What is a Co-op?
Simply put, a co-op is any voluntary organization composed of a group of individuals (or organizations) formed for their mutual (generally, financial) benefit. This is what co-ops have in common:
- They all are democratic, volunteer associations.
- They are formed for mutual financial benefit (to save money or to increase buying power); in short, they are businesses.
- They have no owners other than their members.
- They are not-for-profit organizations; what would be profit in other organizations is returned to the member-owners.
Co-ops are an American and international tradition. They include:
- Credit unions
- Mutual insurance companies (Invented by Ben Franklin in 1752)
- Housing co-ops
- Rural electric power co-ops
- Consumer goods co-ops (REI)
- Distribution co-ops (Ace Hardware)
- Producer co-ops (Sunkist, Land ’O Lakes)
- Natural Food co-ops
All co-ops share a set of values and principles as defined by the International Co-operative Alliance (ICA).
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.
The Seven Co-operative Principles
1st Principle: 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.
2nd Principle: 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.
3rd Principle: 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.
4th Principle: 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.
5th Principle: 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.
6th Principle: 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.
7th Principle: Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.