Grass-roots friendly societies could provide cooperative insurance against dark times
Let us run ahead of the future and start building the institutions we want to have
2025-10-27 — 2026-03-23
Wherein a small Melbourne society is proposed, funded at $200 a month, its pooled fees are invested in countercyclical ETFs, and compliance costs are reduced by AI to $41k–56k yearly.
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What happens to ordinary people when the systems we depend on stop working properly?
We live inside a set of assumptions about the future. The state will provide healthcare. Unemployment insurance will catch us if we fall. The currency will hold its value. Supply chains will keep the shelves stocked. The climate will remain tolerable enough that we can keep living where we live.
None of these are guaranteed, and several are already fraying. Climate change is repricing property, displacing populations, and straining government budgets. Automation is reshaping labour markets in ways that existing welfare systems were not designed to handle. Wars and trade disputes disrupt supply chains with increasing regularity. Any one of these would be a serious policy challenge; taken together, they constitute the thing some people have started calling a “polycrisis”—multiple overlapping stresses that compound each other.
The standard response to all of this is: surely the government will handle it. And maybe it will! Australia has handled crises before. Modern states, especially Western states, are not hedging well against correlated, slow-moving, civilisation-scale risks. They are reactive, not anticipatory. The social safety net was designed for a world of temporary individual misfortune—you lose your job, you get sick—not for a world where entire sectors of the economy might become obsolete at once, or where climate impacts and geopolitical shocks hit everyone in the same region simultaneously.
So what can we do about this ourselves, without waiting for the state to get ahead of the problem?
This is the first in a series of posts about alternative institutions for citizens—things we can build now, while we still have the prosperity to do so, so we’re more robust if the state doesn’t act for us.
1 Why do things collectively?
The obvious individual response to all of the above is: save more money. Build a bigger personal buffer. And sure, do that too. But there are reasons why doing this as a group is qualitatively better than doing it alone.
Even better would be mass, societal scale planning for industrial diversity, financial resilience, and social cohesion. But Australia has had a long run of governments which don’t give off “don’t worry guys we have a long term strategic plan fit for the future” vibes, and the current one is no exception.
So! Community aid!
Economies of scale. A single person investing $200/month doesn’t have much negotiating power or diversification. Fifty people investing $200/month have a pool of $120k/year—enough to access investment vehicles and fee structures that aren’t available to retail investors, and enough to absorb a bad quarter without anyone panicking.
Collective bargaining. A group can negotiate rates that individuals can’t: group health insurance, bulk purchasing, professional services at institutional pricing. The friendly society acts as a small institution on behalf of its members, and institutions get better deals than individuals.
Diversification of skills and networks. In a crisis, money is only part of what you need. We also need information, contacts, and practical help. A group of fifty people across different industries collectively knows far more about which sectors are hiring, which services are still functioning, and where the opportunities are than any one person does. Social capital is a real asset, and it compounds with group size.
Shared administration. Running a serious investment strategy, tracking regulatory obligations, managing claims—this is overhead that doesn’t scale linearly. One person doing it for fifty is vastly more efficient than fifty people each doing it for themselves. (And as I’ll argue below, AI tools can compress this overhead further.)
Commitment and discipline. It’s easy to raid your own savings when times get tight. It’s harder—in a good way—to draw on a shared fund without justification to people you know and respect. The social structure provides the kind of gentle accountability that most of us struggle to maintain individually.
Community ties as resilience. This one is less tangible but maybe the most important. The research on disaster resilience consistently finds that the biggest predictor of how well people come through a crisis isn’t wealth or preparation—it’s the strength of their social networks. A group that has been meeting regularly, managing shared resources, and building trust for years before a crisis hits is in a fundamentally different position from a collection of isolated individuals, even wealthy ones. The institution is the thing that builds those ties.
2 Why a friendly society?
So if we want to do this collectively, what form should it take? I want to dust off an old idea. A friendly society:
A friendly society (sometimes called a benefit society, mutual aid society, benevolent society, fraternal organization or “ROSCA”) is a mutual association for the purposes of insurance, pensions, savings or cooperative banking. It is a mutual organization or benefit society composed of a body of people who join together for a common financial or social purpose. Before modern insurance and the welfare state, friendly societies provided financial and social services to individuals, often according to their religious, political, or trade affiliations.
