The Crocodile and the Plover

Why cooperate at all?

The entrepreneurial impulse — that desire to build something essential and new — has many possible sources, here are three big ones:

  • Pure altruism: I like this one. It assumes that the better angels of our nature are in charge and that they see mutual help as simply the right thing to do. This is the root of most charities and many cooperatives that see a human need and try to fix it. These are often the worthiest causes, and because the beneficiary can’t always reciprocate, 
  • Pure self-interest: This one doesn’t come with the same halo as altruism, but it’s powerful. This is the modern start-up with a good product, supportive capital, and eyes on a mega-valuation. Uber, SpaceX, Alibaba: The right market cocktail can change the world, and the founders (hopefully) earn their yachts along the way.
  • Symbiosis: This is the plover, that little bird that hops around the gumline of a crocodile. The bird gets to eat; the crocodile gets a good flossing. It’s close to self-interest, but there’s a social variable and a social surplus. Both parties get more together than they could get separately. A lot of cooperatives started this way. Imagine the first Quebecois caisse in which the borrowers finally had a choice between no loan at all or borrowing at scandalous rates. Each member's self-interest met at the door to Alfonse Desjardins’s house. 

It’s to this third that the best cooperatives aspire — obviously for and among their own members, but also for their fellow cooperatives. And that’s the point behind Filene’s recent research Cooperation among Cooperatives: Quantifying the Business Case for Credit Unions and Other Cooperatives. With support from CUNA’s Cooperative Alliance ad The National Credit Union Foundation, we were looking for the symbiotic surplus. 

Fortunately, it was easy to find.

Non-financial cooperatives have about $75 B in investable assets such as deposits and securities. These are your grocery, your housing, your rural electric co-ops. Non-financial cooperatives could consider switching large fractions of these to credit unions for an impressive payoff. 
During 2000-2013, credit unions on average paid their members interest rates on deposits that were 0.58% higher than those paid by commercial banks. If cooperatives shift 50% of their deposits ($37.5 B) from commercial banks to credit unions, non-financial cooperatives would earn $2.2 B more in interest over 10 years. That’s social surplus and economic surplus all wrapped together.

The crocodile metaphor only goes so far, of course. Neither the credit union nor the other cooperative is a voracious predator. And neither has to be a fragile partner. But we found a few billion reasons for cooperatives to get closer just by looking at deposits. That’s symbiosis enough for me.

This is just a thumbnail sketch of some pretty in-depth analysis. For more details and to understand our methodology, please download the full report: Cooperation among Cooperatives: Quantifying the Business Case for Credit Unions and Other Cooperatives.


Ben Rogers is the Research Director of the Filene Research Institute

Posted on April 20, 2015 and filed under Feature Small.