ERE32E Co-operative Business Bridget Carroll Centre 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/worke rs/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 Membership 2.Democratic Member Control 3.Member Economic Participation 4.Autonomy & Independence 5.Education, Training & Information 6.Co-operation Among Co-operatives 7.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  /

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.