What is a Co-op? (Part 1)

Collective Interchange is proud to be a co-operative. But what does that mean exactly? To kick off our new blog, we’re going to break down exactly what a co-op is by comparing its guiding principles (as laid out by the International Co-operative Alliance) to those typical of more familiar organizational structures.

While we will detail the guiding principles of co-operatives throughout this series, it is important to remember that co-ops use collective decision-making, making co-ops as diverse as its members.

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Principle 1: Open and voluntary membership

In a co-operative: Many co-operatives do not salary their members, meaning there is no financial restriction on how many members they can have. Members share the values of the co-operative and accept the responsibility of contributing to the business and providing their perspective along the way.

In a business: Employees are salaried, meaning hiring is selective to decrease expenses and increase profit. Employees often choose to work at businesses which match their values and goals.

In a community nonprofit: Salaried employees share the organization’s goals but are often minimized to devote more resources to programs/services.

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Principle 2: Democratic Member Control

In a co-op: All members are equal. Each member has one vote on decisions and shares the same control over resources. Members vote in the co-op’s board of directors, but the board is directly accountable to its members.

In a business or non-profit: There is typically a vertical power structure with a clearly defined decision-making process. Employees are directed and supervised. Decisions are made by executives and supervisors, and/or the board of directors. Frontline staff may or may not be consulted in decision-making, at the discretion of these decision-makers.

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Principle 3: Member Economic Participation

In a co-op: Members make equal contributions and have equal control over the co-op’s capital. Members also collectively decide where to invest any surpluses in accordance with the co-op’s mission. Co-ops can improve access to goods and services by pooling member’s financial resources.

In a business or nonprofit: Management, employees, or members are not expected to contribute capital to the business or organization. Employees are compensated for their work (by wages and, in some cases, shares) but have limited control over the organization’s capital.  

Stay tuned next week for a discussion on the next two principles of co-operatives. In the meantime, come say hi on our LinkedIn, Facebook, or Instagram.

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