Skin in the Game

Member Economic Participation is the third cooperative principle, it reminds us of our stake in the co-op

The following is from the International Cooperative Alliance summary of the third (of seven) cooperative principles, Member Economic Participation:

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. 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 cooperative; and supporting other activities approved by the membership.

So what do those words mean? Let’s take a closer look. Chances are when you joined your cooperative you paid membership fee of anywhere from five to thousands of dollars. That is your part of the equity or your share of ownership (Members contribute equitably to the capital of their cooperative).

As a member you have a say (democratically control) through your elected board of directors. The board sets the strategic direction of the cooperative, then the management and staff put that direction into place through the operations of the co-op.

At the end of the fiscal year if your co-op has received more money than it needed for the expenses a portion is set aside for reserves (members allocate surpluses for any or all of the following purposes: … by setting up reserves) which is like a savings account for the co-op. So the co-op will have the funds for certain long-term expenses. The remaining amount is allocated to each member based on how much they patronized the co-op during the year (benefiting members in proportion to their transactions). This is the amount you will see as a capital credits check, a credit on your bill or in lower rates or fess the co-op charges.

Co-ops are formed by neighbors and friends coming together with the goal to improve the quality of our lives. Our goal remains to continue to do that core mission.

Our cooperative principles guide us and through your economic participation a.k.a. the ‘skin in the game’ we make sure our focus is on you, the member-owner…

Adam Schwartz is the founder of The Cooperative Way a consulting firm that helps co-ops succeed. He is an author, speaker and a member-owner of the CDS Consulting Co-op. You can follow him on Twitter @adamcooperative or email him at aschwartz@thecooperativeway.coop.