About Cooperatives

Co-ops are businesses that create value to share among their members and their communities. They are the original ‘social enterprises’. In a co-op, ownership and control is shared equally amongst members who use their co-op. Members of a co-op are people, other businesses, employees or other community stakeholders who work together to achieve a common purpose or outcome. Better buying power, sharing the costs of running a business, better jobs, education and health care are all value outcomes that can be achieved through co-operatives.

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

Find out more about co-operatives in Australia and the global co-operative movement.

Defining Mutuality explains what co-ops and mutuals are and how they fit together as a unified sector.

Infographic - CMEs in Australia:  More than 2032 active CMEs in Australia, 31.3 million memberships, combined gross annual turnover $104.4 billion, contribute around 8% of our country's earnings

Co-operatives are flexible: distributing vs non-distributing

There are two types of co-operative: ‘distributing co-operatives’ and ‘non-distributing co-operatives’.

A distributing co-operative can distribute any and all of its annual profits to active members. This can incentivise members to strive for the co-op’s commercial success. A distributing co-operative must have share capital and members must own the minimum number of shares specified in the co-op rules.

Distributing Co-operatives explained diagram

A non-distributing co-operative can’t share profits with members. All profits must further the co-op’s purpose. It does not need to issue any shares to members, but this isn’t prohibited. Non-distributing co-operatives meet the ‘not for profit’ definition for Australian taxation purposes.

Non-Distributing Co-operatives explained diagram

Types of members

Co-operative members must be active. This ensures co-operatives have a social as well as financial mission.

Customer-owned co-operative
Members jointly purchase programs and services, improving value for money and access to expert advice.

Worker-owned co-operative
The members of a worker co-operative are the employees of the co-operative. This empowers employees with a stake in the organisation’s decision-making process.

Producer-owned co-operative
Smaller businesses can group together in producer-owned co-operatives (also known as enterprise co-operatives) to share supply chain costs to reach markets that would otherwise be dominated by large investor-owned firms. 

Multi-stakeholder co-operative
Multi-stakeholder co-operatives formally allow for governance by representatives of two or more “stakeholder” groups within the same organisation, including consumers, producers, workers, volunteers or general community supporters.

Co-operative legal structures

Members aren’t liable for debts
Co-operatives are incorporated bodies, so members are not liable for the co-operative’s debts. The co-operative it is a limited liability entity. The co-op is a separate legal identity, so it can buy, own or sell property itself.

A co-operative is an incorporated body, with a board of directors who manage the business of the co-operative and are accountable to members.

One member, one vote
Co-operatives are defined as democratic organisations controlled by their members, who each have one vote, no matter how many shares they hold. They will subscribe to the seven international co-operative principles.

To meet the definition of a co-operative, a group may incorporate under any of the following Australian incorporation acts:

  • The Co-operatives National Law
    • Every state and territory has adopted Co-operatives National Law (CNL) or legislation consistent with it. CNL is most appropriate because the co-operative principles are baked into the legislation. Under other incorporation acts these principles must be inserted using the co-operative’s constitution, which can be precarious for members.
  • Incorporated Associations legislation
    • Each state and territory has a different associations act
  • Corporations Act 2001 (Cth)
  • Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth)
  • Legal Models Comparison Matrix

The Co-op Advantage

Why are co-ops different?

Co-operatives focus on delivering their mission to their members, rather than maximising return to investor shareholders through profit distribution and capital growth. This means co-ops can pursue long term business plans, which can be very successful for patient members and local communities.

Co-operatives help Australia maintain a fair economy

  • Provide competition and choice for consumers in a wide range of market
  • Treat customers fairly and honestly
  • Share the benefits of business and wealth
  • Provide quality employment and independence for Australians
  • Provide services to communities that are valued and needed

Provide competition and choice for consumers in a range of markets

Co-operatives and mutuals are good for the markets that they operate in. Their presence means that there is a permanent competitive pressure on profit maximising firms, keeping prices lower for everyone. In financial services in particular, co-operatives and mutuals promote competition to the big banks, through a range of diverse business options and products.

Businesses that plan for the long term rather than short term

Without the need to respond to short term stock market pressures, co-operatives and mutuals are able to adopt longer term business strategies. They are stable, reliable businesses that behave well in a mixed economy.

Their success is clearly shown by the longevity of mutual businesses, many of which have traded continuously for over 100 years.

Businesses that treat customers fairly and honestly

Research consistently shows that the public trusts co-operatives and mutuals more than other types of business. This is because they have been established to serve their customers or members, rather than investing shareholders. This means that not only do they have an in-built advantage in not having to pay dividends to outside shareholders, but they can concentrate on running the business in a way that best meets the needs of their customers.

Share the benefits of business and wealth throughout the country

Co-operatives and mutuals are successful businesses that share their profits through lower prices to customers and dividends to members so that more Australians can benefit from our natural resources and ingenuity. They reward loyalty and hard work for their members’ contribution in making their businesses a success. They provide employment opportunities across regional and metropolitan Australia and are good for agriculture, bringing back fairness and equity to market supply chains.

Provide employment opportunities for Australians

Co-operatives provide employment opportunities in all parts of Australia – sometimes a co-op is the largest employer in town.

Provide services to communities that are valued and needed

Housing, human services

Explaining the member owned difference

Infographic explaining the member owned difference

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