Principles – They Are Guidelines, Not Rules Aren’t They? – Definitions and Learning From Co-Ops

Posted: 17 March 2014, in Blog

Principles – they are guidelines, not rules aren’t they?

I enjoy the circular debates that go on and on about what is and what isn’t a social enterprise. I tend to take a narrow view but realise that for plenty of folk ambiguity is very pragmatic and it also suits their funding, tax, political and philosophical circumstances and outlook. Thinking of this stuff and given the kicking that the Co-op Group and wider movement has taken recently. I thought I’d like to mount a wee defence of that venerable institution, the co-op movement itself and the notion of definitions based on principles.

Co-ops are funny beasts. I’ve helped set them up, merged and dissolved a few and been on the boards of several. What is intriguing though is how the Co-op Group got into its current situation. In short, the management and the boards have cocked things up. This is measurable by financial performance indicators and a decline in organisational reputation. In this they are not alone. Many retailers and financial institutions have also made dreadful errors of business judgement and some have been downright crooks but if you represent yourself as different and ethical the ordure is always going to fall on you from a great(er) height. The challenge for the Co-op Group is to recover commercially, whilst staying true to its values and principles.

What I like about the idea of co-operation however is that a tension between mission and commercial imperative has always existed. Back in the 1760s (Fenwick) and the 1840s (Rochdale),  the co-op pioneers had philosophical and near hermeneutical debates over the meaning, definition, democracy and purpose of their radical innovation and culminated (sort of) with the creation of a set of universal principles in 1937. New refinements were added in 1966 and 1995 demonstrating that these debates are never finished.*

The radical bit should not be overlooked. Campaigning for democratic control of institutions in the 1760s and 1840s would get you the wrong kind of attention from the authorities ever alert for radicals and sedition – especially given what was happening on continental Europe at the time. Little bit of context there for the next time you pick up your messages at your co-op store. Principles are important and can often be downright dangerous.

Anyway the latest version of the principles is detailed below but the intriguing thing is that the ICA (international Co-operative Alliance) thought it necessary to offer a definition and a statement of values as well as a list of operating principles.

Definition. A co-operative is 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.

Values. Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

Principles. The co-operative principles are guidelines by which co-operatives put their values into practice.

Voluntary and Open Membership. Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

Democratic Member Control. Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.

Member Economic Participation. Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

Autonomy and Independence. Co-operatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

Education, Training and Information. Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.

Co-operation among Co-operatives. Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

Concern for Community. Co-operatives work for the sustainable development of their communities through policies approved by their members.

Anyway, what sparked this blog was some great news about co-operation and the credit goes to our Hebridean chums. The Islay Energy Community Benefit Society has with the help of the Co-operative Enterprise Hub started to raise the target sum of £1.2m to develop a wind energy business. Crucially, the concept of self-help is part of the deal with share subscription applications being part of the deal with the remainder being made up by loan and grant finance.

Great isn’t it. A good news story about co-ops and local communities committed to self-help. Now, all we need is for urban Scotland to follow our rural chums and maybe the debate will move on from what is or isn’t a social enterprise to why don’t Scottish social enterprises do this sort of thing more often?

Could it be because they have chosen the wrong structure? Are co-ops (or maybe CICs) the real future of investor/member led social enterprise rather than municipally controlled, funded and constrained projects and initiatives? Are community based energy co-ops going to be the next generation of social enterprises to go to scale and will these new ones learn the lessons of their retail cousins past?

Meal do naidheachd to the good folk of Islay, Colonsay and Jura who are following the socially enterprising example of the good folk of Gigha, Mull, Tiree, Barra, South Uist and Westray. If you want them to succeed in raising their share target of £750k and wish to invest  check out the links


*For any Aberdonians with a historical bent, I’ve not mentioned the Shore Porter Society (founded 1498) because they are now a private partnership.


NOTE: This opinion piece blog does not necessarily reflect the views or beliefs of Social Enterprise Scotland.