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Principles of Co-Operatives

The document outlines the principles and processes of organizing a cooperative. It discusses the 7 core principles adopted by the International Co-operative Alliance, including voluntary membership, democratic member control, member economic participation, autonomy and independence, education and training, cooperation among cooperatives, and concern for community. It also describes the typical 8-step process for organizing a cooperative, which involves developing an idea, conducting surveys, adopting bylaws, electing leadership, obtaining registration, and establishing operational policies and programs.

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31 views4 pages

Principles of Co-Operatives

The document outlines the principles and processes of organizing a cooperative. It discusses the 7 core principles adopted by the International Co-operative Alliance, including voluntary membership, democratic member control, member economic participation, autonomy and independence, education and training, cooperation among cooperatives, and concern for community. It also describes the typical 8-step process for organizing a cooperative, which involves developing an idea, conducting surveys, adopting bylaws, electing leadership, obtaining registration, and establishing operational policies and programs.

Uploaded by

Suny Jubayer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Principles of Co-operatives (Theory)

♣ Principles of Co-operation:
Cooperatives trace the roots of some principles to the first modern cooperative founded in
Rochdale, England in 1844 which are given below:

1. Open membership
2. Democratic Control
3. Limited interest on capital
4. Distribution of surplus to members in proportion to their transactions
5. Political and religious neutrality
6. Cash trading
7. Promotion of education
In 1995, Cooperatives around the world generally operate according to some core principles and
values, adopted by the International Co-operative Alliance (ICA).

1st Principle: 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.

2nd Principle: Democratic Member Control


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

3rd Principle: Member Economic Participation


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

4th Principle: Autonomy and Independence


Cooperatives are autonomous, self-help organizations controlled by their members. If the co-
operatives enter into agreements with other organizations, including governments, or raise
capital from external sources, it is done so based on terms that ensure democratic control by the
members and maintains the co-operative autonomy.

5th Principle: Education, Training and Information


Cooperatives provide education and training for members, elected representatives, managers, and
employees so they can contribute effectively to the development of their co-operatives. Members
also inform the general public – particularly young people and opinion leaders – about the nature
and benefits of co-operation.

6th Principle: Co-operation among Co-operatives


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

7th Principle: Concern for Community


With focusing on members need, Cooperatives work for the sustainable development of their
communities through policies and programs approved by their members.

♣Methods & Procedures followed in organizing a co-operative:


The success and efficiency of a cooperative depends to a large extent on whether it is organized
from the root/farmers level or from the top/cooperative officers/local well to do people. The
following sequence of events usually takes place for in organizing a cooperative society which
required at least ten to twelve persons.

1. The Idea: Experiences of other cooperatives, suggestion from cooperatives specialists,


addressed by political leaders, radio, television and newspapers.
2. Organizing Committee: After an idea for a co-operative is developed, a committee
consisting of 3-5 members is organized to help group discussions and to help
disseminating the ideas far and wide.

3. Economic Survey: The organizing committee has to conduct an economic survey for
considering certain basic factors under which the society shall have to operate. The first
factor is the economic need for the co-operative. Other factors are-

i) There is a lack of adequate facilities or services in the area.


ii) Prices are too low for the products of the farmers and too high for the goods
they buy.
iii) There is a lack of competition.
iv) Marketing margins are too high.
v) The co-operative will improve the situation.
vi) Adequate and steady volume of business will be available.
vii) A sufficient number of members are interested.
viii) A competent manager is available or can be trained for the purpose.
ix) The members have the willingness and capacity to finance the co-operative.

4. General Meeting: To discuss the results of the survey. If the survey report is favourably
taken, the decision to form the society would be made in this meeting.

5. Adopting By-Laws: By-Laws which explain the nature of the society and certain the
operating rules of the co-operative. The co-operative is then drafted and adopted.

6. Electing the Managing Committee: A managing committee is elected in the general


meeting from amongst the members before the society obtains the legal status.

7. Obtaining legal status or registration: This is the final step usually followed in
organizing a co-operative after six months of probation period. Unless a society is
registrar by the relevant legal authority, it does not obtain the legal status to operate as an
economic unit.
8. Steps after establishing: After its officers are elected, the board should take the
following steps as quickly as possible:

i) Elect committee of the board, specially an executive committee.


ii) Select the depository bank and complete fund raising, if not previously
accomplished.
iii) Select management personnel and decide on salaries, job specification and
working conditions.
iv) Arrange for the necessary bonding of the board officers and co-operative
employees.
v) Obtain workmen’s compensation coverage for the managers and hired
employees and business liability coverage.
vi) Secure book keeping service and set up an accounting system.
vii) Decide upon credit and pricing policies.
viii) Decide upon purchasing, marketing and servicing policies.
ix) Decide upon building, equipments, trucking and warehousing policies.
x) Develop an education and training programmes for board members,
employees and co-operative members.
Reference:

1. www.cdf.coop/7principles

2. E.P Roy (1969); Cooperatives: Today and Tomorrow, The Interstate Printers &
Publishers,INC, Danville, Ilinois, USA.

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