Background Paper to the Statement on the Cooperative Identity

    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
                         8 January 1996

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.

            ICA Statement on Co-operative Identity
                       Background Paper 

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

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-operatives 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 institutions 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
consumer co-operatives, whose beginnings have long been
popularly associated with the Rochdale pioneers; 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.
Through 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 cultures.  
7.    Further, the Statement was intended to serve equally
co-operatives in all kinds of economic, social and political
circumstances.  It recognized 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

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,
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
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

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"

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
fulfil 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, religions, and
political beliefs together.  Co-operators have much to offer
to the world simply by building upon their traditions of
distinctiveness and addressing efficiently the needs of their

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 section 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 must have some freedom
in how they organise their affairs.  Hopefully, this
definition will be useful in drafting legislation, educating
members, and preparing textbooks.

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 membership.

(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
child care. 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.

Member needs 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
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

Between 1990 and 1992, under the direction of Mr. Sven ke
Bk 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. Bk 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 governments. 
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
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
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 name, or
reductions in charges. 

7.   The last operational value is "solidarity".  This value
has a long and hallowed history within the international
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 co-operative.

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

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 Grundtvig and Alphonse Desjardins 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-labelled produce.  

5  Aside from a special tradition of honesty, co-operatives
have aspired 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 operations. 

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 emphasize.

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

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

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 to be 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 persons 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-operative's 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 actions,
that there are no barriers to membership because of gender. 
Furthermore, co-operatives should ensure that women
participate  in equal numbers 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
"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 genocide.

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 beliefs.  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

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)

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, affect 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 word.  It can usefully be
thought of as a listing of rights; indeed, the struggle for
democratic rights on a political level 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 "belong" 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 actions 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.    This 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
allocate surpluses.

3.    "Members contribute equitably to, and democratically
control, the capital of their co-operative."  This statement
reinforces both the need for 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 a 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 dividends.

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: for example, the government or normal
bank interest rate.

4.    Members also control the capital of their co-operatives. 
There are two key ways in which they do so.  First, regardless
of how co-operatives raise capital for their operations, the
final authority for all decisions must rest with the
membership.  Second, members must have the right to own at
least part of their capital collectively, 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 purposes.

(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 the co-operative.

(c) They can support other activities that are approved by
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

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

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
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
tives.  They inform the general public - particularly young
people and opinion leaders - about the nature and benefits of

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 maximise 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 cru-cially
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
organisations.  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.