Caisse populaire
| Caisse populaire |
|---|
| See also |
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. |
Footnotes
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
