Between the financial crisis, the drawn-out economic malaise, and the stock market's often wild gyrations, the past few years have been rocky ones for investors. As a result, many have flocked to safe harbors like gold and government bonds in the hopes of riding out the storm unscathed.

However, the ratings downgrade of American sovereign debt, growing uncertainty over the future of the eurozone, and recent gold price volatility have all raised troubling questions as to the safety of even these traditional investments of last resort.

A truly alternative investment

One option that is rarely considered is investing in the cooperative movement. Ever since the first co-op store was founded by a group of weavers in Rochdale, England, during a period of widespread unemployment in 1844, overall economic gloom has historically translated into boom times for co-ops.

Today's situation is no exception.

Even before the shot in the arm they received from Bank Transfer Day, credit unions (cooperative financial institutions) had been growing at an abnormally quick clip since the 2008 financial crisis, and new food co-ops have been springing up across the U.S. with increased frequency. While many traditional firms have been struggling just to tread water in the past few years, the cooperative sector has been posting record growth.

Investing in cooperation

However, hitching one's investing wagon to the cooperative movement's rising star is tricky. What makes a co-op a co-op is that it is owned by the people who use it, which can consist of the firm's employees, its customers, and/or its suppliers, and profits are distributed among owners based on patronage. Thus, by design, outside investors are usually prohibited from taking an ownership stake in a cooperative.

This doesn't mean investors are entirely shut out of the co-op sector. In order to obtain capital for start-ups and expansions, co-ops often turn to cooperative development funds, or CDFs. These vehicles -- such as the Cooperative Fund of New England (CFNE) and the Minneapolis-based Northcountry Cooperative Development Fund (NCDF) -- take investment funds from co-ops, community groups, and individuals, and lend them in support of an array of cooperative projects.

Such funds are generally small; at the end of 2010, the CFNE had approximately $8.5 million in outstanding loans to 59 different organizations. This scale means that the liquidity of investments in CDFs is often limited; approval for cashing out a note prior to its maturation is usually up to the discretion of the fund's manager. Additionally, the rate of return is generally modest -- investments in the CFNE return 3% annually.

The takeaway

While that's far from the historical returns of a riskier asset classes like stocks, investments in CDFs can be thought of as fairly safe for a few reasons. Historically, the CFNE and NCDF both note that since the funds were founded in the 1970s, no investor has lost their principal. This precedent is buttressed by the fact that some "ethical" CDF investors who philosophically support the mission of the funds agree to shoulder extra risk by tagging their principal as the first to be sacrificed should the fund get in trouble, thus shielding other investors.

Finally, the cooperative model itself can allow struggling co-ops to remain solvent in situations that would sink a for-profit firm. Since they are owned by their users, co-ops can -- in a pinch -- leverage the labor, skills, and resources of their members in order to stay afloat. Many maintain "member-worker" programs even when doing well, but the capacity to mobilize free and extremely low-cost support from their members in a pinch is a valuable resource that can keep loan repayments flowing long past the point when a conventional firm would have defaulted.

Although cooperative development funds are no path to quick riches and not for those who demand instant liquidity, these little-known investment vehicles are an interesting alternative for investors with a pessimistic outlook and/or a desire to invest ethically.

Fool contributor Matt Cropp is a credit union historian. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.