who, what, how

Understanding co-operatives

Mike Brown Profile

A UNIQUE BUSINESS MODEL

Member owned and democratically controlled

A co-operative is a member-owned and controlled business from which benefits are derived and distributed equitably on the basis of use. Co-operatives operate similarly to other businesses but they do have a number of unique characteristics.

These include:

  • They are owned and democratically controlled by their members – the people who use the co-operative’s services or buy its goods, not by outside investors.
  • They return surplus revenues to their members in proportion to their use of the co-op, not in proportion to their investment or share ownership.
  • They meet their members’ needs rather than maximising the co-operative’s profit.

Rochdale Principles

The co-operative guiding principles

The International Co-operative Alliance (ICA) has global responsibility for maintaining the guiding principles which characterise the unique identity of co-operatives.

Also known as the Rochdale Principles, these are guidelines by which co-operatives put their values into practice. They are regularly reviewed to ensure they remain relevant.

 

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Voluntary and Open Membership

Co-operatives are 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.

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Democratic Member Control

Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Those serving as elected representatives are accountable to the membership. 

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Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the co-operative.

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Autonomy and Independence

Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

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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. 

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Cooperation 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.

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Concern for Community

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

 

Definition of co-ops

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.

International Co-operative Alliance

breaking it down

Types of co-operatives

Co-operatives can meet almost any need across a sector. That’s why there’s no one-size-fits-all approach. Every co-operative is unique.  Sometimes co-operatives may be a combination of the below ownership structures, often referred to as multi-stakeholder.

These are the most common forms of co-operative ownership structures in New Zealand.

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Producer co-op

A co-operative where members produce similar types of products such as crops, cattle, milk, or arts and crafts. By combining supply volumes and resources, greater economies of scale are achieved.

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Consumer co-op

A business owned by its customers, the people who buy the goods or use the services of the co-operative. Almost any consumer need can be met by a consumer co-operative.

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Retailer co-op

A co-operative which employs economies of scale on behalf of its members. The members are businesses such as locally owned grocery or hardware stores, rather than individuals. 

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Insurance mutual

These businesses are owned entirely by the individuals who take out the policies. Surpluses are either used to reduce future premiums or rebated to policyholders as a dividend.

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Employee co-op

The employees/workers are the members. This ownership model supports staff retention by involving them in business decisions and sharing in the profits.

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Banking co-op

These are financial entities that belong to their members who, at the same time, are their owners and customers. They can be set up as a bank, a building society, or a credit union.

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Platform co-op

These co-operatives rely upon a technology platform to deliver their services. They can be producer, consumer, employee, or a combination of these ownership structures.

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Utility co-op

A type of consumer co-operative that is tasked with the delivery of a public utility such as electricity, water, or telecommunications services to its members.