Cooperatives – what are they and how are they useful?

By Celine Massa

You might be surprised to learn that there are more than one billion people around the world who are part of some sort of cooperative(1). Eight in every ten Australians are members of a cooperative or mutually-owned enterprise. Think of roadside assistance such as NRMA, member-owned superannuation funds, mutually-owned banks such as Bank MECU or consumer cooperatives such as the Co-op Bookshop.

Are you one of the eight in ten? What does being part of a cooperative mean? And how can you use your membership of a cooperative to make change?

What is a cooperative?

Cooperatives are businesses that are set up for the mutual benefit of all who use them. Each member has an equal share in the business and is able to make joint decisions towards the running of the business.

The Cooperative Group describes a cooperative as “a group of people acting together to meet the common needs and aspirations of its members, sharing ownership and making decisions democratically”. They add, “cooperatives are not about making big profits for shareholders, but creating value for customers – this is what gives co-operatives a unique character, and influences our values and principles”.

Therefore, cooperatives exist to help fulfill the needs of its members and the community and although they are often commercial, they have other motivations beyond profit. The surplus that cooperatives make is usually reinvested into the cooperative for the mutual benefit of their members. Cooperatives share similar values through internationally-agreed principles, which include democracy, equality and solidarity and are at the core of any cooperative.

Different types of cooperatives

There are many different types of cooperatives but they can be grouped into five broad types:

• A consumer cooperative provides its members with goods and services, such as banking, food, housing or groceries.
•  A workers’ cooperative is one where workers are equal owners of the business. This type of cooperative can often be found within manufacturing and production, forestry and tourism.
• A multi-stakeholder cooperative is one where different stakeholders who share a common interest come together. These may include health services, community or social services.
• Purchasing cooperatives are made up of similar organisations that come together to improve their purchasing power such as councils or small businesses/organisations.
• Producer cooperatives are owned by farmers or artisans who come together to process and/or market their products. Examples of this type of cooperative include agricultural or craft cooperatives.

These diverse categories demonstrate how any type of business or organisation can operate as a cooperative structure. It is about the organisation of an activity, not the nature of the activity itself.

So why join a cooperative?

1. Participation and input: A cooperative allows people to exercise influence on matters they care about. It is about bottom-up democracy, as opposed to top-down decision making. Individuals are able to contribute to the running of the cooperative and can help make decisions.
2. Savings: For many, another attractive aspect of cooperatives is the opportunity to make savings. In a consumer cooperative, members are offered discounts on products and/or services. In financial cooperatives such as credit unions and mutually-owned banks, the savings can be seen in such services as mortgages, which are reported to save an average of 0.4 percent (2).
3. Community involvement: Finally, supporting a cooperative allows you to be part of a community of people with similar values to you, where profit is not the priority and rather, member, community and organisational development take precedence. When you are buying from and/or are a member of a cooperative, you are supporting democratically-owned, people-centred, community-forming initiatives.

How to get the benefits of a cooperative in your own life

One way is to think of the type of businesses you use the most and ask yourself : are they cooperatives, and if not, is there a cooperative alternative to these businesses that fulfills the same needs. It is very likely that there are cooperatives providing many of the services and products that you use.

The Cooperatives Australia website has further information (although more from the point of view of the managers of cooperatives than consumer members). From this website you can access websites for state cooperative organisations for NSW, Victoria, South Australia and Western Australia.