What is a Co‑operative

Understanding what a co‑operative is may not be child''''''''s play - but as you embark upon the journey of finding out what a co‑operative is you will surely ask why many more buinesses are not formed as co‑operatives.

Co‑operatives are a different way of doing business.

They are different because they are jointly owned and democratically controlledDemocratic Control
Co‑operatives are controlled by members who actively participate in setting their policies and making decisions. Members serving as elected representatives are accountable to the membership.
by their members - and it is the members who are the beneficiaries of the activities of the business.

There are many types of co‑operative, each serving their members'''''''' economic, social and cultural needs and aspirations in different ways.

In order to develop an understanding of what a co‑operative is and what makes a co‑operative different from other forms of business you need

to understand some key concepts and ideas.

Ever since people have come together to do business as a co‑operative they have been driven by political and ethical valuesValues
Groups, societies or cultures have values that are largely shared by their members. Co‑operative values identify those objects, conditions or characteristics that co‑operators consider important: that is valuable.
.  It is for this reason that co‑operatives are often described as values led businesses.

Co‑operative enterprise has been described as people centred sustainable development.  Underlying this idea are some basic philosophical concepts:

  • a fundamental respect for human beings and a belief in their capacity to improve themselves through mutual self help
  • that democratic procedures applied to economic activities are feasable, desirable, and efficient
  • that democratically controlled businesses make a contribution to the common good

The International Co‑operative Alliance, which serves the worldwide co‑operative movement, is the custodian of the Statement on Co‑operative Identity.

This statement provides a definition of a co‑operative, describes the values that drive co‑operatives and the principles which guide their organisation, structure and culture - how they put their values into practice.

The current Statement on the Co‑operative Identity was adopted by the International Co‑operative Alliance in 1995.

The Statement was the product of a lengthy process of involving consultation with thousands of active co‑operators from around the world. The result of this process was a modern, contemporary definition of what a co‑operative is.

The Statement defines a co‑operative 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

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 statement sets out seven co‑operative principles. These are the guidelines by which co‑operatives put their values into practice.

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

Voluntary and 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.

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.

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.

Autonomy and 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.

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.

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.

Concern for Community.

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

There are several different types of co‑operative in the world, and they operate in all sections of the economy. They vary in size, structure and working methods - in the retail sector alone, co‑operatives range from small independently owned corner shops to the multi-million pound turnover of the Co‑operative Group.

Because of this, co‑operatives are instead defined by the relationship it has with its primary members. For example, in a Worker Co‑operative the primary members are the co‑operatives'''' employees; in a Consumer Co‑operative, the primary members are the co‑operatives'''' customers.

Co‑operation has always existed in the UK, and no-one can say with any accuracy what the first co‑operative society was - although many strong claims exist, from The Shore Porters'''' Society established in Aberdeen in 1498, to the Fenwick Weavers Society in March 1761 or the Hull Anti-Mill in 1795.

The blueprint for modern co‑operation was laid down by the Rochdale Society of Equitable Pioneers in 1844: inspired by the New Lanark co‑operative started by Robert Owen, they wrote The Rochdale Principles - the ethical basis for every successful co‑operative in the UK (and have since been adapted as the ICA''''s Co‑operative Principles).

The history of the early movement was documented by George Jacob Holyoake, including the start of an annual Co‑operative Congress where the Movement made its major decisions, from the creation of the Co‑operative Central Board (which became Co‑operativesUK) to the creation of the International Co‑operative Alliance (ICA) in 1895.

The Movement''''s fortunes changed in the 1970s: challenged by a new breed of supermarkets, the consumer societies were slow to respond whilst the 1980s saw the Conservative government withdraw its support of the co‑operative ideal. However, the Movement is enjoying an upswing, with the main political parties recognising the benefits of co‑operation and societies of all kinds succeeding and thriving everywhere.

Co‑operation has helped people all over the world to make better lives for themselves, with co‑operatives operating in all sectors of the economy in nearly every country in the world: the 2006 ICA Global 300 identified that top 300 mutual and co‑operative organisations in the world had combined assets of $30-40 trillion and an annual turnover of $963 billion - almost equivalent to Canada, the world''''s 9th largest economy.

Switzerland''''s largest employer, Europe''''s largest dairy business, France''''s largest bank, and the world''''s largest miller and marketer of rice are all co‑operative enterprises, and mutual insurance companies as a whole cover 25% of the world market. Co‑operation is particular strong in agriculture - with many of the suppliers of Fairtrade branded goods being co‑operatives - and retailing, with the 10th largest co‑operative in the world being the UK''''s Co‑operative Group.

The worldwide movement is looked after by two main organisations: the International Co‑operative Alliance (ICA) is the guardian of the worldwide movement, and they operate a European branch called Co‑operatives Europe.