A cooperative is a form of business enterprise, or community organization, incorporated in service to its members and users, in order to meet their shared economic, social, or cultural needs and aspirations. A cooperative is jointly owned and democratically controlled by their members and users on the basis of one member, one vote. Essentially, cooperatives use democratic, participatory and transparent decision-making processes and organizational structures, so their members and users (i.e. owners, workers, and consumers) may be directly responsible for benefiting themselves, each other and the society at large.

Cooperative values and Principles

Cooperatives are based on the values of self-help, mutual help, self-responsibility, democracy, equality, equity and solidarity. Cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

The following principles are the guidelines under which cooperatives put their values into practice are :

1. Voluntary and Open Membership.
2. Democratic Member Control.
3. Member Economic Participation.
4. Autonomy and Independence.
5. Education, Training and Information.
6. Cooperation among Cooperatives.
7. Concerns for Community.

The private business is owned by private people, banks, companies etc. The owners of a public enterprise are, for example, the state, a town, a city, a rural council or any other public body. A cooperative society is owned by its members.

These three types of business organizations have many things in common, e.g. they all need money, skilled staff and good management. But they differ in their most important aspect, their purpose. The main purpose of a private business organization is to make money. Those who have put in money in the business want to gain a good profit. The purpose of the public enterprise is to offer services to the public: transport, electricity, water, telephone etc. And, finally, the purpose of a cooperative society is to serve the needs of the members, e.g. farm inputs, insurance, loans, advice, information etc.

As you can see, the purpose of the private business firm is very simple: to make money (if it is easy to make money is another story). The other two types place other purposes first : service to the public and, in the case of cooperatives serving the needs of the members.

As you can see, the purpose of the private business firm is very simple: to make money (if it is easy to make money is another story). The other two types place other purposes first : service to the public and, in the case of cooperatives serving the needs of the members.

This common bond of ideals and principles of modern cooperation is traced back to 1844 when a group of 29 weavers pooled their savings and opened the first successful consumer cooperative on Toad Lane in Rochdale, England. These early cooperatives saw themselves on a largely social mission, to provide for themselves cheap goods and services, which the burgerming Industrial Revolution was keeping out of their reach in the service of personal profit. Their cooperative started out small, only selling a few staple items, but within a few years they had branched out generating annual sales of $100,000.

In bringing their social vision to life, the Rochdale Pioneers developed specific guidelines for the operation of their cooperative. Today we call these guidelines the “cooperative principles”. Though updated and modified, the principles bear the same social vision of these cooperative pioneers. This vision has been shared by thousands of cooperatives around the world, which have adopted these principles as their own, and used them to help organize cooperative businesses.

Cooperative enterprises, which follow cooperative principles and in the cooperative tradition, have many benefits. Although the specific benefits of each cooperative varies depending on the organization and the needs of its members, several benefits are almost universal:

1. Cooperatives save money
   
   There is no owner/operator to take a profit from the customer; the customer is the owner of a cooperative. Members ensure that their cooperative business provides the best quality products and services at the lowest possible cost.
2. Cooperatives demonstrate economic democracy
   
   In an investor-owned corporation the people who have the most money and shares have the most control over the way the business is run. In a cooperative each member has an equal share and one vote when decisions are made. This is known as economic democracy.
3. Cooperatives operate for the benefit of member/owners
   
   In a cooperative, those with Similar needs act together and pool their resources for mutual gain. As a democratic entity, a cooperative changes with the changing needs of its members.
4. Cooperatives are non-profit
   
   In a cooperative no one person reaps the benefits if the business has been profitable. After bills are paid and money is set aside for operations and improvements, all profits are returned to cooperative members. In a cooperative, the purpose is not to moke money, but to save it.