Resilience of the
Cooperative Business
Model
LO:
1. Identify the Cooperative Values and Principles
2. Explain how cooperatives are resilient in crisis
What is a cooperative?
Cooperatives are member-owned businesses.
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.
Cooperative Values
Co-operatives throughout the world share a set of values that give them their distinctive
character.
Self-help-In co-operatives, people help each other whilst helping themselves by working
together for mutual benefit.
Self-responsibility-Individuals within co-operatives act responsibly and play a full part in
the organisation.
Democracy-A co-operative will be structured so that members have control over the
organisation – one member, one vote.
Equality-Each member will have equal rights and benefits (according to their
contribution).
Equity-Members will be treated justly and fairly.
Solidarity-Members will support each other and other co-operatives.
7 Cooperative Principles
Open and Voluntary Membership
Membership in a cooperative is open to all people who can reasonably use its
services and stand willing to accept the responsibilities of membership,
regardless of race, religion, gender, or economic circumstances
Democratic Member Control
Cooperatives are democratic organizations controlled by their members, who
actively participate in setting policies and making decisions. Representatives
(directors/trustees) are elected among the membership and are accountable
to them. In primary cooperatives, members have equal voting rights (one
member, one vote); cooperatives at other levels are organized in a
democratic manner
Members’ Economic Participation
Members contribute equitably to, and democratically control, the capital of
their cooperative. At least part of that capital remains the common property
of the cooperative. Members allocate surpluses for any or all of the following
purposes: developing the cooperative; setting up reserves; benefiting
members in proportion to their transactions with the cooperative; and
supporting other activities approved by the membership.
Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their
members. If they enter into agreements with other organizations, including
governments, or raise capital from external sources, they do so on terms that
ensure democratic control as well as their unique identity.
Education, Training, and Information
Education and training for members, elected representatives
(directors/trustees), CEOs, and employees help them effectively contribute
to the development of their cooperatives. Communications about the nature
and benefits of cooperatives, particularly with the general public and opinion
leaders, help boost cooperative understanding.
Cooperation Among Cooperatives
By working together through local, national, regional and international
structures, cooperatives improve services, bolster local economies, and deal
more effectively with social and community needs.
Concern for Community
Cooperatives work for the sustainable development of their communities
through policies supported by the membership.
3 Main Stakeholders
Apart from the investors of capital, there are three main stakeholders in a
business:
A. its consumers,
B. the producers who supply inputs to or take the outputs from the business,
C. and its employees
In a cooperative, usually one of these stakeholders is put at the centre of the
business. This gives us three classes:
a. consumer cooperatives- owned by consumers who buy goods or services from their
cooperative-
b. producer cooperatives- owned by producers of commodities or crafts who have
joined forces to process and market their products
c. worker cooperatives-owned and democratically governed by employees who
become co-op members
Cooperative Performance in Crisis
2 crisis
A. banking
banking crisis is a financial crisis that affects banking activity.
A bank run occurs when many clients withdraw their money from a bank, because they
believe the bank may cease to function in the near future.
A banking crisis is marked by bank runs that lead to the demise of financial
institutions, or by the demise of a financial institution that starts a string of similar
demises
B. resulting recession- a general decline in economic activity. This occurs
when there is a widespread drop in spending.
How do they manage?
Financial cooperatives can help lessen the impact of the banking crisis.
They do this by continuing to trade without the need for government bail-
outs, and demonstrating that a more risk-averse sector exists that is
focused on the needs of customer-members.
They can use member capital rather than bank borrowing to expand the
business, and they provide services to more risk-averse consumers
They are not driven by profits or shareholder interests
Worker cooperatives concentrate on employment creation
**Bailout is a general term for extending financial support to a company or a
country facing a potential bankruptcy threat. It can take the form of loans,
cash, bonds, or stock purchases. A bailout may or may not require
reimbursement and is often accompanied by greater government oversee and
regulations.
**risk-averse- avoid risk/lesser risk
worker cooperatives can concentrate on employment creation through labour
cooperatives, employee buyouts and rescues
consumer cooperatives can lower the cost of food and other essentials
producer cooperatives can make members’ businesses more productive
Summary
Cooperative enterprises around the world are showing resilience to the crisis.
Financial cooperatives remain financially sound; consumer cooperatives are
reporting increased turnover; worker cooperatives are seeing growth as people
choose the cooperative form of enterprise to respond to new economic realities.
Why?
Because the resilience of co-operatives is based on what co-operatives are
intended to be as organizations and the values and principles that guide
them.
