Cooperatives and Cooperative Principles

A cooperative is defined as a legally incorporated group of people pursuing an economic purpose, in accordance with its bylaws. Members should be familiar with the bylaws of their cooperative.

Cooperatives share various principles that distinguish them from other types of organizations. These principles are the following:

Democratic control by residents
Because cooperatives are concerned with the welfare of all people equally, each member family has one vote regardless of financial investment or the number of shares it holds.

Open membership
Likewise, because of their concern for all people equally, cooperatives may have open membership without discrimination.

Limited return on membership investment
The cooperative’s objective is to provide suitable housing at a reasonable cost; cooperatives do not exist to make a profit. Return on investment capital is often limited by provisions in the bylaws and corporate policies.

Education
It is the responsibility of members to understand the principles of cooperation and to insist upon their use.

Expansion of services
By establishing cooperative procedures and working together, people are able to provide services for themselves that would otherwise be impossible.

Cooperation among Cooperatives
Cooperative associations are strenghtened by sharing of experience and by mutual support of each other.

The International Cooperative Alliance (ICA) identifies various elements common to housing coopeartives. These elements are:

• Housing cooperatives are incorporating societies. They are legally recognized bodies with the authority to do things that could be done by an individual conducting a business.
• Housing cooperatives are democratically controlled, with each member having one vote no matter what number of shares they hold.
• All members of a housing cooperative make an approximately equal contribution to capital, on which they receive a fixed rate of interest.
• Surplus income or profit is not distributed in proportion to members' business with the cooperative. Instead, members may receive a limited return on their capital investment. If additional profits occur, they are used for the general good of the membership.
• Membership in a housing cooperative is voluntary, and the members may resign if the organization cesses to meet their needs.
• The housing cooperative has a social purpose- the provision of good housing at low cost-in addition to an economic purpose. It is not an undertaking aiming at maximum profits, nor is it a government institution.
  

[ Coop Housing Primer]