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A co-operative is a group of people acting together to meet the common needs and aspirations of its members. These can be employees, the local community or customers for instance - sharing ownership and making decisions democratically.
Co-operatives are businesses that want to trade successfully like any other business, but rather than make money for outside shareholders, all the members of the business have a say in what happens to the profits. These could be reinvested in the business, shared among the members or used to help fund work for the local community or cause.
There are many different sizes and types of co-operatives in all parts of the economy from healthcare to housing, farms to football clubs, credit unions to community owned shops, pubs to public relations, wind farms to web design. Examples of successful co-operatives include the Co-operative Group (banking, food) and John Lewis.
The International Co-operative Alliance’s (ICA’s) definition of a co-operative is: “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”.
From the outside, a co-operative may look like any other business. It's what goes on inside that makes them different.
There are over 5,450 independent co-operative businesses in the UK in all parts of the economy. Although they carry out all kinds of business, co-operatives everywhere all have one thing in common. A co-operative business is one that believes in the seven principles of co-operation.
Co-operative businesses offer an alternative business model, one that the co-operative movement says helps puts values and principles at the heart of everything they do. Because every part of the co-operative economy believes in co-operative values and principles, their members sit at the heart of the business. Co-operatives work together to create a fair society, uniting their members around a common need.
A co-operative business uses an alternative business model in a number of ways, ranging from large retail, finance or agricultural businesses to many small and medium-sized co-operative businesses operating in everything from the creative industries to community regeneration.
However co-operatives are still businesses, not charities.
Members - farmers or freelancers, tenants or taxi drivers - can often do better by working together and because the very definition of a co-operative is that the members control the capital. They have their voices heard independent of pressure from outside investors or governments, they get to decide what happens to the profits. As these members are also the owners, they have a say in getting the products and services they need and they help to shape the decisions the co-operative makes.
A co-operative retains an element of profit within the business to allow it to grow. Any remainder can be distributed in ratio to the level of service the member uses, or input they make. So a customer member will get a dividend based on the level of their purchases and employees a bonus related to their salary level and/or time invested.
See our page on Different types of co-operatives for more information.