ERE32E Co-operative Business

Bridget CarrollCentre for Co-operative Studies, University College Cork, Ireland

Session 2: Principles

Distinguishing co-ops

Conventional companies use the difference between the cost and selling price as profit for investors

Co-ops will either Refund some of the difference to

members Retain as common property of

co-op/invest in the co-op Invest for other social purposes

Possible problems with conventional (investor owned) companies

Short-term decision-making

Profit maximising Bonuses Concentrated

ownership Not realising

creative capacity of workers

Decisions not in interests of consumers/workers/community

Ownership from a distance

Speculation

Co operative Principles

How might you operate a business that benefits members not investors?

How do you put certain values into practice?

Guidelines for how co-ops operate Principles not legislated for in every

country

Co-op Principles

1. Voluntary & Open Membership2. Democratic Member Control3. Member Economic Participation4. Autonomy & Independence5. Education, Training & Information6. Co-operation Among Co-operatives7. Concern for Community

Open and voluntary membership Open to

All who can use the services Should be willing to accept

responsibilities of membership Regardless of age, gender, politics Nominal shareholding required May be other requirements – e.g.

must supply (milk), must live in a certain area

Democratic Member Control Co-op democratically controlled –

active participation One-member:one vote, regardless of

shareholding* Operationalised at AGM primarily Other opportunities for member

participation? The bigger the co-operative, the

lesser the democracy?

Member Economic Participation Capital of co-operative contributed to and

democratically controlled by the members Members usually receive limited

compensation Distributed according to use Issued as bonus shares Reinvest (with agreement of members)

Autonomy and Independence

Autonomous, controlled by members Should remain independent of state

supports but depends on market position

Not always easy!

Education, Training and Information

Education for members Training and education for management,

volunteers, staff Information to general public,

government, EU etc. Visibility of co-ops Co-operative marketing – for education?

For differentation? For sales? .coop - internet domain name

Co-operation among co-operatives

Based on recognition of benefits of supporting each other

Work together within movements and between movements

Work together locally, regionally, nationally, internationally

Trade together

Concern for community

Sustainable development of local communities

Sponsorship Ethical policies/investments Responsible lending, packaging etc Environmental protection Job creation initiatives www.co-operativebank.coop /

www.vancity.com

Application of co-op principles? Open membership - subject to “common

bond” and legislation/regulation Democratic member control through Annual

General Meeting (AGM) Minimum shareholding, distribution according

to savings Each credit union is independent Education, training and information? Co-operation among co-operatives – through

chapter and league, Concern for community – many examples

E.g. social lending, money advice

Homework!

This afternoon: Read chapters 2 & 3 of The

Competitive Advantages of Co-operatives.