives on governance and development.
Clearly, if a biennial summit of global co-op leaders is established in Québec City, which appears likely, and if Desjardins continues to pay the piper, the influence of the company on the movement is set to grow big time. And if the movement’s business leaders such as Ms. Leroux succeed in making cooperatives the fastest growing form of enterprise by 2020, look out Big Five, the big green D has you in its sights.
But odd as it may seem to those who appreciate their business skill, beating the Big Five isn’t what turns the crank at Desjardins. It’s hard to say which of the seven co-op principles they take most to heart there. The principles are identical to those that guide development in 750,000 co-op businesses worldwide with a hundred million employees serving a billion members. It may be Principle Seven, Concern for community. “Cooperatives work for the sustainable development of their communities,” the explanatory text reads, “through policies approved by their members.” Sustainable is the operative word here. Sustainable businesses. Sustainable livelihoods. Sustainable environments.
Now. It actually may be the case that now is the time for all movements of conscience and concern and cooperative enterprise to be idle no more. Let a thousand initiatives flourish in as many different ways. For most things, though, from hospital budgets to filling the gas tank to payscales for the working poor, it’s still and always will be about the economy.
Pollution will be tackled by pricing carbon, among other economic models. Energy will be driven more and more to renewable. Social and environmental impacts will be added to financial statements. First nations people will find opportunities in development partnerships based on trust and fair practice. Immigrants will get credit for their training and experience and the help they need to find their way. Schools and tools for young people will be abundant. Desjardins and other co-ops believe these are the things a sustainable economy promises and can provide.
They believe it because cooperatives are the most sustainable of known economic alternatives. It’s a fact. “The survival rate of co-ops is higher than that of private sector companies,” says Ottawa’s Cooperatives Secretariat. “A 2008 study in Quebec found that 62% per cent of new co-ops are still operating after 10 years, compared with 44% for other traditional businesses/corporations.”
At a century-plus and not slowing, Desjardins is a model of sustainability. How that model influences the co-op movement and the way we do business in Canada and abroad will be playing out in Québec City about a year and a half from now. After the $10 million opening extravaganza that grabbed rave reviews and a 90%+ approval rating from goers last year, Act II of the Summit is likely to be something special and, for Ms. Leroux, far from a fond farewell.