Action Plan for Actualization of Co-operative Identity (1997)

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)

Action Plan for Actualisation of Co-operative Identity Statement
by B. D. Sharma* 

(Source:  Report of the Special Workshop on ICA Co-operative
Identity Statement - From Theory to Practice, 17-21 Aug,1997
Jaipur, India, pp.62-89)


In accordance with the decision of the Governing Council of NCUI the
statement on the Co-operative Identity and Re-formulated Principles of
Co-operation were sent to all Member Organisations with the request to
incorporate the same in their bye-laws so that the co-operative values and
revised co-operative principles are reflected in the business policy/day to
day functioning of co-operatives. National Co-operative Union of India also
urged upon the National Governments to incorporate the co-operative values
and revised principles within the legal framework so that co-operatives
could function "as independent, member controlled organisations and on
equal terms with other forms of co-operative enterprises". The Governing
Council of NCUI also decided to place a draft Action Plan for actualisation
of co-operative identity statement in the 13th Indian Co-operative Congress
in order to facilitate wider deliberations. Accordingly, an attempt is made in
this paper to present a draft Plan which is aimed at establishing the
co-operative identity in the emerging environment. Part-I of this paper is the
ICA Statement on Co-operative Identity along with the background paper on
various interpretations. Part-II of the paper presents the draft Action Plan
for actualisation of Co-operative Identity Statement.

Part - I
The International Co-operative Alliance
Statement on the Co-operative Identity
A co-operative 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.

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

The co-operative principles are guidelines by which co-operatives put their
values into practice.

1st Principle : Voluntary and Open Membership
Co-operatives are voluntary organisations, open to all persons able to use
their services and willing to accept the responsibilities of membership,
without gender, social, racial, political, or religious discrimination.

2nd Principle : Democratic Member Control
Co-operatives are democratic organisations controlled by their members,
who actively participate in setting their policies and making decisions. Men
and women serving as elected representatives are accountable to the
membership. In primary co-operatives members have equal voting rights
(one member, one vote) and co-operatives at other levels are also organised
in a democratic manner.

3rd Principle : Member Economic Participation
Members contribute equitably to, and democratically control, the capital
of their co-operative. At least part of that capital is usually the common
property of the co-operative. Members usually receive limited
compensation, if any, on capital subscribed as a condition of membership.
Members allocate surpluses for any or all of the following purposes :
developing their co-operative possibly by setting up reserves, part of which
at least would be indivisible: benefiting members in proportion to their
transactions with the co-operative; and supporting other activities approved
by the membership.

4th  Principle : Autonomy and Independence
Co-operatives are autonomous, self-help organisations controlled by their
members. If they enter into agreements with other organisations, including
governments, or raise capital from external sources, they do so on terms
that ensure democratic control by their members and maintain their
co-operative autonomy.

5th Principle : Education, Training and Information
Co-operatives provide education and training for their members, elected
representatives, managers and employees so they can contribute effectively
to the development of their co-operatives. They inform the general public-
particularly young people and opinion leaders - about the nature and benefits
of co-operation.

6th Principle : Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the
co-operative movement by working together through local, national,
regional and international structures.

7th Principle : Concern for Community
Co-operatives work for the sustainable development of their communities
through policies approved by their members.

Background Paper on The ICA Statement on the Co-operative Identity
1.	The International Co-operative Alliance, at its Manchester Congress
in September, 1995, adopted a Statement on Co-operative Identity. The
statement included a definition of co-operatives, a listing of the movement's
key values and a revised set of principles intended to guide co-operative
organisations at the beginning of the twenty-first century.

2.	This paper explains the context within which the statement evolved,
and it elaborates upon some of the key issues raised, particularly in the
reconsideration of principles.

3.	Since its creation in 1895, the International Co-operative Alliance
has been the final authority for defining co-operatives and for elaborating
the principles upon which co-operatives should be based. Previously, the
alliance had made two formal declarations on co-operative principles, the
first in 1937, the second in 1966. These two earlier versions, like the 1995
reformulation, were attempts to explain how co-operative principles should
be interpreted in the contemporary world.

4.	These periodic revisions of principles are a source of strength for the
co-operative movement. They demonstrate how co-operative thought can be
applied in a changing world; they suggest how co-operative can organise
themselves to meet new challenges; they involve co-operators around the
world in the re-examination of the basic purposes for their movement.

5.	Throughout its history, the co-operative movement has constantly
changed; it will continuously do so in the future. Beneath the changes,
however, lies a fundamental respect for all human beings and a belief in
their capacity to improve themselves economically and socially through
mutual self-help. Further, the co-operative movement believes that
democratic procedures applied to economic activities are feasible, desirable,
and efficient. It believes that democratically-controlled economic
organisations make a contribution to the common good. The 1995 statement
of principles was based on these core philosophical perspectives.

6.	There is no single tap root from which all kinds of co-operatives
emerge. They exist all around the world in many different forms, serving
many different needs, and thriving within diverse societies. Indeed, one of
the main reasons for preparing this document on the co-operative identity
was to reflect that variety and to articulate the norms that should prevail in
all co-operatives regardless of what they do and where they exist. In
particular, the statement provided a common base on which all of the main
co-operative traditions could prosper and work effectively together.

Co-operatives first emerged as distinct, legal institution in Europe during
the nineteenth century. Achieving their first permanent successes during
the difficult years of the 1840s co-operatives grew within five distinct
traditions; the worker co-operatives which had their greatest early strength
in France; the credit co-operatives, which largely began in Germany;
the agricultural co-operatives, which had their early roots in Denmark
and Germany; and service co-operatives such as housing and health
co-operatives, which emerged in many parts of industrial Europe as the
century drew to an end. All of these traditions flourished, albeit with
different degrees of success, in most European countries in the nineteenth
century; all spread  throughout most of the remainder of the world in the
twentieth century.

