Starting up a funeral cooperative

There are presently about 50 funeral cooperatives in Canada. They exist in most provinces, and particularly Quebec. Funeral cooperatives are also to be found in the United States, Peru, a few South American countries, and Great Britain.

You reside in Canada and you are wondering:

“Why start up a funeral cooperative in my community?”

Here are a few good reasons:

By starting a funeral cooperative, I allow the people in my community:

1. To save on funeral services;
2. To choose a company that stands apart for its humane and professional approach;
3. To show solidarity by joining the cooperative movement;
4. To assert their values of mutual assistance, democracy, equity and community engagement;
5. To support the local and regional economy;
6. To obtain quality products and services that meet their needs;
7. To have access free of charge to objective information and practical documentation on all the aspects of death and mourning;
8. To get involved in their cooperative and play a role in its future directions;
9. To encourage a company that is not seeking profit or exploiting bereavement;
10. To have access to personalized services and rites adapted to their beliefs and their wishes;
11. To participate in an organization that acts to curb the constant rise in the cost of funeral services;
12. To be part of a group where meetings, information sessions and social activities are all so many opportunities for exchange which contribute to their personal developments;
13. To feel free to choose, with no pressure to buy;
14. To have a voice in financial decisions and decide how surpluses are allocated;
15. To ensure that the value added by funeral services enriches their community and remains in local hands.

How does a cooperative work?

All cooperatives must follow the rules defined by the International Co-operative Alliance. These rules are laid out in the following seven cooperative principles:

1st principle: Voluntary and open membershipCooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd principle: Democratic member control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are also organized in a democratic manner.

3rd principle: Member economic participation
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive only limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses, in whole or in part, for the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

4th principle: Autonomy and independence
Cooperatives are autonomous self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain the autonomy of their cooperative.

5th principle: Education, training and information
Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperative. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.

6th principle: Cooperation among cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, regional, national and international structures.

7th principle: Concern for community
Cooperatives work for the sustainable development of their communities through policies approved by their members.

How does a funeral cooperative work, in particular?

Funeral cooperatives in Canada are organized as consumer cooperatives. This means that the owners are persons who want to use the cooperative’s funeral services at the time of their own death or that of a family member.

The funeral services offered are generally the same as those found in the public marketplace (funerals, cremation services, vehicles, visitation rooms, etc.). The cooperative hires qualified staff to provide the services and uses specialized providers for the caskets, urns, and so forth.

The differences lie in the extent of the services offered, the setting of prices for services, and the use made of overpayments, which will be determined by the members. Since the users of the services are also the owners of the cooperative, they have a say regarding the quality of the services offered, and advisors will exert no pressure in offering those services

How does one go about starting a funeral cooperative?

Generally, the people who have started up funeral cooperatives went about it this way:

1. Identification of a group of persons who are willing to create a cooperative
2. Formation of an interim committee
3. Market research
4. Feasibility study
5. Production of the business plan
6. Legal constitution of the cooperative
7. Start-up

1- Identification of a group of persons who are willing to create a cooperative

It is important to be sure that creating the cooperative will meet a real need. For this purpose, you need to get a small group of people together who will share your assessment of the situation.

This group might be comprised of persons who are already familiar with the cooperative formula from other lines of business, people who are community leaders by virtue of their involvement in social groups, or simply persons who are determined to start up a cooperative project in the funeral sector.

2- Formation of an interim committee

If you have identified a group of persons who want to proceed with this project, you can contact the Federation of Funeral Cooperatives of Québec, which will be able to make you a more concrete presentation of the cooperative formula in the funeral sector and support you through every phase of the start-up.

You can also contact the cooperative resources in your province through the following cooperative associations:

Alberta
Alberta Community and Co-op Association (ACCA)
Tel.: (780) 963-3766

British Columbia
BC Co-op Association (BCCA)
Tel.: (604) 662-3906

Prince Edward Island
PEI Co-op Council
Tel.: (902) 569-7322

Manitoba
Manitoba Co-operative Association
Tel.: (204) 989-5930

Govt of Manitoba: Co-op Development Services
Jamila Bachiri
Tel.: (204) 239-3883

New Brunswick
Co-operative Enterprise Council of New Brunswick (CECNB)
Tel.: (506) 227-9607

