Table of Contents

1. Overview

Co-operatives are not only for the poor, but of all the different types of business organisations, co-operatives reach down most to the low income groups. The main feature of co-operatives is that they help people to help themselves.

Helping people to help themselves means:

  • making them aware of needs and problems they have in common;
  • giving them access to information about co-operative values, principles and practices;
  • giving them the chance to learn how to work together the co-operative way for the benefit of each individual member and of the group as a whole.

National and provincial government promote co-operatives as a type of business entity and a means to get informal economic actors involved in and benefitting from the formal economy.

What isn’t possible for the individual is possible when many individuals act together.

 

2. Co-operatives: a definition

A co-operative is defined 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 enterprise” (definition by the International Co-operative Alliance).

We can break down this definition into five main points in order to understand it more clearly:

  • A co-operative is an independent organisation. It must stand or fall on its own feet.
  • A co-operative is a group of persons who freely decide to come together to meet common needs and goals.
  • A co-operative is jointly owned. Its primary duty is to its members, not to anyone else outside the co-operative. The benefits of the co-operative are shared by all of the members.
  • A co-operative is controlled democratically, so that each member has an equal voice in decisions.
  • A co-operative must follow co-operative principles (see next heading) in its organisation and activities.

 

3. Seven Co-operative Principles

There are seven co-operative principles that are followed by co-operatives all over the world. Everyone who is involved in a co-operative should know and understand these basic co-operative principles.

  • Voluntary and open membership – nobody is forced to be a member, and there is no 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. Elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote). Members becoming uninvolved often leads to the collapse of the co-operative.
  • 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. Surpluses may be used to develop the co-operative further; paying members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
  • Autonomy and independence – Co-operatives are independent, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure control remains with their members.
  • 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 cooperatives. 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.

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