Though its 1995 statement on the co-operative identity, the International
Co-operative Alliance formally affirmed and welcomed as equals all five
of these traditions. It acknowledged the vitality each possessed, and it
recognized that, whatever the original sources, each tradition had been
adapted in different ways within different societies and among different

7.	Further, the statement was intended to serve equally well
co-operatives in all kinds of economic, social and political circumstances.
It recognised that all groups had created their own co-operative movements
in very distinctive ways, borrowing from others and adhering to principles,
but shaping their organisations according to their own needs, experiences
and cultures. The 1995 statement accepted and celebrated that diversity.

8.	Further, the statement of identity provided a general framework
within which all kinds of co-operatives could function. Each co-operative
tradition or sector, however, has its own special needs and priorities. At the
time of the Congress, therefore, each sector had prepared or was preparing a
statement on operating principles to demonstrate what the general principles
mean for its operations, particularly in the light of contemporary circumstances.

9.	Finally, the statement implicitly recognized that the international
movement has a unique opportunity to assist in the harmonization of
interests among groups of people organised as consumers of goods and
services, as savers and investors, as producers and as workers. By
providing a common framework, the Statement should foster understanding, 
joint activities and expanded horizons for all kinds of co-operative endeavour.

Rationale for the Restatement of Principles
1.	There were particular challenges confronting the international
co-operative movement that made articulation of the co-operative identity
necessary and beneficial in 1995.

2.	Between 1970 and 1995 the market economy had expanded its
impact dramatically around the world. Traditional trade barriers had been
reduced significantly and many of those changes, such as the creation of
free trade areas, the decline in government support for agriculture and the
deregulation of the financial industries, threatened the economic frameworks
within which many co-operatives had functioned for decades. To prosper,
in many instances merely to survive, co-operatives had to examine how they
would react to these altered circumstances.

Such changes also meant that most co-operatives were facing much more
intense competition. Using the advantages of modern forms of
communications, capital roamed the world with minimal interference,
seeking out the most prosperous investments. Economically, this meant that
many co-operatives found themselves directly confronting large
transnational firms, many of them possessing capital and legislative
advantages they did not have.

On intellectual and attitudinal levels, co-operatives were also confronted
by international media and educational institutions that  proclaimed the
predominance of business controlled by investors. Within those contexts,
the value of enterprises controlled democratically in the interests of people
had been brought into question. In fact, the celebration of capitalist
enterprise challenged the confidence of many within co-operatives,
particularly in the North Atlantic countries. In the face of that challenge,
there was a need to provide a clear vision of what made co-operatives
unique and valuable.

3.	In Central and Eastern Europe, the decline of the centrally-controlled
economies had also brought into question the role of co-operatives.
Paradoxically, though, it had simultaneously opened the way for the rebirth
of co-operative enterprise, but that could only occur if there was a clear
understanding of how new and revived movements should be regulated
and encouraged.

4.	At the same time, the rapid expansion of many Asian countries,
along with economic growth in parts of Latin America and Africa, posed
unparalleled opportunities for the expansion of co-operatives. Indeed,
co-operative leaders from those continents provided many of the new
insights and fresh enthusiasm upon which much of the momentum for
examining the future was derived.

All of these developments brought new perspectives to the international
movement. They challenged some traditional assumptions, offered new
interpretations, and suggested new solutions to old problems. For such
opportunities to be seized, however, there was a need to identify clearly
how co-operatives should play a role in societies undergoing rapid change.

5.	Co-operatives confronted other, more general, challenges during
the 1990s, challenges that promised to be even more important in the
coming decades: they were the challenges associated with fundamental
changes in the human condition around the world. They included issues
raised by rapid increases in the global population; growing pressures on the
environment; increasing concentration of economic power in the hands of a
small minority of the world's population; varying crises besetting
communities within all kinds of cultures; deepening cycles of poverty
evident in too many parts of the globe; and increasingly frequent outbursts
of "ethnic" warfare.

Co-operatives, by themselves, cannot be expected to entirely resolve such
issues, but they can contribute significantly to their resolution. They can
produce and distribute high quality food at reasonable prices. They can,
as they often have, demonstrate a  concern for the environment. They can
fulfill their historic role of distributing economic power more widely and
fairly. They can be expected to enhance the communities in which they are
located. They can assist people capable of helping themselves escape
poverty. They can assist in bringing people with different cultures, religious
and political beliefs together. Co-operators traditions of distinctiveness and
addressing efficiently the needs of their members.

6.	The Statement of Co-operative Identity, therefore must be seen
within historical, contemporary and future contexts. The remainder of this
paper elaborates, albeit briefly, on each session of the statement from these
three perspectives.

The Definition of a Co-operative
1.	The statement defines a co-operative in the following way : 
"A co-operative 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".

2.	This definition is intended as a minimal statement; it is not intended
as a description of the "perfect" co-operative. It is intentionally broad in
scope, recognizing that members of the various kinds of co-operatives will
be involved differently and that members much have some freedom  in how
they organise their affairs. Hopefully, this definition will be useful in
drafting legislation, educating members and preparing text-book.

3.	The definition emphasizes the following characteristics of a
co-operative : 

(a)	The co-operative is autonomous : that is, it is as independent of
	government and private firms as possible.

(b)	It is "an association of persons". This means that co-operatives are
	free to define "persons" in any legal way they choose. Many
	primary co-operatives around the world choose only to admit
	individual human beings. Many other primary co-operatives admit
	"legal persons", which in many jurisdictions includes companies,
	extending to them the same rights as any other member.
	Co-operatives at other than the primary level are usually owned by
	other co-operatives; in all cases, the nature  of their democratic
	practice is a matter that should be decided upon by their

(c)	The persons are united "voluntarily". Membership in a co-operative
	should not be compulsory. Members should be free, within the
	purposes and resources of the co-operatives, to join or to leave.