Nova Scotia
Nova Scotia Co-op Council
Tel.: (902) 893-8966

Government of Nova Scotia - Co-operatives Branch  
Tel.: (902) 893-6190

Nunavut
Arctic Co-operatives Limited
Tel.: (204) 697-2243 ext. 221

Ontario
Ontario Co-op Association (ON Co-op)
Tel.: 519-763-8271 or 1-888-745-5521 / ext.23

Saskatchewan
SK Co-operative Association
Tel.: (306) 244-3702

Newfoundland and Labrador
Newfoundland and Labrador Federation of Co-ops (NLFC)
Tel.: (709) 726-9431; 1-877-726-9431

Government of Newfoundland and Labrador - Department of Innovation, Trade and Rural Development  
http://www.intrd.gov.nl.ca/intrd/regionaldev/cooperativedev.html

Yukon
Government of Yukon - Department of Community Services
Tel.: (867) 667-5225

3- Market research

Market research can assess the funeral cooperative’s potential for success in the market concerned. This research will profile the demographic potential, the competition situation, and the quality and prices of services currently offered.

This research will put you in a position to determine the conditions of success for your cooperative project.

Meanwhile, you will continue your recruitment initiative among the local population to evaluate the desire there to support the project of setting up a cooperative.

4- Feasibility study

The feasibility study will deal more specifically with your project. After the interim committee has decided on the configuration of the future cooperative (the services it will offer, its needs in terms of premises, vehicles, etc.), this study will determine what your project requires in terms of financial resources to be a success.

This will let you know how much the project will cost, the number of members it will need to function properly, and the market share you can expect.

This feasibility study will allow you to define the general orientations of the cooperative in terms of the desired make-up of the board of directors, the scope of the cooperative’s educational component, the desired number of employees, the activities for which the membership will volunteer, the share price set, and so on.

5- Production of the business plan

The business plan will be prepared in order to obtain funding from the financial backers. It will generally be prepared once the cooperative has identified the site for its project.

This plan will include the project presentation, the history of the steps taken to the current point, presentation of the members of the interim committee, the organizational structure of the cooperative, the activities to be offered, the recruitment and marketing plan, description of the necessary capital property, the financing structure, a budget estimate, etc.

Have no fear: the Federation and your provincial cooperative organizations will be there to lend a helping hand!

6- Legal constitution of the cooperative

After preparing the draft by-laws, which will determine the mode of operation of your future cooperative, you can call all the members you have recruited thus far to the organization meeting.

This meeting will have to determine the actual content of the internal by-laws.

The internal by-laws serve to establish the powers and responsibilities of each member of the cooperative. The content of a cooperative’s internal by-laws can possibly address the following subjects:

• description of the share capital;
• corporate name and address of the domicile;
• mission and fields of activity;
• conditions of membership;
• rights and privileges of members;
• modes of convocation and procedures of general meetings;
• composition and election of the board of directors;
• mode of convocation of meetings;
• powers and responsibilities of the board of directors, the executive committee (if any), and the other committees;
• roles of the members of the board of directors;
• powers and responsibilities of the general management;
• dates of the fiscal year;
• borrowing authority;
• external auditor;
• signatories;
• clauses of dissolution;
• special provisions;
• procedure for amendment of the internal by-laws;
• effective date;
• etc.

7- Start-up

After obtaining financing and after the organization meeting has been held, your cooperative will be in a position to put in place the other elements that will allow it to start up its actual commercial operations.

It is from this point forward that your cooperative will be able to offer funeral services to its members.

From this point, who are the decision makers in a funeral cooperative?

Like any other organization, a cooperative is structured according to various levels of decision making. Hence respect for the hierarchy of powers and responsibilities is fundamental to its development. When every level of authority fully plays its role, all the chances of success come together!

There is a dual structure to the operation of a cooperative: an associative structure and a corporate structure.

The associative structure comprises all levels of authority where the members can exercise their rights as co-owners (general meeting) or elected representatives of members (board of directors and various committees).

The corporate structure comprises all levels of authority whose role is to look after implementation of the economic activities of the cooperative. This structure includes all the human resources of the cooperative (general management, permanent and casual employees, contract workers, subcontractors, professionals, volunteers, etc.).

