The Co-operatives First team is regularly asked “what is a co-operative?” and many of our posts display various uses of the co-operative model to explore this question. This week we’re going to outline three types of financial sector co-operatives.

Mutual Insurance

A mutual is a company owned by its policy/account holders. The difference from many other types of financial sector co-operatives is owners (policy holders) of a mutual do not generally provide capital through the purchase of shares.

Mutuals originated in England in the 1600s and made their way to North America via Ben Franklin. (Yes, that Ben Franklin). In 1752, Franklin helped form the Philadelphia Contributionship, which provided fire insurance for over 140 policy holders. Each policy holder made equal payments to any policy holder experiencing losses resulting from fire. Once the policy ended, the premium was returned to the policy holder.

Throughout the 19th and 20th centuries, several other mutual insurance companies were started by local farmers, home-owners, businesses, or car owners to create security and protection for their families. The most notable of these being Nationwide, which started in the 1920s to provide auto insurance for farmers in Ohio. Today, some American mutual insurance companies are giants in their industry, with recognizable names like State Farm, Liberty Mutual Insurance, and Nationwide leading the industry.

In Canada, our mutual insurance companies lack national recognition, but serve important roles as local regional service providers. Saskatchewan Mutual Insurance Company, Portage la Prairie Mutual Insurance, and Red River Mutual Insurance are some local examples. Ontario is home to dozens of locally-owned mutual insurance companies, the most of any province.

Credit unions

Mutuals are not the only type of financial sector co-ops. Credit Unions are locally-owned banks whose shareholders open an account with the organization. There are 275 credit unions across Canada, representing over 5.6 million members, contributing over $6.5 billion the Canada’s GDP annually.

Banking with a credit union is a different type of banking and a great way to keep your money local, supporting local businesses, community development and families. Your local credit unions invest locally through loans, mortgages and grants or donations. Plus, profits are returned to local shareholders through patronage rebates.

Credit unions can also range in size from Vancity in British Columbia (18 billion in assets) and Servus in Alberta (13.5 billion in assets) at the top end of the large credit unions to smaller one or two branch credit unions with a few million in assets.


Investment co-ops

Another option for keeping your money local is investing in a community investment co-op. Originating in Nova Scotia, the community investment co-op model offers community members a platform to invest in creating a pool of capital designed to support local business, community development and other economic activity. The co-op makes investments on behalf of its shareholders into local businesses or economic activity, which supports the local economy and creates a return for investors.

These firms can be quite specific in their values and goals. The Creston and District Community Investment Co-op has a focus on “social issues, environmental sustainability, and local agriculture and food systems” and supports local businesses by providing accessible loans. Sangudo Opportunities Investment Co-operative also values local, and has a mandate to support youth employment, local businesses and grassroots initiatives and leadership. Both firms value keeping wealth local, which supports Main Street over Wall Street.

If you’re interested in accessing locally-owned financial services and keeping money in your community, consider a co-op.

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