(d)	Members of a co-operative "meet their common economic, social
	and cultural needs". This part of the definition emphasizes that
	co-operatives are organised by members for their individual and
	mutual benefit. Normally, co-operatives must function within the
	market place and so they must be operated efficiently and prudently.
	Most of them exist primarily to meet economic purposes, but they
	have social and cultural goals as well. By "social" is meant the
	meeting of social goals, such as the provision of health services or
	childcare. Such activities must be conducted in an economic way so
	that they provide the kinds of services that benefit members.
	Co-operatives may also embrace cultural goals in keeping with
	member concerns and wishes : for example, assisting in the
	promotion of a national culture, promoting peace, sponsoring sports
	and cultural activities, and improving relations  within the
	community. Indeed, in the future helping to provide a better way of
	life - cultural, intellectual and spiritual - may become one of the most
	important ways in which the co-operatives can benefit their members
	and contribute to their communities.

	Members need may be singular and limited, they may be diverse,
	they may be social and cultural as well as purely economic, but,
	whatever the needs, they are the central purpose for which the
	co-operative exists.

(e)	The co-operative is "a jointly-owned and democratically-controlled
	enterprise". This phrase emphasizes that within co-operatives
	control is distributed among members on a democratic basis. The
	dual characteristics of ownership and democratic control are
	particularly important in differentiating co-operatives from other
	kinds of organisations, such as capital-controlled or government controlled
	firms. Each co-operative is also an "enterprise" in the	sense that it is an
	organised entity,  normally functioning in the	market place; it must, therefore,
	strive to serve its members efficiently and effectively.

Values - The First Sentence
1.	The co-operative movement has a deep and distinguished intellectual
history. During each of the last ten generations of human history, many
theorists in various parts of the world have made major contributions to
co-operative thought; and much of that thought has been concerned with
co-operative values. Moreover, co-operatives around the world have
developed within a rich array of  belief systems, including all the world's
great religions and ideologies. Since co-operative leaders and groups have
been greatly influenced by those belief systems, any discussion of values
within co-operatives must inevitably involve deeply-felt concerns about
appropriate ethical behaviour.

Consequently, achieving a consensus on the essential co-operative values is
a complex although inevitably rewarding task.

Between 1990 and 1992, under the direction of Mr. Sven Ake Book of
Sweden, members of the International Co-operative Alliance and
independent researchers engaged in extensive discussions about the nature
of co-operative values. The results of that study are available in the book
"Co-operative Values in a Changing World", written by Mr. Book and
published by the International Co-operative Alliance. That book, along
with "Co-operative Principles: Today and Tomorrow", written by
W.P. Watkins, largely provided the theoretical context out of which the
statement on co-operative identity was derived. They are particularly
recommended to anyone wishing to pursue the topic in greater depth.

2.	The first sentence on values in the 1995 statement reads as follows:
"co-operatives are based on the values of self-help, self-responsibility,
democracy, equality, equity and solidarity".

3.	"Self-help" is based on the belief that all people can and should
strive to control their own destiny. Co-operators believe, though, that full
individual development can take place only in association with others. As
an individual, one is limited in what one  can try to do, what one can
achieve. Through joint action and mutual responsibility, one can achieve
more, especially by increasing one's collective influence in the market and
before government. Individuals also develop through co-operative action by
the skills they learn in facilitating the growth of their co-operative; by 
the understanding they gain of their fellow-members; by the insights they
gain about the wider society of which they are a part. In those respects,
co-operatives are institutions that foster the continuing education and
development of all those involved with them.

4.	"Self-responsibility" means that members assume responsibility for
their co-operative - for its establishment and its continuing vitality. Further,
members have the responsibility of promoting their co-operative among
their families, friends and acquaintances. Finally, "self-responsibility"
means that members are responsible for ensuring that their co-operative
remains independent from other public or private organisations.

5.	Co-operatives are based on equality. The basic unit of the
co-operative is the member, who is either a human being or a grouping of
human beings. This basis in human personality is one of the main features
distinguishing a co-operative from firms controlled primarily in the interests
of capital. Members have rights of participation, a right to be informed, a
right to be heard, and a right to be involved in making decisions. Members
should be associated in a way that is as equal as possible, sometimes a
difficult challenge in large co-operatives or in federations of co-operatives.
In fact, concern for achieving and maintaining equality is a continuing
challenge for all co-operatives. In the final analysis, it is as much a way of
trying to conduct business as it is a simple statement of rules.

6.	Similarly, achieving equity within a co-operative is a continuing,
never-ending challenge. Equity refers, first of all, to how members are
treated within a co-operative. They should be treated equitably in how they
are rewarded for their participation in the co-operative, normally through
patronage dividends, allocations to capital reserves in their names, or
reductions in charges.

