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The 7 Cooperative Principles

The 7 Cooperative Principles

Cooperatives around the world generally operate according to the same core principles and values, adopted by the International Co-operative Alliance in 1995. Cooperatives trace the roots of these principles to the first modern cooperative founded in Rochdale, England in 1844.

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The fundamental ideas of cooperatives have been around for hundreds of years. While several early groups weren’t capable of sustaining their businesses, scholars consider the Rochdale pioneers to be the first modern co-op. They formed in England in 1844 and established the base principles and structures for running an equitable and successful cooperative business. As interest in co-ops began to rise, a Rochdale member founded the International Co-operative Alliance (ICA) to help support the movement internationally.

Today, cooperatives around the world share several founding base principles and values adopted by the ICA in 1995. These groups are comprised of autonomous individuals and created based on the guiding standards of volunteerism, democracy, and a set of common cultural, social and economic needs. This guide will help you better understand the values of a co-op, the principles of a co-op and the application of cooperative principles in everyday practices.

 

What Are Cooperative Values?

The cooperative values serve as guidelines for all co-op organizations and their members. There are six main cooperative values:

  • Self-help: Co-ops are geared towards creating a community where every member benefits equitably. To accomplish this ideal, members need to help themselves while also helping each other.
  • Self-responsibility: Much of the cooperative ideology is based on the idea that each individual member is individually responsible within the group. They should be responsible and play their part on their own, without the need for external motivation or incentive.
  • Democracy: Democratic structure is crucial to running a successful cooperative. The organization exists so that all members have control, and no one individual holds more power than the others. Members choose representatives by way of voting, and each individual has one vote per election.
  • Equality: Each member of a cooperative should benefit from the same rights, based on their level of contribution.
  • Equity: Cooperative organizations should treat all members fairly, without any form of discrimination. Equity is essential to creating a harmonious relationship among all members.
  • Solidarity: The members within a cooperative form a unified organization where all the individuals support one another. Each organization also supports other cooperatives to form a united network.

In addition to the main cooperative values, there is also a set of ethical values. They are traditional ethics established by the founders of the cooperative organization. All co-ops function under the ideals of honesty, openness, social responsibility and caring for others.

These values act as the foundation for cooperative principles. The principles are essentially guidelines for how members can successfully integrate and practice the core co-op values in every area of their organization. Both the values and principles are crucial in all areas, from everyday operations to elections and policies.

What Are the Cooperative Principles?

When the founders of the ICA created the guiding principles for cooperatives, they looked to the original Rochdale organization. They had been operating under the same core values and practices for 50 years with notable success. The ICA adopted those principles as guidelines and created the base ideology for all cooperatives. Now, they are an integral part of the way co-ops function, internally and with other organizations.

The ICA’s Statement of Cooperative Identity outlines the general ideology of co-ops and how they should function. It identifies the cooperative 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.” Each cooperative principle helps to break down this idea into several standards that the organization should integrate into its practices.

The 7 Cooperative Principles

The ICA established seven standard principles for all cooperatives to follow. They help organizations flourish and operate successfully while encouraging all members to participate equally. Under these values, the ICA has become a leader for the worldwide network of cooperatives.

The cooperative principles are:

1. Voluntary and Open Membership

The members are the most important part of a cooperative. Without dedicated and participating members, no co-op can succeed. To gain such a group of individuals, all co-ops need to remain voluntary organizations with membership opportunities for all. They should be open to any persons who are able and willing to join, accept responsibility as a part of the organization and can use the organization’s services.

It also protects members and interested individuals from any form of discrimination. Cooperatives accept members voluntarily, meaning they cannot discriminate based on gender, sexuality, social status, race, political affiliation, religion or any other personal details. As long as individuals are willing to follow the core principles and values of the co-op, they can become members.

This principle protects the fundamental human rights of interested individuals and members. It establishes that no person or organization can turn an individual into a willing co-operator and that their involvement has to come from a place of genuine interest. The voluntary membership also provides individuals with freedom of association. They can exercise their free will and decide if and when they wish to join and leave the organization.

2. Democratic Member Control

Cooperatives are founded on the ideals of democracy. Every member plays an integral role in making decisions that affect the organization as a whole. The cooperative makes crucial choices, adds or reforms policies and elects new representatives as a group. All of the members have equal voting rights, with one ballot per individual, and elected officials hear every person’s voice.

