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Purpose and Function


What are bona-fide co-ops?

Co-ops are not ‘commercial businesses’, and they are not ‘charities’, they are in fact ‘associations of equal persons’ seeking to alter their position within specific markets. These facts separate them from investor-owned companies, which are ‘associations of finance (capital)'. Co-ops are enterprises that ought to support their members by developing their capacity to lead more prosperous and more fulfilling lives; this requires that they help their members to withstand the vagaries of the market and the misfortunes of life. Genuine co-ops are democratically controlled by their members and unequivocally run for their mutual benefit. They operate using unique systems of organization, association, economics and management, and may be identified by their adherence to a specific set of foundation practices.

types and activities of SHEs
Listing of types of co-ops
Listing of types of co-ops

A Statement of Identity

The International Cooperative Alliance (ICA) ‘Statement of cooperative Identity’ states that “a cooperative 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”. Under the ‘Resources’ section of this website a link is provided to the ICA website but it is essential to note this ‘Statement of Identity’ is exactly what it says it is – it provides criteria that can help us identify a genuine co-op but it tells us very little about how to rum successful and genuine co-ops on a day-to-day basis.


When a group of people decide to set up a cooperative enterprise, they will normally have a clear idea about what they want to change in a market and the benefits that they seek to bring to members. The most immediate outcomes that members want will form the core of the purpose. For example, in a:
    • Farmers’ marketing enterprise – getting fairer   terms and reaching new markets for their produce.
    • Consumer food co-op – supplying healthy and   sustainable foodstuffs at fair prices.
    • Credit union – providing ethical financial   services including savings and loans at both fair and reasonable rates.
    • Rural community co-op - securing access to   important services, such as a local shop, transport, or banking facilities.
    • Worker co-op – providing jobs that give   self-fulfilment, fair rewards, more lifestyle choices and good working   conditions.
    • Tenant housing co-op - to secure better living   conditions, get fair rents, reliable maintenance and a supportive community.
    • Care co-op - to secure high standards of care   that meet the real needs of individuals, at a fair and reasonable cost.
It is important to realise that the above are broad examples; all co-ops need to tailor their core purpose to fit their own situation. Also, that the purpose of a   co-op cannot be condensed into a simple slogan, the purpose needs to be holistic and be reviewed regularly. Setting and reviewing a co-ops purpose needs to follow a logical process and fully involve their members; the necessary process is described in my book – Enterprises that Change Lives.

Loss of purpose

In some co-ops, their de-facto purpose has changed from serving their members to protecting the jobs and lifestyles of their top managers and the positions of officeholders. As a result, they often focus on generating short-term gains used to pay bonuses to top managers. Worryingly, many of the people involved with co-ops do not appear to know how and why previously highly effective enterprises have either ceased operating or have mutated   into organizations that are no longer authentic co-ops.


The term ‘function', as used on this website, means ‘what the organization does to achieve its purpose'. This is highlighted because to properly understand this form of enterprise it is critical to know that co-ops have the function of intervening in the market in the best interest of their members. It is imperative to be clear as to the function of an organization because it is only likely to succeed when those running the organization focus on this.   
To learn more about: Understanding Self-help Enterprises
Watch this 6 minute video now or view later  
Link to Video
To view or download a diagram that shows how co-ops relate to all other forms of enterprise

Updated: August 2020 © Edgar Parnell 2020
Cooperatives and all other types of self-help enterprise
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