7.	The last operational value is "solidarity". This value has a long and
hallowed history within the international movement. Within co-operatives,
this value ensures that co-operative action is not just a disguised form of
limited self-interest. A co-operative is more than an association of members;
it is also a collectivity. Members have the responsibility to ensure that all
members are treated as fairly as possible; that the general interest is always
kept in mind; that there is a consistent effort to deal fairly with employees
(be they members or not), as well as with non-members associated with the

Solidarity also means that the co-operative has a responsibility for the
collective interest of its members. In particular, to some extent, it represents
financial and social assets belonging to the group; assets that are the result
of joint energies and participation. In that sense, the solidarity value draws
attention to the fact that co-operatives are more than just associations of
individuals; they are affirmations of collective strength and mutual

Further, "solidarity" means that co-operators and co-operatives stand
together. They aspire to the creation of a united co-operative movement,
locally, nationally, regionally and internationally. They co-operate in every
practical way to provide members with the best quality goods and services
at the lowest prices. They work together to present a common face to the
public and to governments. They accept that there is a commonalty among
all co-operatives regardless of their diverse purposes and their different

Finally, it needs to be emphasized that solidarity is the very cause and
consequence of self-help and mutual help, two of the fundamental concepts
at the heart of co-operative philosophy. It is this philosophy which
distinguishes co-operatives from other forms of economic organisation. In
some countries the concepts of self-help and mutual help have been ignored
by governments, and co-operatives have been organised through
government initiative, sponsorship and financial assistance; the unfortunate
result is movements controlled and managed by governments. It is essential,
therefore, the solidarity of co-operators and co-operatives, based on self-help
and mutual responsibility, be understood and respected, particularly in
developing countries, but in industrially-developed countries as well.

Values - The Second Sentence
1.	The second sentence reads: "In the tradition of their founders,
co-operative members believe in the ethical values of honesty, openness,
social responsibility, and  caring for other".

2.	"In the tradition of their founders .... " refers to the fact that all the
great movements have, at their origins, remarkable men and women who
made outstanding contributions as "founders". Such individuals as the
Rochdale Pioneers, Frederich Raiffeisen, Hermann Schultze-Delitsch,
Philippe Buchez, Bishop Grundtving and Alpone Desiardins are revered
throughout the movements they helped begin; they are admired by
co-operators in other movements as well. Their contributions, moreover,
were typically more than practical, as important as their pragmatism was-it 
was also ethical and moral as well. At the same time, each national
movement has its own founders, men and women whose practical and
ethical values are still profoundly important; this reference to "the founders"
is intended to remember them well.

3.	It can be argued rightly that the ethical values to which co-operatives
aspire influence the activities of some capital-controlled and some
government-owned organisations. They are included, however, because
they have a special place within co-operative traditions. In particular, they
were fundamentally important within the various kinds of co-operatives as
they emerged in the nineteenth century. They are also apparent in many of
those responsible for the movement's growth and development over the
intervening years.

4.	Many of the early co-operatives of the nineteenth century, most
obviously the Rochdale Pioneers, had a special commitment to honesty;
indeed, their efforts were distinguished in the market-place partly because
they insisted upon honest measurements, high quality, and fair prices.
Worker co-operatives, throughout their history, have been renowned for
their efforts to create honest systems of open management. Financial
co-operatives gained excellent reputations around the world because of the
honest ways they conducted their business, in particular the calculation of
interest payments. Over the decades agricultural co-operatives have
prospered because of their commitment to high quality, honestly-labeled

5.	Aside from a special tradition of honesty, co-operatives have inspired
to honest dealings with their members, which in turn has led to honest
dealings with non-members. For the same reason, they have a bias towards
openness : they are public organisations which regularly reveal to their
membership, the public and governments considerable information on their

6.	The other ethical values emanate from the special relationships
co-operatives have with their communities: they are open to members of
those communities, and they have a commitment to assist individuals in
helping themselves. They are partly collective institutions which exist in one
or more communities. They have inherited traditions which have been
concerned about the health of individuals within communities. They,
therefore, have an obligation to strive to be socially responsible "in all
their activities".

Within their financial capacity to do so, many co-operatives have also
demonstrated a remarkable capacity to care for others. Many of them have
made significant contributions of human and financial resources to their
communities. Many of them have provided extensive assistance to the
growth of co-operatives throughout the developing world. It is a tradition
of which co-operators should be proud; it reflects a value that they should

7.	In short, honesty, openness, social responsibility and caring for
others are values which may be found in all kinds of organisations, but they
are particularly cogent and undeniable within co-operative enterprise.

Principles - An Introductory Comment
1.	Many people understand principles as iron-clad commandments that
must be followed literally. In one sense, that is true in that principles should
provide standards of measurement. In another sense, they should restrict,
even prohibit, certain actions while encouraging others.

Principles, however, are more than commandments; they are also guidelines
for judging behaviour and for making decisions. It is not enough
to ask if a co-operative is following the letter of the principles; it is important
to know if it is following their spirit, if the vision each principle affords,
individually and collectively, is ingrained in the daily activities of the
co-operative. From that perspective, principles are not a stale list to be
reviewed periodically and ritualistically; they are empowering frameworks
energizing agents-through which co-operatives can grasp the future.

2.	The principles that form the heart of co-operatives are not
independent of each other. They are subtly linked; when one is ignored,
all are diminished. Co-operatives should not be judged exclusively on the
basis of any one principle; rather, they should be evaluated on how well
they adhere to the principles as an entirety.

3.	Seven principles are listed in the 1995 Statement. They are :
Voluntary and Open Membership; Democratic Member Control; Member
Economic Participation; Autonomy and Independence; Education, Training
and Information; Co-operation among Co-operatives; and Concern for
Community. The first three principles essentially address the internal
dynamics typical of any co-operative; the last four affect both the internal
operation and the external relationships of co-operatives.

The "Voluntary and Open Membership" Principle
1.	The beginning of the simple sentence explaining this principle
emphasizes that "Co-operatives are voluntary organisations." It reaffirms
the fundamental importance of people choosing voluntarily to make a
commitment to their co-operatives. People cannot be made co-operators.
They must be given the opportunity to study and understand the values for
which co-operatives stand; they must be allowed to participate freely.

Nevertheless, in many countries around the world economic pressures or
government regulations have sometimes tended to push people into
becoming members of some co-operatives. In those instances co-operatives
have a special responsibility to ensure that all members are fully involved
so that they will come to support their co-operatives on a voluntary basis.