General meeting of members

The general meeting is supreme, within the limits of the powers it is granted by law. Every member has the right to speak there, and the right to vote.

The members are the wealth of the cooperative. Therefore the general meeting of members can be the perfect place for them to exert their influence as to the major directions to be preferred. Furthermore, the cooperative is free to define membership categories other than that of regular member, whose rights are defined according to their particular status.

The general meeting reads the annual report prepared by the board of directors and the external auditor’s report.

Depending on the various provincial statutes governing cooperatives, the exclusive powers of the general meeting are generally as follows:

• Establish and amend the internal by-laws and articles of constitution;
• Elect members of the board of directors;
• Appoint the external auditor;
• Decide upon the dissolution of the cooperative, its merger with another cooperative, its joining the ranks of a federation or confederation, etc.

Board of directors

The administrators, directors and other representatives of the cooperative are considered to be agents of the general meeting. Their role is to ensure that the cooperative best serves the interests of its members, that is, that it:

• offers them the best terms for the purchase and sale of goods and services;
• best satisfies the requests expressed at the general meeting.

The board of directors plays the role of interface between the associative structure and the corporate structure. Elected by the general meeting, the directors have to translate the long-term policies adopted by the meeting into objectives, ordering operational planning of the economic activities of the cooperative. For this they can obtain technical assistance from the general management.

The directors exercise their powers collectively. Only decisions made at meetings of the board of directors and recorded in the minutes can be executed. This means that the directors cannot intervene individually in the management of the cooperative, make an undertaking or spend on behalf of the cooperative, unless they have been expressly mandated to do so by the board of directors. Furthermore, to avoid any conflict of interest, the directors cannot deal directly or indirectly with the cooperative (as salaried employee, agent, company representative or shareholder, supplier, etc.) unless duly mandated by resolution of the board of directors.

In order to appropriately play its role, the board of directors has certain powers and responsibilities relating to the corporate structure (general management and human resources management) and the associative structure.

The president

The president has limited power under mandates assigned by the board of directors. He or she has no decision-making power. The particular powers of the president are:

• casting the deciding vote in a tie;
• calling a special general meeting or a board of directors meeting.

The president prepares for meetings of the board:

• Formulates the agenda with the general management
• Sees that action is taken on decisions of the board
• Signs the minutes, together with the secretary
• Has delegated authority to sign any official document
• Acts as official representative of the cooperative
• Chairs board meetings
• Ensures compliance with the mandate assigned by the general meeting
• Ensures the effectiveness of board meetings
• Encourages the active participation of directors in meetings.

General management

The general manager is the director of the cooperative’s corporate structure. He has the same responsibilities and powers as the manager of any other company. Consequently, he is solely responsible for the daily operation of the cooperative, within the framework of the limits defined by the board of directors, to which he is accountable (execution of mandates, compliance with management directives, etc.).

The general manager usually has the mandate to plan, organize, manage and control the cooperative’s activities based on the short- and medium-term objectives set by the board of directors. The powers and responsibilities of the general manager concern administrative and financial management, human resources management, and management of equipment and fixed assets.

The powers and responsibilities of the general manager with respect to financial management are as follows:

• Prepare annual budgets and monthly and annual financial reports and submit them to the board of directors.
• Establish the flat costs of goods and services and propose a pricing policy to the board of directors.
• Propose means of ensuring the cost-effectiveness and development of the cooperative to the board of directors.
• Hire and fire the permanent, casual and contract staff of the cooperative.
• Supervise, direct and evaluate the permanent, casual and contract staff of the cooperative.
• Establish the work descriptions and work schedules of all staff.
• Propose a personnel management policy and a compensation policy to the board of directors.
• Purchase equipment and maintain equipment and buildings in accordance with the purchasing policy.
• On behalf of the cooperative, engage the professionals and contract workers required to maintain and repair equipment and buildings.

Roles of the various levels of authority

PARTNERS	ROLES
Members	Users - Adherents. Make their needs known, participate in the development of the cooperative, and use its services.
General meeting	Orient the cooperative and receive the reports of the board of directors and other reports.
Board of directors	Administer the cooperative’s business.
Committees	Contribute to realization of the objectives of the board of directors.
General management	Manage the business of the cooperative in accordance with the objectives of the board of directors.
Employees and volunteers	Contribute to the realization of management’s objectives.