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123 N. Hill St
South Bend, IN 46617


What is a Co-op?

The seven principles adopted in 1995 are described below.

Definition: 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.

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.

1. Voluntary and open membership

This principle has changed little from the 1966 version. It implies that individuals must not be coerced into cooperative membership. Rather, their participation as active and responsible members should be based on a clear understanding of the values for which cooperatives stand and support for those values. At the same time, while membership is open, the principle assumes the member is able to use the services provided and is willing to take on the responsibilities of membership. This language recognizes that some cooperatives may close membership based on ability to use the cooperative or on a limit to the number of members the cooperative can effectively serve. The important idea here, however, is that cooperatives do not discriminate against potential members based on their inherent characteristics (social, racial, political, religious or gender). Particularly important is the addition of gender as a category in the 1995 principles. The ICA Women's Committee has worked long and hard to have gender added to the list and to ensure that the organization's expectations for cooperative enterprises are clearly expressed.

As U.S. food cooperatives learn to survive in intensely competitive markets, the membership principle and associated principles of education and member control take on critical importance. Members value their cooperatives only when they believe that the cooperative understands and serves their needs well. The membership cannot carry out its unique cooperative responsibilities if it is uninformed, nor if it is unable to be heard by its elected representatives. The open membership principle obligates elected leaders, managers and staff to elicit information from the entire membership body (not just a subset of organized opinion) and to understand their members and potential members fully regardless of their religious or political beliefs, their gender or sexual preference or their cultural or social background. The special relationship between the cooperative and the people it serves is a unique characteristic of cooperative business.

2. Democratic Member Control

Building on the principle of open and voluntary membership, the principle of democratic member control defines the way in which members will make decisions. It assumes that members will participate in setting policy and giving broad direction to cooperative activities in a way in which no member has no greater "voice" than any other member. This principle is closely related to the "one member, one vote" principle of the 1966 revision. The new principle, however, gives specific attention to the potentially different voting structures that may be put in place in secondary cooperatives. When cooperatives (rather than individuals) are members of secondary cooperatives, the one member, one vote rule may result in substantial inequities for the individual members of member cooperatives. For example, if a cooperative of 1,000 members and a cooperative of 25 members each have one vote in the affairs of their cooperative distributor, the 25 members of the smaller cooperative clearer have a stronger proportional voice than do the 1.000 members. For this reason, the principle clearly addresses the possible need for different voting procedures at the distributor level in order for voting to be democratic.

3. Member Economic Participation

This principle deals directly with the very difficult problem of capital acquisition by cooperatives in amounts large enough to compete effectively with vast global industries. Throughout this history, cooperatives have been built on the premise that capital is a servant of the enterprise, rather than the master. Cooperative activities are organized to meet member needs, not to accumulate capital in the hands of investors. In the past, the principle of capital as servant led to a belief that resources generated by profitable cooperative enterprises should be returned to labor, rather than concentrated in the hands of owners of capital, by strictly limiting returns to invested funds.

It has not always been clear what role, if any, is played by non-member capital investment, or investment by members beyond the "fair share" required. Although members own millions of dollars that they might invest in cooperatives, the previous restrictions on dividends to be paid on capital did not encourage them to invest beyond the required amounts. Consequently cooperatives have repeatedly been unable to generate equity for capital intensive projects; nor have they been able to maintain the value of invested capital during inflationary times. The strict limitation on dividends to capital has been lifted in the 1995 principles which now imply that cooperatives compensate capital and labor fairly.

In order to retain the democratic nature of the enterprise, members of cooperatives are expected to contribute capital equitably and to democratically control the capital of the business. To retain the community centered nature of the enterprise and the belief that strength comes from pooling resources to engage in mutual self help, there is an underlying expectation that a portion of the cooperative's capital should be owned collectively by all members. Finally, the principle also gives guidance to members on possible uses for surpluses generated by the enterprise. Interestingly, two of the suggested three uses are designed to provide community rather than individual benefits.

4. Autonomy and Independence

In the thirty years since the passage of the 1966 Cooperative Principles, numerous third world countries used cooperatives as an intentional part of their social and economic development strategies. Where there are many instances of successful development through cooperatives, the overall record is mixed at best. Even though the intent was to develop self-reliant member controlled enterprises, government initiation and support was necessary to begin the cooperative ventures. Unfortunately, many of the governments, especially in centrally planned economies, were unable to withdraw from the cooperatives. Instead, cooperatives, closely controlled by government functionaries, became inefficient, bureaucratic and poorly managed, a haven for government bureaucrats. Independence and autonomy was never realized.

The new autonomy and independence principle emphasizes that cooperatives must be free of intervention from governments or other sources so that ultimately the members are able to control their own destiny.

5. Education, Training and Information

Education continues to be a priority of the cooperative movement in the new Statement of Identity. The background paper on the principle emphasizes that cooperative education is more than advertising product or distributing information. It is critical to the effective and informed participation of members which lies at the core of the cooperative definition. "It means engaging the minds of members, elected leaders, managers and employees to comprehend fully the complexity and richness of cooperative thought and action." The rewritten principle also highlights the importance of educating the young and opinion leaders about the nature and benefits of cooperation. If cooperatives are to be part of the solution to many of the world's problems, people must be not only aware of the concept, they must appreciate it and be willing to participate in it. Such active involvement will not occur if people do not understand cooperative enterprise.

6. Cooperation Among Cooperatives

This principle is virtually unchanged from the 1966 Principles.

7. Concern for Community

Grounded in the values of social responsibility and caring for others, this new principle gives articulation to the cooperative interest in making contributions to a better society at large. By taking ownership over portions of the economy, cooperative members are saying, in effect, we can meet our needs and the needs of others better than they are currently being met. Because the effort is a mutual one, cooperative members understand that to provide for any member is to provide for all members.