Caisse populaire
Caisse populaire (also a credit union) - is a Canadian member-owned co-operative that provides financial services similar to ones of a traditional bank. The character of this organization is non-profit since it is owned by several members that receive dividends, distributed from extra money. Usually caisse populaires provide services to local communities and to members who previously made investments. These members make deposits that can later be provided as loans and other financial services to other members. The services of caisse populaire may vary. Another feature of caisse populaire is that all fees and interest rates depend on needs of its members. These organizations tend to apply more affordable interest rates on loans or more favourable interest rates on deposits and other types of savings accounts. Unlike other financial organizations, caisse populaires can be founded by any group of people united by a mutual interest - which is why those are usually local communities, groups of employees, people involved in the same kind of activity. The board usually consists of volunteers due to non-profit type of organization[1].
History
The first caisse populaire was founded in 1900 in Levus, Quebec. The founder, Alphonse Desjardins, who worked at that time as a French-language stenographer in the House of Commons and as a journalist, established the company as a co-operative to guard savings and issue loans. The company did not have capital and had limited liability. European savings and loan companies were the models of inspiration for his own organization. The target audience was the working class. Caisse populaire encouraged them to prepare financial stable future for themselves by saving money and invest money that would be needed for loans and financial crisis. The European character of organization also helped French Canadians to be financially independent. On January 23 in 1901 the caisse populaire was opened for the first time in the home of Desjardins. The total share payment of 12 people was $26.40. The first savings deposit was made on February 7 and it was worth 5 cents. However, by 1906, the total amount of costs was nearly $40,000. This urged Quebec legislation to adopt the Act on co-operative syndicates. By 1920 there were already 219 caisses populaires, 23 of them were outside Quebec in Ontario, 9 in French communities in New England. The success of the organization was the result of constant support and active participation of its members. In order to improve the financial position of shareholders and their family members, in 1948 the co-operative introduced a life insurance subsidiary. This decision met the requirements of that time, as the country was implementing an innovative family insurance program, which was launched simultaneously with a loan and savings insurance program. In 1970, the Group commissioned the SIC system, an integrated computerized system for people's cash desks, thus automating all operations. Later through the years caisses populaires established themselves in insurance, industrial and trust financial sectors, not mentioning the funds management, securities brokerage and banking services branches. The company Mouvement Desjardins has became the largest private employer in Quebec with 40 000 employees involved in its activity[2].
Banks vs caisse populaire
In contrast to caisse populaire banks are for-profit since the dividends are later distributed among shareholders that directly influence bank strategies, whereas bank account owners have no power and direct dividends. Other differences are provided below[3]:
| Caisse populaire | Bank | |
|---|---|---|
| Owners | All founding members | Limited number of shareholders |
| Objective | Well-being and economic development of the community:
|
Shareholders’ enrichment |
| Management | Locally elected members or volunteers from the community | Head office that has no link to any community or country |
| Participation in decision-making | All members take part in Annual General Meeting and they can run for the position of a board member. Each member has 1 vote. | Only shareholders participate in Annual Meetings, the number of votes corresponds to the number of shares. |
| Distribution of dividends | A surplus of finances returns to their members and communities, though only if possible. | Dividends are regularly issued to a small group of shareholders. |
Examples of Caisse populaire
- Desjardins: Desjardins is the largest federation of caisses populaires in Canada. Founded in 1900, it is an integrated cooperative that includes caisses populaires, credit unions, insurance companies, and venture capital companies. It offers a variety of financial services, such as savings accounts, investments, loans, mortgages, and insurance.
- Caisse Desjardins du Bas-Richelieu: This caisse populaire is located in Quebec, Canada. It provides banking services such as deposits, investments, loans, mortgages, and credit cards. It also offers other financial services such as insurance, travel, and auto services.
- Caisse Populaire de l'Estrie: This caisse populaire is located in Quebec, Canada. It has been offering banking services since 1934. It offers services such as deposits, investments, loans, mortgages, and credit cards. It also provides additional services such as insurance, travel, and auto services.
- Caisse Populaire Acadienne Ltée: This caisse populaire is located in New Brunswick, Canada. It has been providing banking services to its members since 1957. It offers services such as deposits, investments, loans, mortgages, and credit cards. It also provides additional services such as insurance, travel, and auto services.
Advantages of Caisse populaire
A Caisse populaire is a non-profit, member-owned financial co-operative that offers many of the same services as a traditional bank. Some of the advantages of using a Caisse populaire include:
- Lower Fees: Because Caisse populaire is a non-profit, members benefit from lower fees than those offered by traditional banks.
- Higher Interest Rates: Members of a Caisse populaire benefit from higher interest rates on their savings accounts than those offered by traditional banks.
- Local Ownership: By using a Caisse populaire, members are supporting local ownership and their communities.
- Lower Loan Rates: Members of a Caisse populaire often enjoy lower loan rates than those offered by traditional banks.
- Online Banking: Most Caisse populaires offer online banking, allowing members to access their accounts and manage their finances from anywhere in the world.
- Investment Opportunities: Members can often take advantage of investment opportunities offered by the Caisse populaire, allowing them to grow their savings and investments.
Limitations of Caisse populaire
A caisse populaire is a Canadian member-owned financial co-operative that provides similar services to a traditional bank. However, there are several limitations associated with the use of a caisse populaire. These include:
- Limited services: Caisse populaires typically offer fewer services than a traditional bank, such as fewer banking options and a lack of international banking services.
- Limited access: Caisse populaires often have fewer locations than traditional banks, making it difficult for members to access their accounts.
- Lower interest rates: Caisse populaires often offer lower interest rates than banks, resulting in a lower return on savings.
- Lower loan amounts: Since caisse populaires are typically smaller than traditional banks, they are often unable to provide large loans.
- Limited online services: Although caisse populaires do offer online banking, their services are usually more limited than those of traditional banks.
- Complementary Financial Services - This approach is intended to provide additional services to members such as insurance, investments, and financial advice.
- Community Outreach - This approach is aimed at helping members in their local communities, such as providing financial literacy programs, workshops, and seminars.
- Member-Driven Services - This approach focuses on providing services that are designed to meet the needs of members. Such services include low-cost loan products, flexible repayment options, and more.
- Technology-Based Services - This approach focuses on utilizing technology and developing online platforms to provide members with convenient access to services.
In summary, Caisse populaire utilizes various approaches in order to provide financial services to members, including complementary financial services, community outreach, member-driven services, and technology-based services.
Footnotes
| Caisse populaire — recommended articles |
| Charitable foundation — Business correspondent — Stock insurance company — Small enterprise — Third sector — Cafeteria system — Cooperative insurance — Affinity Card — Direct paper |
References
- Convigton Jr., H. E.(2017) How Self-help Credit Union Turned Small-time Loans Into Big-time Change, Duke University Press, Durham and London
- Desjardins, A. (1914) The Cooperative’s people bank La Caisse Populaire, The Russell Sage Foundation
- Zinger, J.T. (1994) Credit Unions and Caisses Populaires Background, Market Characteristics and Future Development, Centre for the Study of Co-operatives University of Saskatchewan
- Audit and Accounting Guide Depository and Lending Institutions: Banks and Savings Institutions, Credit Unions, Finance Companies, and Mortgage Companies (2018), American Institute of Certified Public Accountants
Author: Kamil Piszczek
