What’s A Cooperative?

Cooperatives Defined

The International Cooperative Alliance (ICA) defines co-ops as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. You’ll find cooperatives throughout the world engaged in all sorts of businesses.

While they make look much different from one another and engage in many different kinds of business, three core values inform their operations:

  1. Member-ownership: the people who are members of the cooperative are joint owners. The co-op therefore is operated for their benefit.
  2. Non-discrimination: membership is open to all people eligible to join the cooperative without exception. Members also have equal say in the operation of the co-op (one member, one vote).
  3. Mutual self-help: the purpose of the cooperative is to allow members to work together in order to meet their individual needs.

The Seven Cooperative Principles

Originally conceived by the Rochdale Pioneers in 1844, the Cooperative Principles serve as a guidepost for how co-ops everywhere operate their businesses. The ICA formally adopted Seven Cooperative Principles in the 1930s, and these principles are periodically updated.

The Seven Cooperative Principles include:

1. Voluntary and Open Membership

Co-operatives 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.

2. Democratic Member Control

Co-operatives 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 co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner.

3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4. Autonomy and Independence

Co-operatives 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 co-operative autonomy.

5. Education, Training and Information

Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.

6. Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

7. Concern for Community

Co-operatives work for the sustainable development of their communities through policies approved by their members.