What is a Co-op?
What does it mean?
Co-operatives are owned and democratically controlled by their members. All the decisions made about the co-operative are done so democratically. Any surplus or benefits attained are distributed amongst members, communities and re-invested into the business.How do they work?
There is no single format for co-operatives to follow. But in retail Co-ops, all have a committee, who are elected members, who are responsible for the policy of the Society and also employ the chief executive and senior management team to run the day to day business.What is the difference between a Co-op and a Plc?
In a co-op members can invest a limited amount of share capital and take part in a "one member, one vote" system. Each member has an equal vote regardless of his or her share capital. This does not happen in a plc.Co-ops vs PLCs
- A co-operative is set up to meet mutual needs whereas a plc exists to make a profit from being able to satisfy a need that exists.
- A co-operative belongs to its members. A plc belongs to its shareholders/ investors.
- A co-operative is run democratically on the basis of one member, one vote. In a plc the number of shares owned determines votes.
- Co-operatives share their profits with their members (the dividend) whereas plcs return profits to the holders of their capital.
- Shares that members have in a co-operative are of fixed value and are withdrawable. Shares are non-withdrawable in plcs and their value fluctuates.
- Co-ops are constituted under the Industrial and Provident Societies Act whereas plcs are constituted under company law.
The Co-operative Difference
A co-operative is different because its members have a say in how the business is run, by attending meetings, voting for their representatives and therefore influencing the policies, both ethical and operational. The level of influence is irrespective of how much a member invests - £1 or £20,000.Where do the profits go?
Profits are divided in a number of ways at the discretion of the particular co-operative. After an allocation to the revenue reserve of the co-operative the remaining surplus can be split in a number of ways.
Co-operatives are generally remembered for the "dividend". This is paid
in a number of retail societies including the Midlands Co-operative.
Other societies may pay a "social dividend", a prime example of this being
the community dividend paid by Co-operative Group or the 1% of profits paid by the
Midcounties Co-operative for co-operative development.
The method of distribution within other co-operative sectors differs, such as a distribution in one worker co-op could be based on the number of hours worked. However, irrespective of the actual method of division, profits are divided by the democratically elected board on behalf of all the members.
Are there other kinds of Co-ops?
Yes, there are many different kinds of co-ops. The following are all different types of co-operatives: consumer co-ops, housing co-ops, worker co-ops, food co-ops, community co-ops, credit unions, care co-ops and agricultural co-ops. The latest addition to the Co-operative family are football supporters’ trusts. Click here to see our Links page.Did you know?
The Co-op Bank was the first major British financial organisation to announce an ethical policy, in 1992.
