What is a Co-Operative?
The co-operative business model relies on a one member one vote system, rather than a shareholder system. This type of governance defines the main difference between co-ops and other business models. Co-operatives are democratic in nature, but they are, of course, prone to corruption. Successful co-ops rely on being governed with a service culture in order to maintain the integrity of the co-operative.
Another key feature of co-operatives is the way in which they allocate profits. Rather than the business being focused on minimizing costs, thus maximizing profits, co-operatives focus on meeting the needs of their members (owners). The profits are often reinvested into the co-operative to improve the services provided, paid out in dividends (in the case of CUs) or invested into the community (where the members live).
There are 5 different types of co-operatives:
Consumer – e.g. retail, housing
Financial – e.g. credit unions, insurance
Producer – e.g. agriculture, forestry, art
Worker – e.g. employee owned
Multi-Stakeholder – e.g. health care, social services
There are also 7 principles of co-operatives, and they are as follows:
1) voluntary and open membership, 2) democratic member control, 3) member economic participation, 4) autonomy and independence, 5) education, training and information, 6) co-operation among co-operatives and 7) concern for community.
Co-ops as they relate to development
Co-operatives empower communities, including vulnerable members of society (e.g. women, children, disabled people, etc.). Since all members are owners and have equal voting rights in the business the access to information is greater within co-ops than other businesses. For example, women with this information (read power) can be involved in the decision making process and get involved on boards.
Another key feature of co-operatives is the way in which they allocate profits. Rather than the business being focused on minimizing costs, thus maximizing profits, co-operatives focus on meeting the needs of their members (owners). The profits are often reinvested into the co-operative to improve the services provided, paid out in dividends (in the case of CUs) or invested into the community (where the members live).
There are 5 different types of co-operatives:
Consumer – e.g. retail, housing
Financial – e.g. credit unions, insurance
Producer – e.g. agriculture, forestry, art
Worker – e.g. employee owned
Multi-Stakeholder – e.g. health care, social services
There are also 7 principles of co-operatives, and they are as follows:
1) voluntary and open membership, 2) democratic member control, 3) member economic participation, 4) autonomy and independence, 5) education, training and information, 6) co-operation among co-operatives and 7) concern for community.
Co-ops as they relate to development
Co-operatives empower communities, including vulnerable members of society (e.g. women, children, disabled people, etc.). Since all members are owners and have equal voting rights in the business the access to information is greater within co-ops than other businesses. For example, women with this information (read power) can be involved in the decision making process and get involved on boards.
What is a Credit Union?
Credit Unions are a type of co-operative. They are financial institutions (like banks, or microfinance institutions) but are governed based on the co-operative business model. This means that the Credit Union is owned and controlled by the people who use it's services.
Credit Unions focus on both savings mobilization and loan provision, both of which are critical services to provide to communities.
Here is a video that clearly explains the difference between Credit Unions and Banks.
Credit Unions focus on both savings mobilization and loan provision, both of which are critical services to provide to communities.
Here is a video that clearly explains the difference between Credit Unions and Banks.
To learn more about co-operatives and their impact on economic and social development visit CCFiN's partner, the Canadian Co-Operative Association (CCA).
