Learn how co-operatives are different from other types of businesses and how they empower their members and communities.

What is a Co-operative?

A co-operative is a type of business that is owned and controlled by its members, who share a common goal or need.

According to the Statement on the Co-operative Identity by the International Co-operative Alliance, 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.

In other words, co-operatives are people-centred enterprises. And they can operate in any sector of the economy, such as agriculture, banking, education, health, housing, retail, or tourism.

Co-operatives are businesses driven by values of self-help, self-responsibility, democracy, equality, equity, and solidarity.

Today, the co-operative movement is far from being a marginal phenomenon, at least 12% of humanity is a co-operator of any of the 3 million co-operatives on Earth.

7 Co-operative Principles

They follow seven principles that guide their activities and decision-making:

1. Voluntary and Open Membership: Anyone who agrees to the co-operative's purpose and values can join and participate.

2. Democratic Member Control: Members have equal voting rights and elect their representatives and leaders. Men and women serving as elected representatives are accountable for the membership.

3. Member Economic Participation: Members contribute to the capital of the co-operative equitably and democratically. Part of this capital usually become the property of the co-operative. But the surplus capital can be used for: (1) developing their co-operative; (2) setting up or building reserves; (3) benefiting members in proportion to their transactions with the co-operative; and (4) supporting other activities approved by the members.

4. Autonomy and Independence: Co-operatives are self-governing and free from external interference.

5. Education, Training, and Information: Co-operatives provide education and training to their members and staff so that they can contribute to the development of the co-operative.

6. Co-operation Among Co-operatives: Co-operatives work together with other co-operatives to strengthen the co-operative movement.

7. Concern for Community: Co-operatives contribute to the social, economic, and environmental well-being of their communities.

How do Co-operatives Work?

Co-operatives are different from other types of businesses in several ways.

First, co-operatives are not driven by profit, but by the needs and interests of their members. Co-operatives aim to provide quality goods and services at fair prices, rather than maximising profits for shareholders.

Second, co-operatives are democratic and participatory, meaning that members have a say in how the co-operative is run and what it does. Co-operatives hold regular meetings and elections, where members can voice their opinions and vote on important issues. Co-operatives also encourage members to get involved in the co-operative's operations, such as by volunteering, working, or providing feedback.

Third, co-operatives are inclusive and diverse, reflecting the diversity of their members and communities. Co-operatives respect the rights and dignity of all people, regardless of their gender, race, religion, age, ability, or background. Co-operatives also strive to meet the needs and preferences of their members, by offering a variety of products and services, and by adapting to changing circumstances.

What are the Benefits of Co-operatives?

Co-operatives offer many benefits to their members and society as a whole. Some of these benefits are:

a. Co-operatives create economic opportunities and social empowerment for their members, especially for marginalized and disadvantaged groups.

b. Co-operatives foster a sense of belonging and solidarity among their members, who share a common vision and values.

c. Co-operatives promote sustainable development and environmental responsibility, by using natural resources wisely and reducing waste and pollution.

d. Co-operatives support local development and community resilience, by creating jobs, generating income, and providing essential services.

e. Co-operatives contribute to social justice and peace, by promoting democracy, human rights, and co-operation.

What are the Different Types of Co-operatives?

Co-operatives can be classified into different types according to their purpose, membership, or structure. Some of the most common types of co-operatives are:

i. Consumer co-operatives: These are co-operatives that provide goods and services to their members, who are also the consumers. Examples of consumer co-operatives are grocery stores, health clinics, credit unions, and housing co-operatives.

ii. Financial co-operatives: Financial co-operatives provide thrift and loan services to members. They first gained prominence in rural communities where farmers would borrow micro credit during the early 1900s. Today, financial co-operatives are known as credit unions, and saving and credit co-operatives.

iii. Producer/Marketing co-operatives: These are co-operatives that produce goods or services for the market, and are owned and controlled by their workers or suppliers. Examples of producer co-operatives are agricultural co-operatives, artisan co-operatives, and worker co-operatives.

iv. Farmer or agricultural co-operatives: These are producer co-operatives in which farmers pool their resources in certain areas of activities. For instance, farmers can control supply and marketing channels on a business level. Some even unite growers to boost business productivity and yield.

v. Purchasing co-operatives: These are co-operatives that buy goods or services in bulk from suppliers, and distribute them to their members, who are also the buyers. Examples of purchasing co-operatives are wholesale co-operatives, retail co-operatives, and co-operative federations.

vi. Service co-operatives: These are co-operatives that provide specialized services to their members, who are also the users. Examples of service co-operatives are education co-operatives, social co-operatives, and transport co-operatives.

vii. Campus co-operatives: These are co-operatives that operate on or near college or university campuses, and serve the needs and interests of students, faculty, and staff. Examples of campus co-operatives are bookstore co-operatives, food co-operatives, and student housing co-operatives.

viii. Multi-stakeholder co-operatives: These are co-operatives that have more than one type of membership, representing different stakeholders in the co-operative's activities. Examples of multi-stakeholder co-operatives are community co-operatives, health co-operatives, and social enterprise co-operatives.

Keen to start a co-operative? Connect with us at contactus@sncf.org.sg