We stopped using friendly societies because the state got better at providing services. But if we think the state might not provide enough in future, that ecological niche reopens. Friendly societies were designed for exactly this—small groups, self-governing, built to function when larger institutions can’t or won’t. I gotta tell you, I think we need to plan for that; a Universal Basic Income ain’t gonna happen, baby.
Earlier on this blog, thinking about these kinds of problems, I tried to start a housing cooperative; I’m a co-operative problem-solving kind of guy. This idea is way easier than that kind of cooperative. Housing is weird, and housing markets are weird.
3 A modern citizen-supported crisis hedge
I don’t think there is a strong argument for a classic-style friendly society that simply pools income to provide insurance. There are economies of scale to insurance that are hard to beat—if 10 people in my neighbourhood pool our income to make our own flood insurance fund, this is probably not great, because if we get flooded we will all be flooded at the same time. Nationwide insurance is most efficiently provided by nation-scale institutions, and the state is currently pretty good at that.
A more interesting, contemporary pitch is investing in counter-cyclical assets—things that might still be a store of value at the time when the state cuts back.
Here’s a model: we start a mutual aid society that takes membership fees and invests them in a diversified portfolio of industry-specific ETFs or unit trusts. These investments could grow over time, potentially faster than government tax income. When financial troubles hit, our society would have assets to negotiate and pay for services like healthcare and unemployment insurance.
This is riskier than classic income pooling, but that’s a feature. We don’t care if the friendly society does poorly in good times or during disasters the state would cover; we want it to be useful to its members in bad times. This thing makes sense as a crisis instrument—the scenario at the top of this post is what it looks like from the inside.
I would propose keeping each society small—maybe dozens of members. This dodges coordination problems, keeps trust personal, and means we can iterate fast rather than grinding through bureaucracy designed for large institutions. What follows is a worked example of what such institutions might look like. Scale would be by creating many such institutions, rather than trying to scale up to the size of a major insurance company, or a state.
Sound interesting? Get in touch.
4 Interesting assets
Whatever the retail equivalent of Catastrophe bonds is, for natural catastrophes. Critical minerals, for energy scarcity. We can invest in defence contractors if we’re worried about war, although that is distasteful for various reasons.
5 Interesting services
Could such societies negotiate other deals for their members by using institutional clout?
6 Prior art
6.1 The historical record
Friendly societies have deep roots—burial societies existed in ancient Greece and Rome, medieval guilds extended the idea to illness and other misfortune, and by the 19th century friendly societies were enormous. David Beito’s From Mutual Aid to the Welfare State estimates that roughly a third of adult American men belonged to fraternal lodges by 1910, cutting across race, class, and gender lines. In Australia, the major orders—Manchester Unity Oddfellows, Ancient Order of Foresters, the Druids, the Rechabites—were central to colonial social infrastructure, providing sickness benefits, funeral funds, and medical access decades before the welfare state existed. Australian Unity, which still operates, traces its lineage to these traditions.
The standard narrative is that fraternal societies declined because the welfare state made them unnecessary. Beito’s counterargument is interesting: government programs displaced mutual aid, replacing reciprocity-based solidarity with paternalistic dependency. Whether or not you buy that framing in full, the relevant point for us is that the decline was contingent on the state actually providing. If state provision weakens, the ecological niche reopens. But: we would want to start such projects while we have the prosperity now, not wait until we lose the economic surplus that would have made them possible.
6.2 Modern mutual aid revivals
There’s a lot happening here already:
Broodfonds (Bread Funds). A cute modern Dutch variant. Broodfonds started in the Netherlands in 2006 as a mutual sick-leave scheme for freelancers. Groups of 25–50 people each contribute €33–€112/month into individual dedicated accounts. If a member gets sick, the others “gift” them a modest income for up to two years. There are now over 350 groups with 15,000+ members. The gifts structure is a hack to avoid insurance regulation (in the Netherlands, at least), and the small group size keeps trust personal. A UK adaptation, Mutual First Aid, and a UK Bread Funds project are attempting to transplant the model.
