What is a Co-op?

While the modern co-operative movement has been in existence for more than one hundred and fifty years — and its roots go back even further in history — the co-op business model has been receiving renewed attention in recent years, most recently with the United Nations' designation of 2012 as the International Year of Co-operatives.

A co-operative can be used to accomplish almost any purpose: to fulfill a need, obtain a product or service, produce a product or service, or secure employment.  Most co-ops are focused on one of these activities, but many of them address a combination of these acitivities.  Around the world, co-ops operate in all sectors of the economy, from agricultural and fishery co-ops to food co-ops, industrial manufacturing to financial services, health care to the arts.  From small-scale community co-ops to multimillion dollar enterprises, co-ops include almost 1 billion members and employ 100 million women and men (more than multinational corporations).

What makes a co-op unique is that it is owned and democratically governed by its members, the people who use its products or services, or are employed by the business.  The purpose of the enterprise it to not to accumulate profit for investors, but to meet the goals and aspirations of its members.  For this reason, any surplus generated by a co-op is reinvested in the business or returned to the members based on their use of its services.  Membership in the co-op is obtained through the purchase of a member share in the business, which does not change in value (in contrast to publicly traded corporations) and entitles the member to one vote in matters that come before the members.

In many countries, co-ops are recongnized by the government for their unique contribution to community development.  The Italian Constitution, for example, "acknowledges the social function of co-operation as a form of mutual aid devoid of all private speculative intent."  In the United States, the federal government has promoted the co-operative business model in many areas of the economy, including rural electricity and telecommunications, housing and farming.  The US Department of Agriculture defines a co-op as a "user-owned, user-controlled business that distributes benefits on the basis of use."

In 1893, leaders from around the world founded the International Co-operative Alliance (ICA) with the goal of defining the co-op business model, promoting its use around the world and defending the unique values and principles that make co-operatives a viable alternative to business as usual.  In 1995, the ICA created this update to the Co-operative Identity:

Definition

A co-operative is 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.

Values

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Principles

The co-operative principles are guidelines by which co-operatives put their values into practice.

1. Voluntary & Open Membership.  Co-operatives are voluntary organisations, 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 organisations 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 organised 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 & Independence.  Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, 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 & 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.


For more information, visit the website of the International Co-operative Alliance, www.ica.coop.