Cooperatives 101

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A Brief History of Cooperatives

The first cooperative was founded in 1844 in Rochdale, England. The original twenty-eight members were weavers and skilled workers in various trades who came together, created business principles to guide their work and to establish a location to sell their goods. 

The need for cooperation was in response to a changing industry landscape that saw mass production pushing out smaller merchants. With their less expensive, quickly manufactured products, mass producers were able to meet the growing demands of consumers faster than their artisanal counterparts who put time and care into the quality of their wares.   

The founding cooperative members were able to “pool their resources” and be competitive with larger manufacturers at scale. Having principles and looking out for each other’s well being were baked into the founding cooperative principles because of the inequality, low pay, long hours, unsanitary workplaces, and absence of workers’ on the job rights indicative of the industrial culture of the time.

What’s a cooperative?

 A cooperative 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.

USAID: Cooperatives 101

What are the Tiers of Cooperatives?

First Tier: Community

Cooperatives

Individuals are members and businesses can be in any sector.

Second Tier: Regional/National

Unions, Federations

Cooperatives are members and this level tends to be sector-specific for greater efficiencies in markets.

Third Tier: National

Apex Associations

Multi-sector, national membership of organizations which aim to advocate on behalf of cooperatives, educate the public, and improve cross-sector collaboration.

What are the Seven Cooperative Principles?

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. Concern for Community

Cooperatives work for the sustainable development of their communities through policies supported by the membership.

Cooperative Values

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Resources

To enable cooperative development