COOPERATIVE MANAGEMENT The cooperative principles are guidelines by which

cooperatives can put their values into practice.

The Basic Cooperative Values 1. voluntary and open membership;

2. democratic member control;
3. member economic participation;
The basic cooperative values as enshrined in the definition are
4. autonomy and independence;
stated as follows:
5. education, training and information;
Cooperatives are based on the values of: 6. cooperation among cooperatives;
7. concern for community.
1. self-help,
2. self-responsibility, 1st Principle: Voluntary and open membership
3. democracy, - Cooperatives are voluntary organizations, open to all
4. equality, persons able to use their services and willing to accept the
5. equity and solidarity. responsibilities of membership, without:
• gender,
In the tradition of their founders, cooperative members believe • social,
in the ethical values of: • racial,
1. honesty, • political or
2. openness, • religious discrimination.
3. social responsibility and
4. caring for others. 2nd Principle: Democratic member control
- Cooperatives are democratic organizations controlled by
1. Self-Help - is based on the belief that all people can and their members who actively participate in setting their policies
should strive to control their own destiny. and making decisions.
- Cooperators believe that full individual development can take - Men and women serving as elected representatives are
place only in association with others. accountable to the membership.
- Individuals also develop through cooperative action by the In primary cooperatives members have equal voting rights by
skills they learn in facilitating the growth of their cooperative. virtue of the “one member, one vote” rule;
- Cooperatives are institutions that foster the continuing - cooperatives at other levels are also organized in a
education and development of all those involved with them. democratic manner.

2. Self-Responsibility - Members assume responsibility for 3rd Principle: Member economic participation
their cooperative – for its establishment and its continuing - Members contribute equitably to, and democratically control,
vitality. the capital of their cooperative.
- Members have the responsibility of promoting their - At least part of that capital is usually the common property of
cooperative among their families, friends and acquaintances. the cooperative.
Members also ensure that their cooperative remains - Members usually receive limited compensation, if any, on
independent capital subscribed as a condition of membership.
- Members allocate surpluses for any or all of the following
3. Equality - Members, whether an individual or a group, are purposes:
all equal. • developing their cooperative, possibly by setting up
- It does not depend on the social and economic status of the reserves, part of which at least would be indivisible;
member. • rewarding members in proportion to their
transactions with the cooperative; and
4. Equity - Achieving ‘equity’ within a cooperative is • supporting other activities approved by the
continuing, never-ending challenge. membership.
- It also refers to how members are treated within a
cooperative. 4th Principle: Autonomy and independence
- They should be treated equitably in how they are rewarded - Cooperatives are autonomous, self-help organizations
for their participation in a cooperative, normally through controlled by their members.
patronage dividends, allocation to capital reserves in their - If they enter into agreements with other organizations,
name, or reduction in charges. including governments, or raise capital from external sources,
they do so on terms that ensure democratic control by their
5. Solidarity - Ensures that cooperative action is not just a members and maintain their cooperative autonomy.
disguised form of limited self-interest.
- A cooperative is more than in association of members; it is 5th Principle: Education, training and information
also a collectivity. - Cooperatives provide education and training for their
- All members including the employees and the nonmembers members,
who are closely associated with the cooperative should be - Elected representatives, managers and employees so that
treated fairly. they can contribute effectively to the development of their
- This also means that the cooperative has a responsibility for cooperatives.
the collective interest of its members. - They inform the general public, particularly young people and
- Solidarity is the very cause and consequence of self-help opinion leaders, about the nature and benefits of cooperation.
and mutual help.
6th Principle: Cooperation among cooperatives
- Cooperatives serve their members most effectively and
Principles of Cooperatives
strengthen the cooperative movement by working together - By reducing the number of middlemen, producers are in a
through position to conclude a much better deal with traders or
• local, contract with any buyer they like.
• national,
• regional and Worker cooperatives - Its main objective is to create jobs for
• international structures. members.

7th Principle: Concern for community There are two categories of worker cooperatives:
- Cooperatives work for the sustainable development of their 1. producer cooperatives
communities through policies approved by their members. 2. labor cooperatives

4.6. Producer cooperatives

Types of Cooperatives
- Are both co-owners and employees of the cooperative whose
aim is to produce and sell goods and/or services.
Cooperatives operate in all sectors of the economy. It is
difficult to list them for each sector. - The employees together decide on the general direction and
appoint their leaders (manager, administrators, etc.)
two principal objectives of the members
1. Service cooperatives - They also decide how to divide up any surplus.
2. Worker Cooperatives - Their goal is to get a job (i.e.
producer and labor cooperatives) - Another novelty of this type of cooperative is that it allows for
the takeover and restart of a bankrupt business.
I. Service Cooperatives
- This option is one way of keeping going and developing the
- In these cooperatives, the members join together with a view business and existing jobs.
to enjoy economic advantages by securing the goods and
services they need to exist. Labor cooperatives

- Service cooperatives can be made up of natural persons or - They sell their labor and skills to other enterprises.
corporate bodies.
- They generally operate in the fields of packing and
4.1. Financial cooperatives maintenance of highways and public buildings, etc.
4.2. Consumer Cooperatives
4.3. Farmers’ or Agricultural cooperatives Topic 3A: Types of Cooperatives
4.4. Housing cooperatives
4.5. Public service provision cooperatives
Cooperatives vary depending on the service offered and the
4.1. Financial cooperatives way that the members are organized. They also differ
- These cooperative covers credit unions and insurance depending on the economic activity, how members use the
cooperatives. Cooperative and kind of management.
- Offers financial services such as savings and loans at
favorable interest rates and insurance services. Six types of classification

4.2. Consumer Cooperatives

- Their main object is to supply their members with goods and Producer / Marketing Cooperatives
services for their personal use at the lowest cost
- The Producer Co-ops were one of the first kinds of
They are to be found in different sectors such as: Cooperatives developed to explore and provide solutions to
• food; the farmers’ production in the early 1880s. Producers Co-ops
• housing; are also known as marketing co-op where the members
• educational goods and services; provide the co-op with the same production that the co-op
• leisure. markets in a processed or value-added form.

