Cooperative

A cooperative is a social enterprise, an association of individuals with both economic and social goals and a shared philosophy, which has become increasingly common since the 1990s, when there was a concerted push to popularize the cooperative movement—then about a century and a half old. The Statement on the Cooperative Identity, drafted by the Geneva-based International Cooperative Alliance in 1995, defines a cooperative (often shortened to “co-op”) 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 … based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of cooperative founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.” Those clauses of the statement allude to the Rochdale Principles—first formulated by the Rochdale Society of Equitable Pioneers, the consumer cooperative that founded the modern cooperative movement in 1844—and have been updated by the International Cooperative Alliance to retain the original spirit but reflect the modern economic climate. The Rochdale Principles is a set of ideals or values that guide the activities and function of cooperatives.

Voluntary and open membership is a critical requirement of cooperatives, which must be 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.” This does not prevent the adoption of rules such as limiting the membership to citizens of a particular geographic area, or those who belong to a certain industry (farmers, for instance) or who have specific experience in that industry; nor does it prevent the charging of membership dues and thus turning away those who cannot pay.

Democratic member control means that cooperatives function as democratic groups controlled by the members, who make decisions and set policies; most cooperatives give all members equal voting rights, though some may weight votes according to factors particular to their circumstance (much as shares of stock provide weighted votes to stockholders in proportion to the number of shares they own). Generally, elections are held for representatives who are responsible for the day-to-day operations of the coop.

Member economic participation says that members contribute to their co-op's capital, at least a portion of which becomes the co-op's common property, used to develop the co-op, set up reserves, benefit members in proportion to their participation, and support other operations jointly approved by the co-op's membership. Generally speaking, members will put money into the co-op for its activities, and when a profit is made, that profit will be paid back to the members in proportion to what they put in, with surpluses used [Page 103]to further expand or fund co-op activities. Depending on the nature of their activities, some co-ops may pay dividends to their members, the way stock companies do.

Autonomy and independence require that whatever relationship a co-op enters into with some other body must not be one that compromises the co-op's independence. A co-op cannot be bought out by some corporation and still remain a co-op, for instance.

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