What Does It Mean to Be a Co-op?
Not everyone is familiar with the structure and operations of cooperatives. Here is some information (taken from the website of the Cooperative Grocer) to help you understand this unique business model.
What Is a Consumer Cooperative?
Cooperatives are member-owned, member-governed businesses that operate for the benefit of their owners according to common principles agreed upon by the international cooperative community. In co-ops, owners pool resources to bring about economic results that are unobtainable by one person alone. Most simply put, a cooperative is a business 1) voluntarily owned by the people who use it, and 2) operated for the benefit of its members.
Regardless of the goods and services provided, co-ops aim to meet their owners needs. Most food co-ops are consumer cooperatives, which means that all our retail co-ops are owned by the people who shop at the stores. Owners exercise their ownership by patronizing the store and voting in elections. The owners elect a board of directors to hire, guide and evaluate the general manager who runs day-to-day operations.
All co-ops contain the following elements:
- co-ops are owned and governed by their primary users (the owners).
- co-ops are democratically governed (one owner, one vote).
- co-ops are businesses, not clubs or associations.
- co-ops adhere to internationally recognized principles.
Consumer cooperatives are very different from privately-owned “discount clubs,” which charge annual fees in exchange for a discount on purchases. The “club” is not owned or governed by the “owners” and the profits of the business go to the investors, not to members. In a cooperative, the owners own the business and the profits belong to the community of owners.
The specific goals of a cooperative are determined by its Owners, but all cooperatives adhere to the principles of cooperation that are based on practices of the first successful consumer cooperative in Rochdale, England (founded in 1844). There are consumer, producer co-ops (usually agricultural) and worker-owned cooperatives. There are also housing co-ops, health care co-ops (the original HMOs were co-ops) and financial co-ops (credit unions).
The overall goal of the cooperative movement is to create organizations that serve the needs of the people who use them. Cooperative businesses provide goods and services in a way that keeps community resources in the community.
The International Cooperative Alliance, representing cooperatives around the world, approved the following statement in 1996:
The cooperative principles are guidelines by which cooperatives put their values into practice.
First Principle: Voluntary and Open Membership Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination. Second Principle: Democratic Member Control Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner. Third Principle: Member Economic Participation Members contribute equitably to, and democratically control, the capital of their coop-erative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any of all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership. Fourth Principle: Autonomy and IndependenceCooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy. Fifth Principle: Education, Training and Information Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public–particularly young people and opinion leaders–about the nature and benefits of cooperation. Sixth Principle: Cooperation Among Co-operatives Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures. Seventh Principle: Concern for Community While focusing on owners’ needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.[Adopted in Manchester (UK) by the General Assembly of the International Cooperative Alliance (ICA), 23 September 1995, on the occasion of the Alliance’s Centenary. The Statement was the product of a lengthy process of consultation involving thousands of cooperatives around the world.]