The Basic Understanding of Cooperative

The Basic Understanding of Cooperative

What is a cooperative? 

A cooperative is a collectively owned enterprise that serves the interests of its members. This means a company owned by its members, customers, or both.

Co-operatives are for-profit, private enterprises

There is often a misconception that cooperatives are non-profits. This isn’t true. Like traditional companies, cooperatives are profit-seeking private enterprises that act in the interest of their shareholders. The primary distinction is that the shareholders in cooperatives are its members or customers—not its investors and founders. This means that the company’s profits are distributed back to its members, instead of to a singular owner or group of executives. 

Co-operatives are controlled by their members

In addition to profit sharing, cooperative member-owners are given a voice in business decisions. This does not mean sitting in a circle and making consensus-based decisions. A cooperative may design elegant and transparent systems for decision-making that meet the needs of the organization.

Co-operative is a constructive alternative 

Historically, cooperatives have emerged when markets have failed to meet the needs of a particular community or to correct markets that have consolidated into monopolies or monopsonies. When the government or private market fails to provide solutions, collective actions are needed.

We can create community-owned and governed organizations that serve our needs and allow us to capture and keep the value we create, instead of allowing it to be extracted from us. Cooperative models can provide the constructive alternative we need.

Ownership & control in the co-operative framework

It’s important to remember that when we talk about cooperatives, we are talking about more than business entities or models—we are talking about core cultural values that give us humanity.

When framing conversations about cooperatives, we should remember the core concepts – Ownership and control. cooperatives are a way to give communities ownership and control. Technical frameworks and operational instruments like bylaws or the structuring of patronage dividends serve an end to share ownership and control among its workers, members, or customers. As you start your own cooperative, you will need to first articulate who you are sharing ownership and control with, and then work together or with outside help to build out a framework on the mechanics of how to do so. 

Starting Up Support 

Starting a cooperative takes vision and hard work to pull off, but you don’t have to go it alone. In Malaysia, the government officially assigned Suruhanjaya Koperasi Malaysia (SKM) to establish, register, and develop Co-operative Societies, stimulating the development of cooperatives, encouraging, promoting, monitoring, controlling & giving technical and financial support to boost the cooperative business. (The Malaysian Cooperative Commission (SKM) is an entity that was incorporated on 1 January 2008. SKM was previously known as the Malaysian Cooperative Development Department (JPK).)