Since all members are affected by the co-op’s choices, as they all hold the same status, it’s natural that they should have the power of decision. It’s a vital part of all operations, from the day-to-day schedules to broader issues that will affect the future of the co-op. Providing a democratic structure ensures all members have a fair stake in the organization and that their opinions and observations are considered. Healthy debate is also essential for a working democracy.

Beyond creating a fair method of decision-making, it engages all members and serves as an incentive to participate. If members know their votes count and are valuable to the good of their organization, they will be more willing to participate in democratic practices as well as daily operations. Democracy also ensures those in elected positions are held accountable for their actions. If members decide an official is abusing their power or not considering the good of all members, they can take steps to solve the issue as a group.

3. Members’ Economic Participation

To maintain fairness in all areas of the cooperative, members need to contribute equitably to its economy. They should also maintain democratic control over the collected capital. A portion of the capital is considered the property of the group.

Should there be any surplus capital, the members decide where to distribute the money. Surpluses typically go towards:

  • Developing the cooperative or creating reserves
  • Benefitting members equitably based on their transactions
  • Supporting membership-approved activities

Creating an equitable and democratic economy is essential for several reasons. For one, it establishes that capital supports business pursuits but doesn’t rule how the cooperative operates. Money should always be considered a servant of the members. It is a means by which the co-op can develop and grow. Additionally, creating a democratic process for allocating capital ensures the co-op spends it with its people in mind and prevents any major excess.

4. Autonomy and Independence

While each member has their own freedoms within the cooperative, the organization itself is also an autonomous and independent entity. The members of the co-op determine everything it does, which allows the co-op to function independently. The organization needs to be self-sustaining for each member to be able to exercise his or her freedoms within the structure.

The autonomy of the cooperative is also essential to outside collaboration. Co-ops can decide to enter business relationships with other organizations or raise additional capital from outside investors or sources. This principle ensures they keep their democratic and independent structure regardless of who they enter into agreements with. It even extends to arrangements between co-ops and external governments. The terms and conditions should always include group autonomy.

Maintaining an autonomous and democratically run organization is essential to cooperation. Without these two factors, co-ops would have no self-identity and would have no unique connections to share. They also ensure the members can continue to run the co-op by self-governing, regardless of their relationships and agreements with commercial entities and national governments. Securing democratic practices is especially important when it comes to working with sources of capital.

5. Education, Training and Information

To run a co-op successfully, promoting and spreading education is a necessity. Every individual involved with a cooperative needs to be well informed about the way they operate, their purposes and the responsibilities of each person. Members, employees, managers and elected officials all need continual training as the cooperative evolves and changes over time. If they are well versed in the co-op’s policies, regulations, values and principles, they’ll all be able to contribute more effectively to its development.

But education shouldn’t stop at the cooperative’s internal members. It should also extend to the surrounding community and the general public. Members can teach others about the beneficial nature of cooperative businesses and encourage interest in their organization. Informing younger generations and community leaders not only creates outside approval and awareness, but it may also encourage interested individuals to join the organization.

Internal and external education are both necessary parts of cooperative practices. Continual member training helps cooperatives develop, advance and adapt to new technologies, helping them become better business entities. It also supports co-ops in adjusting to other changes, such as changes in laws, social trends or the economy.

Beyond the cooperative itself, education encourages the spread of information. It helps create relationships with universities and supports research regarding the cooperative movement. With formal research, co-ops can help spread the educational material to governments and officials and inform future policies. Teaching the wider public about the history, principles and day-to-day operations of a co-op can create a stronger, more supportive local community.

Overall, continual education is crucial for a cooperative to function. Regardless of how far a co-op’s outreach goes, there’s always a core purpose in mind — to nurture a more complete understanding of the nature of cooperation as well as to emphasize its benefits.

6. Cooperation Among Cooperatives

While co-ops are independent of one another and run by autonomous individuals, they also need to work together harmoniously. Creating a larger network of cooperatives — locally, regionally, nationally or even internationally — allows independent organizations to better serve their members. Each co-op brings its unique abilities and contributions to the table, and they function with more strength as a unit.

Not only do individual members benefit from the connectivity, but it also helps the cooperative as a whole. Developing larger structures that span multiple cooperatives strengthens the movement through combined efforts and support. The networks can then work together across organizations to better serve their members. They can also choose to work with other structures that will serve the common good of the members and the movement as a whole.

Creating a stable structure establishes independent co-ops as both social and economic entities in relation to other groups and organizations. Forming these networks allows co-ops and their collaborators to gain a mutual benefit from one another, rather than to compete against one another for profit, like non-cooperative businesses. Working together emphasizes the value of solidarity.