2.	The sentence continues by referring to how co-operatives admit
members. It affirms that co-operatives are "open to all persons able to use
their services and willing to accept the responsibilities of membership
without gender, social, racial, political, or religious discrimination." This
statement reaffirms a general commitment basic to co-operatives since their
emergence in the nineteenth century: a commitment to recognizing the
fundamental dignity of all individuals, indeed, all peoples.

3.	The phrase "open to all person able to use their services..."
acknowledges that co-operatives are organised for specific purposes; in
many instances, they can only effectively serve a certain kind of member
or a limited number of members. For example, fishing co-operatives
essentially serve fishing people; housing co-operatives can house only so
many members; worker co-operatives can employ only a limited number
of members. In other words, there may be understandable and acceptable
reasons why a co-operative may impose a limit on membership.

4.	The phrase "willing to accept the responsibilities of membership"
reminds members that they have obligations to their co-operative. Such
obligations vary somewhat from co-operative to co-operative, but they
include exercising voting rights, participating in meetings, using the
co-operatives services, and providing equity as the needs arise. It is a set
of obligations that requires constant emphasis, but which should reap
significant benefits-for both the member and the co-operative.

5.	Co-operatives should ensure, through positive action, that there are
no barriers to membership because of gender. Furthermore, co-operatives
should ensure that women participate in equal number in their education and
leadership development programmes.

6.	Co-operatives should also reach out, either through their own
activities, or through assisting in the development of new co-operatives,
to all evident population groups and minorities able to benefit from
co-operative enterprise. The basis for this involvement should not be
charity; it should be the result of a careful, practical and innovative
assessment of the possibilities for co-operative action.

7.	The membership principle also prohibits discrimination based on
"social" characteristics. "Social" refers, first of all, to discrimination based
on class. Since its earliest years, the co-operative movement has sought to
bring together people of different classes; indeed, that is what distinguished
it from some other nineteenth century ideologies.

"Social" also refers to culture, in which might be included ethnic and, in
some instances, national identity. This is a difficult concept, however,
because a few co-operatives are organised specifically among cultural
groups, very often minority cultural groups. These co-operatives have
every right to exist as long as they do not impede organisation of like
co-operatives among other cultural groups; as long as they do not exploit
non-members in their communities; and as long as they accept their
responsibilities for fostering the development of the co-operative movement
in their areas.

8.	The principle also includes a reference to "race". In various drafts
of the document circulated prior to the Congress, the reference to race was
omitted. It had not been included in the belief that even the idea of "race"
should not be accepted as an appropriate way to categorize human beings.
"Race" can imply biological differences, a view that in the last 150 years has
created cleavages within the human family resulting in bigotry, wars and

Discussions with co-operators around the world, however, suggested that
not including a reference to "race" might be misleading: for example, some
people, unfamiliar with the fundamental philosophic position of the
co-operative movement, might conclude that it was acceptable to exclude
people on the basis of "race". For that reason, it was included in the
membership principle accepted at the Congress so that there can be no doubt
as to the movement's position on the issue. Perhaps when the principles are
reviewed the next time, the reference can be dropped.

9.	Co-operatives should also be open to people regardless of their
political affiliation. Since its beginnings, the co-operative movement has
encouraged people of different political allegiances and ideologies to work
together. In that sense, it has tried to transcend the traditional ideologies that
have created so much tension, unrest, and warfare in the late nineteenth and
twentieth centuries. Indeed, this capacity to bring diverse people together
for common goals is one of the great promises the movement offers to the
twenty-first century.

10.	Almost all co-operatives admit members regardless of religious
belief's. There are some, most commonly financial co-operatives, that are
organised by churches and religious communities. Such organisations do
not negate the principle as long as they do not impede organisation of like
co-operatives among other religious groups; as long as they do not exploit
non-members in their communities; as long as they co-operate with other
co-operatives in every possible way; and as long as they accept their
responsibilities for fostering the development of the general co-operative
movement in their areas.

11.	The Membership Principle has a close connection to the Education
Principle and the Democratic Member Control principle. The membership
can play its role only if it is informed and if there are effective
communications among members, elected leaders, managers, and (where
applicable) employees.

Moreover, the membership can only feel involved if it is consulted and if it
is confident that it will be heard. In that sense, while there is a necessity for
elected leaders, managers, and staff to be competent, they must also be able
to understand their members fully, regardless of religious or political
beliefs, gender or sexual preference, cultural or social background.

12.	"Membership" is arguably the most powerful-but often the most
underrated-of all the Principles. In essence, it means there should be a
special relationship between the co-operative and the people it essentially
serves. That relationship should define the business conducted by the
co-operative, effect the way it does that business, and shape its plans for
the future. Further, a recognition of the centrality of "membership" must
mean that co-operatives will be committed to a particularly high level of
service to members, the main reason for their existence.

The "Democratic Member Control" Principle
1.	"Democracy" is a complex world. It can usefully be thought of as
a listing of rights; indeed, the struggle for democratic rights on a political
levels is a common theme of the history of the last two centuries. Within
co-operatives, "democracy" includes considerations of rights; indeed,
rights and responsibilities. But it also means more: it means fostering the
spirit of democracy within co-operatives, a never-ending, difficult,
valuable, even essential, task.

The first sentence of this Principle in the 1995 Statement reads:
"Co-operatives are democratic organisations controlled by their members,
who actively participate in setting their policies and making decisions." This
sentence emphasizes that members ultimately control their co-operatives;
it also stresses that they do so in a democratic manner. Further, it reaffirms
the right of members to be actively involved in setting policies and in
making key decisions.

