Cooperative Equity and Ownership: An Introduction
“Not for profit, not for charity, but for service” is one common way that credit unions differentiate their activities from those of other economic enterprises, and it works well as a concise and accurate descriptor for the whole cooperative sector. Cooperatives are business enterprises, not charitable organizations, so they are not the same as non-profits; yet they do not exist to maximize profits, so they are not the same as investor-owned firms. Cooperatives are enterprises that are democratically owned and controlled by the people who benefit from them and are operated collaboratively for the purpose of providing services to these beneficiaries or members.
The International Cooperative Alliance defines a cooperative as “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.” A co-op is an enterprise formed by a group of people to meet their own self-defined goals. These goals may be economic, social, cultural, or as is commonly the case, some combination.
In a cooperative, only participants who have met the requirements for membership are allowed to be owners. All cooperatives operate on the principle of “one member, one vote”, so control is allocated evenly among the users of the co-op without regard to how much money each has invested. Cooperatives operate for the benefit of members, and those benefits are distributed in proportion to each member’s transactions with the cooperative. In a co-op, the answer to the question of “who owns, who controls and who benefits from the enterprise?” is always the same – the cooperative members.