Co-op Survival Rates in Alberta

Alberta Community and Co-operative Association and BC-Alberta Social Economy Research Alliance

Author +
Richard Stringham and Celia Lee

Year: 2011

Agencies with an interest in co‐operative development would benefit from better understanding of the patterns and causes of co‐op formation and dissolution in Alberta. The research aims were to establish:

  1. The number and variety of co‐ops incorporated in Alberta over the last ten years;
  2. The conditions that gave rise to the incorporation of these co‐ops;
  3. The survival rate of incorporated co‐ops;
  4. The reasons for a co‐op’s discontinuance;
  5. The ways in which a co‐op’s early development and incorporation might be assisted; and
  6. The ways by which a co‐op’s demise might have been averted.

Incorporation and dissolution data was examined for 127 co‐operatives incorporated from 2000 to 2009. An online survey was conducted with respondents from 29 co‐operatives of 134 incorporated in the period 2000 to 2010. Eight (8) of those co‐ops were represented in telephone interviews.

From 2000 to 2009, 127 new co‐operatives were incorporated in Alberta excluding mergers of preexisting co‐operatives and registration of extra‐provincial co‐operatives. A spike occurred in new cooperative incorporations in 2002, possibly a result of the new Alberta legislation and its enabling clauses. The fewest number of incorporations took place in 2008, possibly due to a global economic slowdown.

Dissolution data provided for Alberta co‐ops incorporated between 2000 and 2004 does not appear to be reliable. More recent data shows that three year survival rates for co‐ops incorporated in 2005 and 2006 was 81.5% compared to 48% for conventional firms in Alberta. Co‐ops operating in the same field as other co‐ops (e.g., housing, water and sewage) generally had better survival rates than those which are more innovative.

Capital and hired staff were both considered important to the success of those co‐operatives which used either or both of those resources. The majority of capital was from member shares and loans. Securing financing from the lending sector was considered challenging for more than half of respondents. However, neither lack of capital nor having paid staff were reported as problems which led to the dissolution of co‐ops.

Partnerships and networks were generally valued by those that used them.

Coordinating with different regulatory organizations was one of the most significant challenges for coops in terms of maintaining their momentum, optimism and financial viability. Similarly, keeping up with administrative paperwork was overwhelming for volunteers who were also trying to develop and run their co‐ops.

Each of the respondents from dissolved co‐ops indicated that their groups had used external expertise prior to incorporation. 71% of the operating co‐ops had done so.

At least 42% of operating co‐ops had used consultants prior to incorporation and generally rated their helpfulness as higher than any other type of external expertise. 29% of operating co‐ops used consultants after incorporation, and generally did not value their helpfulness as strongly as prior to incorporation. In contrast, none of the dissolved co‐ops used consultants prior to incorporation and, most likely, after incorporation.

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