THE SEVEN CO-OP PRINCIPLES, PRINCIPLE #3
Last week we shared the second Principle of the Seven Co-op Principles, Owner Control. One Owner, One Vote. We’ve designed this series of posts to provide you and your neighbors with a better understanding of co-ops and the impact Grassroots Local Market will have in YOUR community.
This week, we shared and expanded on Principle # 3 Owner Economic Participation, of the Seven Principles of Cooperatives.
THE SEVEN CO-OP PRINCIPLES - PRINCIPLE #3: MEMBER ECONOMIC PARTICIPATION
The third principle helps describe the investment made by members of the co-operative and how they raise or generate additional capital and allocate surpluses. This principle was built on the foundation that “share capital should receive only a strictly limited rate of interest, in any,” and “surplus should be distributed in an equitable way by, appropriation to reserve, provision of common services, distribution in proportion to the use members make of the services of the co-operative.”
In basic terms, the capital created in a co-operative is the servant, not the focus of the enterprise. The structure of the co-operative is built to focus on “the service” being provided and not focus on the capital being created.
SEVEN COOPERATIVE PRINCIPLES
- Voluntary, Open Ownership. Open to all without gender, social, racial, political, or religious discrimination.
- Democratic Owner Control. One Owner, One Vote.
- Owner Economic Participation.
- Autonomy and Independence.
- Education, Training and Information.
- Cooperation Among Cooperatives.
- Concern for the Community.
SO, WHAT DOES ALL OF THIS MEAN?
Co-operatives are equally and equitably owned organizations, where every member-owner contributes the same amount for their democratic vote and voice in their co-op.
The third principle of Co-operatives is about, you guessed it, Equality. (Starting to see a pattern here?) Where Principle One ensures everyone has an equal opportunity to become a member-owner, and Principle Two ensures that every one of those member-owner has equal rights. Principle Three ensures that all member-owners invest equally, and participate fairly to their shared vision - The Co-op.
Members contribute to the common capital of the co-operative and invest in a membership share in order to become a voting member or the organization. Members are able to purchase or contribute capital to accumulate a number of shares, but linking to Principle 2, Democratic Member Control, members may only be grated one equal vote.
Co-operatives use “surplus” in lieu the term “profit”. Profit defined: the total annual positive result of business trading. Surplus defined: part of the profit derived from the economic relationship with its members. Co-operatives use a surplus in many ways.
- To develop the co-operative and establish a reserve. This strengthens the vitality of the organization and ensures stability.
- To reinvest in the co-operative staff. This can include expanding the resources available to staff members including education and additional training.
- To build and launch new co-operative initiatives.
- To support social and cultural activities made available to the public in which they operate. This may include hosting special events or educational opportunities hosted by the co-op.
Finally, a surplus may also be allocated or distributed back to member-owners in the form of a Patronage Dividend where the surplus dollar amount, or a percentage thereof, is divided between all member-owners based on the dollar amount they spent in the Co-op. A member-owner who participates more economically, by shopping at the Co-op more, is equitably awarded monetarily for that participation.
CO-OPS OPERATE TO FULFILL THE SOCIAL AND CULTURAL NEEDS OF A COMMUNITY
The main focus of a co-operative is to meet a social and/or cultural need within a community. Again, this means the co-operative is formed and operated to go beyond capital gains, and functions of human commitment by its members to bring increased value and purpose to bring strength and vitality to a community. This is also why diverse and equal representation of the community in which the co-op resides is ideal.
MEMBERSHIP SHARES = MEMBERS’ CAPITAL
Membership shares (stock) play a dual role within a co-operative. Not only does a membership share grant an individual the right to equal vote, it also contributes to the pool of working capital necessary to operate the business. Careful consideration is placed on setting the monetary value for a membership share, as it should be affordable and obtainable by those individuals who need the co-ops services. Grassroots has set the membership stock price at $200 and offers both a one-time purchase, as well as a five-month installment plan option.
FOR MORE INFORMATION ON GRASSROOTS LOCAL MARKET, BECOME A MEMBER OR SIGN-UP FOR EMAIL UPDATES, VISIT GRASSROOTSLOCALMARKET.COM.