In many co-operatives, this active involvement occurs at general meetings at
which policy issues are discussed, major decisions are made, and important
actions are approved. In other co-operatives, such as worker, marketing, or
housing co-operatives, members are more routinely involved in the day-to-
day operations  of the co-operatives.

2.	In all co-operatives, "men and women serving as elected
representatives are accountable to the membership." This sentence reminds
elected representatives that they hold their offices in trust for the immediate
and long-term benefit of members. Co-operatives do not "being" to elected
officials any more than they "belong" to the employees who report to these
officials. They belong to the members, and all elected officials are
accountable, at election time and throughout their mandate, for their action
to the membership.

3.	The third sentence of this principle reads: "In primary co-operatives,
members have equal voting rights (one member, one vote) and
co-operatives at other levels are also organised in a democratic manner

This sentence describes the customary rules for voting in co-operatives.
The rule for primary co-operatives is self-evident. The rule for  voting at
other than the primary level is open-ended in the belief that co-operative
movements themselves are best able to define what is democratic in a given
circumstance. In many secondary and tertiary co-operatives, systems of
proportional voting have been adopted so as to reflect the diversity of
interest, the size of memberships in associated co-operatives, and the
commitment among the co-operatives involved. Such agreements should
be reviewed periodically, and it is usually unsatisfactory if the smallest
co-operatives in such arrangements have so little influence that they feel
they are essentially disenfranchised.

The "Member Economic Participation" Principle
1.	The Principle reads: "members contribute equitably to, and
democratically control, the capital of their co-operative. At least part of
that capital is usually the common property of the co-operative. Members
usually receive limited compensation, if any, on capital subscribed as a
condition of membership. Members allocate surpluses for any or all of the
following purposes: developing their co-operative, possibly by setting up
reserves, part of which at least would be indivisible; benefiting members in
proportion to their transactions with the co-operative; and supporting other
activities approved by the membership."

2.	Co-operatives operate so that capital is the servant, not the master
of the organisation. Co-operatives exist to meet the needs of people, and
this Principle describes how members both invest in their co-operatives and
decide how to allot surpluses.

3.	"Members contribute equitably to and democratically control, the
capital of their co-operative." This statement reinforces both the need
members to contribute capital to their co-operative and for them to do so
in an equitable fashion. In essence, they can contribute capital in four ways.

First, in most co-operatives, members are required to invest in a
membership share or shares in order to belong and to benefit from
membership. Only rarely should such membership "share or shares" be
paid any interest.

Second, as co-operatives prosper, they may create reserves, derived from
the retained earnings of the organisation's activities. Normally, all or
significantly large proportion of these earnings are owned collectively,
representing the collective accomplishments of members supporting their
co-operative. In many jurisdictions this collective "capital" is not even
divided among the members should the co-operative cease to exist; rather, it
is distributed to community enterprises or other, associated co-operatives.

Third, co-operatives may have needs for capital far greater than what they
can save from their economic activities. Many co-operatives expect that
members will regularly contribute a portion of their dividends on some
rotating basis or until retirement; in those cases co-operatives would not
pay interest, the member benefiting from continuing participation and future

Fourth, co-operatives may have to make special appeals to members for
further investments; indeed, more of them probably should do so. Under
those circumstances, it is appropriate to pay interest on such investments,
but at a "fair" rate. The return paid on such investments should be at a
competitive, not a speculative rate: a reflection of what they have
accomplished as a collectivity.

5.	When the activities of co-operatives create surpluses, members have
the right and the obligation to decide how those surpluses should be
allocated. They allocate such surpluses for any or all of the following

(a)	They can choose to develop the co-operative, "possibly by setting
	up reserves, part of which at least would be indivisible". This
	approach, which in many co-operatives should be the normal way to
	allocate surpluses that are not returned to members, is vitally
	important in securing the long-term viability of the co-operative.

(b)	They can choose to pay a return to members, usually referred to as
	the "dividend" based on the member's participation in the
	co-operative. This is the traditional way to reward members for
	their support of co-operative.

(c)	They can support other activities that are approved by members.
	One of the most important activities they can-and should-choose
	to support is the further development of the co-operative movement,
	locally, nationally, regionally and internationally. 

The "Autonomy and Independence" Principle
1.	Co-operatives in all parts of the world are very much affected
by their relationship with the state governments determine the legislative
framework within which co-operatives may function. In their taxation,
economic and social policies, governments may be helpful or harmful in
how they relate to co-operatives. For that reason, all co-operatives must be
vigilant in developing open, clear relationships with governments.

At the same time, the Autonomy Principle addresses the essential need for
co-operatives to be autonomous, in the same way that enterprises controlled
by capital are autonomous in their dealings with governments.

2.	The principle reads: "Co-operatives are autonomous, self-help
organisations controlled by their members. If they enter into agreements
with other organisations, including governments, or raise capital from
external sources, they do so freely and on terms that ensure democratic
control by their members and maintain their co-operative autonomy."

3.	In referring to "other organisations", the Principle acknowledges
the fact that, around the world, more co-operatives are entering into joint
projects with private sector firms, and there is no reason to believe that this
tendency will be reversed. It does stress, however, how important it is that
co-operatives retain their  freedom ultimately to control their own destiny
whenever they enter such agreements.

The "Education, Training and Information" Principle

1.	The co-operative movement has a long-standing and distinguished
commitment to education. The 1995 principle reads: "Co-operatives provide
education and training for their members, elected representatives, managers
and employees so they can contribute effectively to the development of their
co-operatives. They inform the general public-particularly young people and
opinion leaders-about the nature and benefits of co-operation."