COVID-era mutual aid networks. The pandemic saw a massive resurgence of mutual aid groups globally. In Australia, groups like Love Your Neighbour Melbourne (9,000+ members) organized grocery runs and other support. Mutual Aid Australia emerged as an umbrella cooperative. Most of these were informal—no investment function, no durable legal structure—but they demonstrated that the appetite for organized solidarity persists.
ROSCAs and chamas. Rotating savings and credit associations are essentially friendly societies under another name, and they are alive and well globally—Kenyan chamas, Southeast Asian tontines, Latin American tandas. These are mostly informal but some have substantial assets.
The Sustainable Economies Law Center has published a Mutual Aid Toolkit addressing legal structures for mutual aid groups in the US context.
7 AI Angles
The historical friendly societies needed armies of volunteers to do administration—meeting minutes, accounts, claims processing, correspondence, rule-books. Modern financial regulation demands even more: risk management frameworks, actuarial reports, governance documentation, regulatory returns.
The bet here is that AI agents can compress much of this work. Not eliminate it—I imagine we would still need human judgement for the important decisions—but make it cheap enough that a group of 30–50 people can afford the overhead that used to require institutional scale.
I’ve asked my LLM research assistant for a detailed war-game of what this would look like—itemising APRA compliance costs, estimating what AI can compress, and sketching the shoestring team we’d need. tl;dr: traditional compliance for a friendly society runs $100k–215k/year, which is death for a small mutual. With aggressive AI automation of documentation, regulatory reporting, and actuarial prep work, it looks like we could compress that to $41k–56k/year. Still painful at 50 members, but viable at 100+, especially if the compliance infrastructure is shared across a network of societies.
However, there are some workarounds—ultra-small boutique funds with only AUD2M, other legal structures that are not APRA-registered, and so on—that could be viable at smaller scale.
That companion post works through possible legal structures in Australian law—from full APRA registration down to a Broodfonds-style gift model—and a staged approach that lets us build capability incrementally without taking on institutional-scale costs from day one.
8 Replicating to other mutual aid groups
I think the most valuable thing we could produce isn’t a single friendly society but a template: legal docs, governance frameworks, software tools, investment strategies, compliance checklists, and lessons learned—all published openly so that anyone can fork the model.
The vision is many small societies (dozens of members each), loosely affiliated, sharing infrastructure and knowledge but independently governed. This keeps each group small enough for trust and agility, while the network as a whole achieves scale for collective bargaining and knowledge-sharing.
This is essentially the societal-scale part of the Broodfonds model—they published their framework and it replicated to 350+ groups. We’d ideally be doing the same thing as far as replication goes.
9 Actually democratizing to all of society
If we hope that friendly societies might be a universal solution to mutual aid: no. This model is great for middle-class people who already have some surplus income. A mutual aid society might help keep middle-class people above the poverty line, but it won’t help people who are already below it.
How about everyone else? As I learned in that companion post, the baseline running costs for these things are high, so we cannot access them if we’re already broke. We could massively lower the entry costs with regulatory reform, but on the timescale I am interested in (i.e. starting now and making the next handful of years go better) this is not going to be a thing.
Also, even with regulatory reform, if we have less capital to get returns from, we get less return.
That said, while recognising that a neo-friendly society would be an instrument for middle-class welfare, I think it is worth considering anyway, because keeping middle-class people above the poverty line is also a good idea.
10 Open questions
- Is there appetite for this among people I actually know (as opposed to strangers on the internet, where there’s appetite for everything)?
- What does the right counter-cyclical portfolio actually look like?—catastrophe bonds, critical minerals ETFs, and defence stocks are low-effort examples, but designing a real crisis-hedge portfolio needs serious thought.
- What are existing Australian co-ops or mutuals doing that’s close to this vision—and what can we learn from them?
- A bunch of legal and regulatory questions that I’ve tried to work through in that companion post.
If you know about any of this, I’d love to hear from you. And, like, soon. We should probably have started this already if we wanted to do it, but maybe it’s not too late.