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Unit 2 - Instructor
Discussion Guide
PowerPoint
Slides for Unit 2 Discussion Guide
Corresponding slides are in parenthesis with associated discussion
points, denoted "S" for slide and by number.
I. Definition of a cooperative (S 2.1 & S 2.2)
1. A cooperative is a business owned and controlled by persons who use
its services. Benefits are derived and distributed equitably on the basis
of use.
It is mainly distinguished from other business forms by three
contemporary principles (a principle is a basic idea defining special
characteristics).
2. Cooperative Principles (S 2.3, S 2.4, & S 2.5)
a) The User-Owner Principle: The people who own
and finance the cooperative are those that use the cooperative.
b) The User-Control Principle: The people who
control the cooperative are those that use the cooperative.
c) The User-Benefit Principle: the cooperative's
sole purpose is to provide and distribute benefits to its users on
the basis of their use.
3. These principles generally define how cooperatives
operate. Cooperative principles have been in existence and working for
people over a long period of time. Historically, the first set of operating
principles where developed by a group in England
called the Rochdale pioneers. While dated,
the Rochdale principles are still reflected in today’s modern
cooperative principles.
II. The Rochdale Principles. (S 2.6
& S 2.7)
a) Current day principles evolved from "Rules of Conduct and
Points of Organization," put forth by the Rochdale Equitable Pioneers
Society, Rochdale, England; probably for the first time in its Annual Almanac
of 1860.
b) There were twelve features/principles of the original Rochdale cooperative:
1) Voting is by members on democratic basis.
2) Membership is open.
3) Equity is provided by patrons.
4) Equity ownership share of individual patrons is limited.
5) Net income is distributed to patrons as refunds on a cost basis.
6) Return on equity capital is limited.
7) Exchange of goods and services at market prices.
8) Duty to educate.
9) Cash trading only.
10) Assume no unusual risk.
11) Political and religious neutrality.
12) Equality of the sexes in membership.
III. Review of Four Traditional Cooperative Principles (S 2.8 & S
2.9)
Allows for a greater understanding of
cooperative operations:
a) Service at cost - surpluses returned
to members
b) Obligational responsibility and benefits
received are in proportion to use
c) Limited return on equity capital - value
of services most important
d) Democratic control - one member, one
vote, or proportional voting systems
IV. Three Contemporary Cooperative Principles Further Explained (S
2.10 & S 2.11)
a) Abraham Lincoln said, "Important principles may and must
be flexible."
b) Contemporary principles are simple and avoid including specific
points some may consider policies or practices. At the same time, they
implicitly encompass an array of practices.
c) Contemporary principles of user-control, user-owned,
user-benefit
1) User-control - voting is by members on a
democratic or proportional basis.
2) User-owned - equity is provided by
patrons.
3) User-benefit - net earnings are
distributed to patrons as refunds on a cost basis.
V. Introduction to the International Cooperative Alliance (S 2.12 & Handout 2)
Have students take Quiz 2 and then discuss answers.
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