2.	This Principle emphasizes the vital importance played by education
and training within co-operatives. Education means more than just
distributing information or encouraging patronage; it means engaging the
minds of members, elected leaders, managers and employees to
comprehend fully the complexity and richness of co-operative thought and
action. Training means making sure that all those who are associated with
co-operatives have the skills they require in order to carry out their
responsibilities effectively.

Education and training are also important because they provide excellent
opportunities whereby co-operative leaders can understand the needs of
their membership. They should be conducted in such a way that they
continuously assess the activities of the co-operative and suggest ways
to improve operations or to provide new services. A co-operative that
encourages effective two-way communications  between its members
and leaders, while operating in an effective manner, can rarely fail.

3.	The Principle ends by recognizing that co-operatives have a
particular responsibility to inform young people and opinion leaders (for
example, politicians, public servants, media representatives, and educators)
about the "nature and benefits" of co-operation. In recent decades, too many
co-operatives in too many countries have ignored this responsibility. If
co-operatives are to play the roles of which they are capable in the future,
it is a responsibility that will have to be better met. People will not
appreciate, they will not support what they do not understand.

"Co-operation Among Co-operatives"
1.	This Principle reads: "Co-operatives serve their members most
effectively and strengthen the co-operative movement by working together
through local, national, regional and international structures."

This Principle, first articulated in the 1966 restatement of principles, has
been followed to varying degrees since the 1850s. It was never more
important as a principle than in the 1990s. Co-operatives must be free,
particularly from government interference, as they work out allegiances,
mergers, and joint ventures among themselves as they try to achieve their
full potential.

Indeed, co-operatives can only maximize their impact through practical,
rigorous collaboration with each other. They can achieve much on a local
level, but they  must continually strive to achieve the benefits of large-scale
organisations while maintaining the advantages of local involvement and
ownership. It is a difficult balancing of interests: a perennial challenge for
all co-operative structures and a test of co-operative ingenuity.

Co-operatives around the world must recognize more frequently the
possibilities of more joint business ventures. They must enter into them in
a practical manner, carefully protecting the interests of members even as
they enhance them. They must consider, much more often than they have
done in the past, the possibilities of international joint activities. In fact, as
nation states lose their capacity to control the international economy,
co-operatives have  a unique opportunity to protect and expand the direct
interests of ordinary people.

2.	Co-operatives must also recognize, even more than in the past, the
necessity of strengthening their support organisations and activities. It is
relatively easy to become preoccupied with the concerns of a particular
co-operative or kind of co-operative. It is not always easy to see that there
is a general co-operative interest, based on the value of solidarity and the
principle of co-operation among co-operatives. That is why general
co-operative support organisations are necessary; that is why it is crucially
important for different kinds of co-operatives to join together when
speaking to government or promoting "the co-operative way" to the public.

The "Concern for Community" Principle
1.	Co-operatives are organisations that exist primarily for the benefit
of their members. Because of this strong association with members, often
in a specific geographic space, co-operatives are also often closely tied to
their communities. They have a special responsibility to ensure that the
development of their communities - economically, socially, and culturally
- is sustained. They have a responsibility to work steadily for the
environmental protection of those communities. It is up to the members to
decide how deep and in what specific ways a co-operative should make its
contributions to their community. It is not, however, a responsibility that
members should seek to avoid.

The co-operative principles cumulatively are the life blood of the movement.
Derived from the values that have infused the movement from its
beginnings, they shape the structures and determine the attitudes that
provide the movement's distinctive perspectives. They are the guidelines
through which co-operators strive to develop their co-operative organisation.
They are inherently practical principles, fashioned as much by generations
of experience as by philosophical thought. They are, consequently, elastic,
applicable with different degrees of detail to different kinds of co-operatives
in different kinds of situations. Above all, they require co-operators to make
decisions: for example, as to the nature of the democracy of their
institutions, the roles of different stakeholders, and the allocation of
surpluses that are created. They are the essential qualities that make
co-operators effective, co-operatives distinct, and the co-operative
movement valuable.

The 1995 Statement on the Co-operative Identity : This Statement was
adopted at the 1995 Congress and General Assembly of the International
Co-operative Alliance, held in Manchester to celebrate the Alliance's
Centenary, Recommended to the Congress by the ICA Board, the Statement
was the product of a lengthy process of consultation involving thousands of
co-operators around the world. The process was chaired by Ian
MacPherson of Canada, who prepared numerous drafts of the Identity
Statement and its Background Paper in an effort to understand the state
and needs of the co-operative movement at the end of the twentieth century.
He was assisted by a Resource Group that included Raija Itkonen from
Finland, Hans Munkner from Germany, Yehudah Paz from Israel,
Masahiko Shiraishi from Japan, Hans-Detlef Wulker from Germany and
Bruce Thordarson, Director-General of the ICA.

Part-II - Action Plan
I.	At Government Level
1.	Amendment of Co-operative Laws in the following directions :

(a)	Incorporation of Statement of Co-operative Identity adopted by
	International Co-operative Alliance in the Co-operative Law.

(b)	Removal of restrictive provisions from Co-operative Laws for
	ensuring autonomous and independent functioning of co-operatives.

(c)	Implementation of steps for development of co-operatives from the
	stage of instrumentality of the state to the stage of member owned,
	member used and member controlled economic enterprises.

(d)	Transfer of powers and responsibility regarding administration and
	management of co-operatives from the State Department of
	Co-operation to co-operatives and their federations.

2.	State Support to Co-operatives :

(a)	State support to co-operatives be so designed that it facilitates
	development of co-operatives as autonomous and independent
	member user owned and controlled enterprises.

(b)	The co-operatives having equity participation by Government should
	be allowed to redeem/refund the share capital to the Govt. As a
	policy, the Government should help co-operatives to prepare and
	implement a time bound programme for redemption of equity of the

(c)	The National Policy on Co-operatives, which is in the offing,
	should specifically mention that state support to co-operatives shall
	be without any strings. It has to be based on a memorandum of
	understanding between the Government and the concerned
	co-operatives as mutually agreed by them.