7. Concern for Community

All cooperatives focus on their internal communities, but they are also concerned with their local communities outside of the organization. Co-ops source materials from and invest in local suppliers to contribute to the community’s sustainability. While the group works as a unit, each member should also take it upon themselves to contribute to the community in some way. The cooperative and surrounding network should encourage them to serve with pride.

But sustainability doesn’t stop at the local level. Community goes as far as a worldwide reach, and cooperatives should think and act on both a local and global level. Members can work towards approving policies that consider the community at large.

Maintaining local and global concern is important for several reasons. As other principles dictate, cooperatives are independent organizations that work best in a collaborative effort. So, each co-op should have their own way of contributing to sustainable development, but they should also work within their networks. This enables cooperatives to take action on a level that can affect the world. Not only are co-ops directly affected by community development, but they can also have a great impact if they work together.

Applying the Cooperative Principles

While the seven co-op principles provide general outlines for how each organization should operate, there are many ways to apply these ideas practically. Here are some of the ways you can use the principles within your co-op to create a stronger organization:

 

  • Voluntary and open membership: Create a culture of inclusivity and respect within your membership. Joining members should not be subject to discrimination of any kind. One of the best ways to ensure there is no such judgment of new volunteers is by starting with the mindset of your existing membership. They should understand that every individual is to be treated equally in all ways and given the same opportunities. Also, establish a policy for member removal by way of a vote. If you have a predetermined list of breaches of responsibility, it will be easy to spot any potential for discriminatory acts.
  • Democratic member control: For a democratic structure to work successfully, your co-op needs to focus on communication and engagement. It’s important to promote consideration and discussion among your membership. You can do so by taking advantage of technological developments and online communication as well as holding in-person meetings and assemblies.
  • Members’ economic participation: Since cooperatives are not solely concerned with economics, neither is this principle. It works in conjunction with the others. Economic contributions from individuals are considered membership shares, which go directly towards financing the co-op and benefitting the members. Your cooperative should require limited participation from all members indiscriminately, and in return, grant them the right to vote.
  • Autonomy and independence: Members of cooperatives are the deciding forces behind new policies and decisions. They should be able to run their cooperative without the influences of wider government policy or other organizations. However, your co-op should also engage with government and businesses. To maintain independence, ensure your co-op is creating relationships with boundaries and speaking with a single, unified voice.
  • Education, training and information: Cooperatives need to provide educational resources for all members. Each individual should have a proficient understanding of co-operative identity, the seven principles and values. You can use technological advancements to provide programs and resources as well as host group sessions, where members can interact with one another and learn together. The in-person option will help build trust and community among your members.
  • Cooperation among cooperatives: When cooperatives work together, there are several ways to create an effective relationship. All organizations should practice openness and transparency in all business matters, and the general memberships should approve all strategies. All organizations should also practice representing each co-op’s collective interests, flexibility and willingness to compromise in working towards a mutual benefit.
  • Concern for community: While co-ops should support their members and local community, they should also be concerned with the development of the cooperative movement on a global scale. They should promote peace and social justice in their operations and advocate for cooperatives. By maintaining a focus on spreading information and educating others, co-ops can help create a better community.

Learn More About Cooperatives With NCBA CLUSA

NCBA CLUSA has been advancing, promoting and defending cooperative business for over 100 years. We advocate for and educate about the cooperative movement, creating new opportunities in all sectors and industries. With our efforts and the assistance of thousands of cooperatives globally, we aim to build a stronger economy and a better world.

Keep browsing to learn more about our organization and how we advocate for cooperatives around the world. You can also contact us with any questions or comments, or become a member of our growing community of advocates today

The 7 Cooperative Principles

1. Voluntary & Open Membership

Anyone can join a co-op—they don’t discriminate based on gender, social, racial, political or religious factors.

2. Democratic Member Control

Members control their business by deciding how it’s run and who leads it.

3. Members' Economic Participation

All co-op members invest in their cooperative. This means people, not shareholders, benefit from a co-op’s profits.

4. Autonomy & Independence

When making business deals or raising money, co-ops never compromise their autonomy or democratic member control.

5. Education, Training and Information

Co-ops provide education, training and information so their members can contribute effectively to the success of their co-op.

6. Cooperation among Cooperatives

Co-ops believe working together is the best strategy to empower their members and build a stronger co-op economy.

7. Concern for Community

Co-ops are community-minded. They contribute to the sustainable development of their communities by sourcing and investing locally.

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