Cooperative Principles

Cooperative Principles

Originally Drawn up by Charles Howarth, one of 28 weavers and other artisans who founded the Rochelle Equitable Pioneers in Rochdale, England, on December 21, 1844, these principles governing cooperatives were introduced into the United States in 1874 by the National Grange, and formally written down by the Coopertive Alliance in 1937 (last updated in 1995).

There are 7 principles that govern all types of cooperatives. 

1) Voluntary and Open Membership

Cooperatives are voluntary organizations 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.

2) Democratic Member Control

Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions.  The elected representatives are accountable to the membership.  In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.

3) Members’ Economic Participation

Members contribute equitably to, and democratically control, the capital of the cooperative.  At least part of that capital is usually the common property of the cooperative.  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 the cooperative, possibly by setting up reserves;, part of which at least would be indivisible: benefitting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

4) Autonomy and Independence

Cooperatives are autonomous, self-help organizations controlled by their members.  If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

5) Education, Training, and Information

Cooperatives provide education and training for their members, elected representatives, managers, and employees so that they can contribute effectively to the development of their cooperatives.  They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.

6) Cooperation Among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

7) Concern for Community

While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.

Every day, more than 29,200 cooperatives provide essential products and services to American consumers, touching our lives in many ways.

Tomorrow at breakfast, check your morning paper. Many of the articles may be labeled “Associated Press” or “AP.” Those stories were written by individual reporters but distributed by a cooperative news organization.

If your breakfast includes freshly squeezed orange juice, it may be from a Sunkist product. Sunkist is a citrus-growers cooperative based in California.

And the list goes on: Land O’ Lakes butter, Ocean Spray cranberry juice, Sun-Maid raisins, Nationwide Insurance, Blue Diamond almonds, Ace Hardware, REI outdoor gear— they are all cooperatives. In fact, one of every four Americans is a member of some type of cooperative, including more than 91 million served by credit unions and 42 million connected to more than 900 electric co-ops in 47 states.

Although many in number, cooperatives do differ from “typical” businesses in one big way: they are organized for the benefit of their members, not single owners or stockholders. The first known cooperative in the United States was formed by Benjamin Franklin in 1752. That organization, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, still operates today.