What is a co-operative?

What is a co-operative?


Source: Co-operatives UK

Co-operatives are autonomous associations formed and democratically directed by people who come together to meet common economic, social and cultural needs. Founded on the principle of participatory governance, co-operatives are governed by those who use their services: their members.

Based on the principles of empowerment, education, and community, co-operatives operate laterally promoting participation both within their own organisation, and through a focus on community interaction, and support.

What is the difference between a co-operative and a mutual enterprise (CMEs)?

A mutual, mutual organisation, or mutual society is an organisation (which is often, but not always, a company or business) based on the principle of mutuality. Unlike a true co-operative, members usually do not contribute to the capital of the company by direct investment, but derive their right to profits and votes through their customer relationship. Examples of mutuals include financial institutions like Bank Australia, Beyond Bank, Employers Mutual and Rabobank for example.

What comprises the co-operative and mutual business model?

CMEs will need at least the following for its day-to-day operation:

  • General Assembly
  • Board of Directors
  • Set of Officers
  • Committee System
  • Hired management/paid employees

They are democratically run businesses which are member-owned and controlled with a one member one vote system. This is different to listed companies when the number of shares you hold determines the weight of your vote and influence.

What values and principles guide CMEs?

CMEs provide consumers with a distinct values-based and community-owned and controlled alternative. Unlike the private, public, or voluntary sectors, all co-operatives around the world are guided by the same seven principles:

  1. Voluntary and open membership
  2. Democratic member control
  3. Member economic participation
  4. Autonomy and independence
  5. Education, training, and information
  6. Co-operation among co-operatives
  7.  Concern for Community

What are the economic and social benefits of the CME sector?

The CME sector promotes economic diversity and a prudent and common sense approach to business. The sector generates competition and choice in the market while providing competitive leverage for small to medium enterprises.

From a social aspect, co-operative and mutual enterprises empower people and communities to engage in business. In addition, CMEs:

  • educate communities in the operation of business
  • create a strong democratic governance culture in communities
  • improve the community and its inhabitants
  • CMEs instil the value of financial responsibility in people and businesses
  • CMEs re-build and maintain public trust in business

How important is the sector to Australia economically and socially?

  • The first Australian consumer co-operative was registered in 1859.
  • Over 2000 co-operative, mutual and member-owned businesses operating nationally.
  • More than 14.8 million memberships generating a turnover of over $27.8 billion.
  • Co-operatives and mutuals including member-owned siper contribute around 7% of our country’s earnings
  • Motoring organisations are owned by more than 7 million members
  • Mutual insurers and friendly societies provide insurance to more than 2.3 million Australians
  • Customer owned banks, credit unions and building societies have 4.5 million members

Are CMEs found in all sectors of the Australian economy?

CMEs participate in numerous sectors of the Australian economy including but not limited to:

  • Agriculture (including fishing)
  • Banking and Finance
  • Housing
  • Insurance
  • Personal services
  • Retail
  • Shared services
  • Wholesale and purchasing

Are there any CMEs I would have heard of?

In Australia, some of our most successful companies are CMEs:

CBH Group – export 40% of Australia’s grain
Murray Goulburn – process a third of Australia’s milk supply and the largest dairy exporter
HCF – share of national health insurance market is 12.4% (hospital persons covered)
Australian Unity – revenues of $1.30 billion for 2013-14 financial year

Other well-known CMEs include Rabobank, NRMA and Capricorn Society. There are also many smaller co-operative and mutual enterprises dotted across the country ensuring the economic viability of communities and towns while also contributing to the social fabric of their local areas.

To view all BCCM members, please click here.

How do I set up a co-operative?

Visit the Get Mutual website where you will find case studies, toolkits, links to reports and helpful organisations as well as a ‘dating service’ to help you to connect with advisors and experienced professionals to help with your co-operative developments.

Where can I find out more information on the sector?

There are a number of places where you can find out more information on the sector including this website, Get Mutual, International Co-operative Alliance and some of other counterparts across the world including Mutuo UK, Co-operatives UK and Co-operatives and Mutuals Canada to name but a few.

How did co-operatives start?

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