(d)	The para-statal bodies namely NCDC, NABARD etc. created to
	support co-operatives should not insist on Government guarantee
	for providing financial assistance to co-operatives.

(e)	The Government should not involve itself in any way in the
	recruitment, appointments and formulation of service conditions of
	managerial personnel of co-operatives.

(f)	Support of co-operatives to implement some of the economic
	programmes of the Government should be elicited on the basis of
	mutually agreed terms and conditions, but not through a directive. If
	co-operatives suffer loss on account of implementation of such
	programmes, Government should be obliged to meet these losses.

(g)	Co-operatives to be eligible for Government support and
	concessions should fulfill the following criteria:

	i)	They should be registered under Co-operative Law based on
		common economic needs of the members.

	ii)	Their bye-laws and business policies should incorporate the
		co-operative values and principles of co-operation in the
		statement of co-operative identity adopted by the ICA.

	iii)	They must have business dealings with at least 75% of their

II.	At Co-operatives' Level :
(a)	As recommended by Choudhary Brahm Perkash Committee the
	co-operatives should not accept equity contribution from the
	Government The co-operatives having Government equity should
	prepare and implement a time bound programme for its

(b)	With a view to making membership open, voluntary and broad
	based co-operatives at grass-root level (village level) may motivate
	the poor, e.g. artisans, labourers, women to become the members of
	co-operatives. In the initial stages co-operatives may organise self
	help groups of such sections of the people and eventually integrate
	them into their membership.

(c)	In order to enhance the involvement of women in co-operatives,
	concept of joint membership (wife and husband) should be

(d)	Each co-operative society should lay down responsibility norms for
	members. New members should sign a pledge to fulfill these
	responsibility/obligation norms at the time of their admission.
	Fulfillment of responsibility/obligation norms should form
	main/substantive agenda for deliberations at the General Body
	Meetings. Those members who have been failing to fulfill the norms
	continuously for three years may be delisted from  membership  of

(e)	All the co-operative organisation should initiate a thorough analysis
	of their membership. Inactive/sleeping members may be delisted.

(f)	With a view to ensuring effective implementation of principle of
	"democratic member control" the following steps may be taken :

	i)	Criteria for quorum for General Body needs re-thinking. For
		a General Body Meeting, presence of atleast 50%
		membership should be quorum.

	ii)	The Board of Directors/Managing Committee must be
		accountable to the members. The General Body, therefore,
		should be empowered to review the performance of the
		Board and if dissatisfied with its performance, it should have
		right to replace it even in middle of its (Board's) tenure
		through elections.

	iii)	Every co-operative society should formulate some system
		for eliciting members' feed-back/suggestions about the
		working of the society.

(g)	The co-operative societies should develop an effective information
	system for the members, board members and opinion makers.
	Within the organisation, management information systems should be
	evolved and the executive management should continue to constantly
	pass on the information to the board members. For members of the
	co-operative societies, member information bulletin should be issued
	on a continuous basis. The federal co-operatives should bring out
	regular publications providing information relating to the business
	trends and policies and the steps taken by the federation for the
	benefit of the members.

(h)	In order to ensure effectiveness of the education and training
	programmes for co-operatives, there is a need for strengthening
	resource base of co-operative unions. The present system of
	contribution to Co-operative Education Fund is required to be
	further revamped. Apart from contribution to Co-operative
	Education Fund, every co-operative society should set up apart a
	specified amount in its budget for conducting in-house education
	and training  activities for the benefit of its members and elected
	representatives. It would be necessary that the co-operative society
	should have a long-term perspective for HRD at its  level.

(i)	There is no contradiction between professionalisation of
	management and perseverance and protection of co-operative identity.
	If the managerial personnel of co-operative is efficient and
	professional, achievement of organisational mission of co-operatives
	can be facilitated effectively. What is important is clarity about the
	role perception and freedom of operations at the level of professional
	managers in co-operatives. Every co-operative organisation should,
	therefore, formulate its personnel management policies keeping in
	view this perspective in mind.

(j)	As one of the principles of co-operation is co-operative among
	co-operatives, it is necessary to ensure the maintenance of
	organisational discipline within the structure of co-operative
	movement. The federal co-operatives should essentially function
	through their constituent units and in no case compete with them.

(k)	As recommended by the Ch. Brahm Perkash Committee, the federal
	co-operatives should undertake the following functions :
	i)	Safeguard the observance of the co-operative principles.
	ii)	Undertake research and evaluation and assist in preparation
		of perspective development plans of member co-operatives.
	iii)	Promote harmonious relations between member
	iv)	Help member co-operatives in the settlement of disputes
		among themselves and between a co-operative and its
	v)	Represent the interests of member co-operatives and lobby 
		for policies and legislation favourable to co-operatives.
	vi)	Undertake business services on behalf of its members.
	vii)	Evolve viability norms for member co-operatives.
	viii)	Provide legal aid and advice.
	ix)	Provide any other services, at the behest of member

(l)	Since co-operatives are community based organisations, they have
	to evolve such policies as will ensure the development of
	communities economically, socially and culturally. The common
	community related issues need to be taken up by co-operatives such
	as environment free business practices and activities, health caring,
	schools, drinking water facilities, gender integration, child and
	women welfare, welfare of the aged, development of youth etc.
	With the entrusting of various development programmes to village
	panchayats, there is a need for effective coordination between the
	co-operatives and village panchayats at the grass-root level.

* Mr. B. D. Sharma is the Chief Executive of National Co-operative
   Union of India