It has been used above all in the food sector both in - The Co-ops’ mandate is to commercialize the members input
developing countries struggling against insecurities of food by seeking the best price possible on the market. In Manitoba
supply and in industrialized countries in the grip of many groups of suppliers are organized into marketing co-ops
unstoppable rises in the cost of consumer goods. to meet the marketing requirement and to explore and access
the market for their product.
- The member/consumer enjoys quality goods and services at
minimum cost. - These Producer Co-ops include farmers, artists, harvesters
and fishers seeking out and selling to end users to earn and
4.3. Farmers’ or Agricultural cooperatives retain the benefit of their owners/producers.

- Agricultural cooperatives help growers with the marketing of Consumer Cooperatives

their harvest by obtaining consumer goods and input helping
with the management of farming credit. - This is one of the best-known forms of cooperatives. They
are owned and controlled by the people that buy the products
and services sold, managed or distributed by the co-ops.
 5. They may not amend their articles to change to any
- Their mandate is to acquire the products and services other type of co-op.
required by their members at the lowest possible cost with the
highest possible quality. These co-ops can operate in three Financial Cooperatives
different ways; as buying clubs where products and services
are obtained by the co-op only when the members place an - The financial co-ops were initially based on consumer co-ops
order; as retail stores where the members come in to shop; offering financial services to their members. Financial co-ops
and as service providers where members order the service, were started in rural communities providing farmers with micro
such as cable television, internet access, insurance, water or credit during the early 1900s and they were known as the
natural gas. people’s bank or credit unions, and saving and credit
cooperatives.
- In Manitoba there are general stores, gas bars, farm
supplies, furniture stores, funeral services, natural gas - These co-ops have the mandate to provide their members
utilities, water utilities, internet access and cable television co- with financial services at the lowest possible cost and the
ops serving the needs of their members. highest possible return. These services include a variety of
deposit vehicles, mortgages, loans, lines of credit, safety
Worker Cooperatives deposit boxes, financial planning, estate administration and
insurance.
- Worker co-ops are identified as the third type of Cooperative
owned and controlled by their employees. The purpose of the New Generation Cooperatives
worker co-op is to create jobs for their members and allow
them control of their workplace. Members provide the capital - New Generation cooperative or New Formula to view and
to finance the business, each sharing the costs and risks of operate a Co-op and they are the latest buzzwords in the co-
ownership. op community describing a variation on the traditional co-op,
yet, retaining the critical co-op principles. New Generation
- The management of a worker co-op is concentrated in the Cooperatives (NGCs) represent an emerging trend in
business part and classified as a third type of co-op where the agriculture, forestry, fishing and other industries that are
members are employees. supplied by producers. These are distinct types of
cooperatives formed to enable members to process raw
- Usually, the worker co-ops are services co-op offering commodities. As a result, members not only receive market
services to other business and they are generally printing, prices for their produce, they also gain the opportunity to profit
nursery schools, cleaning, consulting, delivery, manufacturing from processing and marketing these value-added products.
and food services.
- It is primarily the financial structure and membership
- Major benefits to the employee-members include requirements that distinguish NGCs from the more traditional
involvement in the policy-making process, through the cooperatives. Typically, higher equity investments are
election of a Board of Directors, profit sharing through required by members in order to establish a processing plant.
patronage allocations, and a quality of work life that is Furthermore, the number of members is limited to those who
established by the membership. purchase delivery rights, as well as by the processing capacity
of the plant. Because of the unique structure of NGCs,
Housing Cooperatives members feel a greater degree of personal ownership and a
stronger commitment to the cooperative.
- Housing co-ops are developed to resolve the living need by
offering an affordable and secure housing in a viable - These Cooperatives are referred to as new generation
community. The members are tenants/owners having the because of four distinct variances from traditional co-ops:
ability to manage and control the co-op.
1. The focus is on the value-added processing or
- There are two types of housing co-ops under Manitoba manufacturing of raw commodities delivered to the
legislation, “Not-for profit” (a defined term) and all others. co-op by its members and the marketing of the
resulting products.
- Not-for-profit housing co-ops are those where Articles of 2. A significant equity investment is required by each
Incorporation specify that they are not-for-profit, that file member, with the total initial equity contribution being
income tax returns as a not-for-profit corporation or that have a major portion of the gross project costs.
received from the Government of Canada or the Government 3. A two-way contract between the member and the co-
of Manitoba or an agency of either one of them, a subsidy or op requires each member to deliver, and the co-op to
assistance of a type that assisted with or reduced housing accept, an agreed-upon amount of the raw
costs. commodity for each delivery right (special
investment share under Manitoba legislation) owned
- The Not-for-profit housing co-ops are subject to the by the member.
following restrictions: 4. Membership is limited to the number of special
investment shares (delivery rights) required to be
1. They cannot issue investment shares sold by the co-op to its members in order to meet its
2. They must conduct at least 90% of their business processing capacity.
with their members
3. They shall carry on their business without the Multi-Stakeholder Cooperatives
purpose of gain for their members
4. They may not be continued under any other - The Manitoba government amendments to the Cooperatives
legislation. Act will allow groups that normally form separate co-ops, such
as workers and consumers, to combine their resources and
create a co-op together. This allows co-ops greater strength
and sustainability with the ability to diversify their
stakeholders.

Non-profit Community Service Cooperatives

Provides services to the community on a not-for-profit basis,

for example a child care center owned and operated by the
parents using the center.