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What is a Co-op?

Co-ops worldwide share a common creed, they share a fundamental respect for all human beings and a belief in people's capacity to improve themselves economically and socially through mutual help. This basic philosophy has been developed into a list of seven principles that serve as guidelines for how cooperatives do business. Two of the seven principles describe who owns a co-op; two describe how decisions are made; and three list specific ways that co-ops put their beliefs into action.

The principles were originally developed in the mid-1800s by groups struggling to provide unadulterated, quality food at fair prices at a time when the market offered few options. As times have changed, the principles have been modified slightly, but the basic concepts have remained the same for more than 150 years.

In the 1990s, the International Co-operative Alliance (ICA) reviewed the cooperative principles and reformulated them. The modern co-op principles are:

1. Open and voluntary membership (ownership)

Co-ops do not limit, for any social, political, or religious reason, who may join and become a co-owner of the co-op. Co-ops are open to all who can make use of their services and are willing to accept the responsibilities involved.

2. Member economic participation (ownership)

This principle combines many concepts, all based on the basic idea that co-ops and their money are owned and controlled by their members. Members provide the basic capital (money) to start and operate the co-op. If co-ops pay dividends to their member-owners, the rate must be limited. Surplus, or profit, resulting from the operations of the co-op belongs to the members, and they control how it will be distributed. If a co-op's surplus is returned to members, it is distributed in proportion to the amount of business each member has conducted with the cooperative.

3. Democratic member control (decision making)

All co-op members have equal voting and decision-making power in the governance of the business, on the basis of one vote per member.

4. Autonomy and independence (decision making)

Cooperatives are independent, self-help organizations controlled by their members. They limit the influence of outside agencies or business partners to ensure their independence.

5. Education, training, and information (special practices)

Co-ops have an obligation to educate members about cooperative business. This mandate also encompasses educating the general public, young people, and community leaders about the nature and benefits of cooperation.

6. Cooperation among cooperatives (special practices)

To bring the theory of working together full circle, co-ops recognize the vital importance of working with other co-ops locally, regionally, nationally, and internationally. Through these efforts, co-ops try to help each other and to strengthen their economic positions and to contribute to the co-op movement. This principle of "cooperation among co-ops" extends the idea of working together to the organizational level.

7. Concern for community (special practices)

While member needs are their primary concern, cooperatives also work for the sustainable development of their communities. In addition to reformulating the co-op principles, the ICA created the following "Statement on the Cooperative Identity." Approved by ICA members in September 1995, the statement defines the standards by which all co-ops should operate: