Co-operation for the common good: Social purpose that runs through co-op history

The Community Impact Index has shown what co-ops can do – and here is a look at why this work is part of the movement’s DNA

Co-operatives UK’s emergency flood appeal for funds for co-operative reconstruction in countries devastated by hurricanes stands within a long tradition of co-operation supporting those in need.

Among the co-operative archives in Manchester is a history of the Bury District Co-operative Society, written to commemorate its jubilee in 1905. It contains a table of grants made by that society over its first 50 years.

By 1905 the list, which is added to from year to year, runs to 17 different causes including hospitals (Manchester Royal Infirmary and Dispensary, Bury Dispensary Hospital, Manchester Royal Eye Hospital, Manchester Ear Hospital); the Bury Ragged School; the Royal National Lifeboat Institute, and a range of other local charities and causes such as the Bury Cinderella Club, the Poor Children’s Mission Bury, and the Queen’s Jubilee Nursing Fund Bury; and, of course, the Central Co-operation Union fund.

The amounts of money are modest but significant. For example, £116 was paid to hospitals by the Bury Society in 1905, probably equivalent to about £10,000 today. The total amount paid to charities by the north-west section of co-operative societies that year was £16,975.

Related: Emergency appeal to support co-ops devastated by floods and hurricanes

Such payments were generally approved by members meetings and came out of surplus before distributions were made to members as a dividend on purchases. The model rules for retail societies provided that after paying for the expenses of the business and interest on shares, a specified amount (commonly 2.5%) was to be applied for educational purposes, other sums for provident purposes permitted by the laws applying to Friendly Societies, and after that the remainder was to be paid to members as a dividend on purchases.

While co-operative societies were a self-help mechanism to enable individuals to meet their immediate needs (in this context access to basic provisions), their purpose was always wider than just the economic interest of the members.

The constitution of the Rochdale Society of Equitable Pioneers (the “Law First”) clearly states that the underlying purpose was to improve the financial, social and living conditions of its members. The shop was part of this, but so was providing work, employment, housing and indeed establishing a new society served by enterprise.

A copy of a Co-op Workers Society shares book from 1914

So supporting local institutions like hospitals, and other charitable causes which may not bring obvious benefits to the locality (the Bury society’s regular support to the RNLI being a good illustration), was part of a wider contribution to the common good.

In this year’s Community Impact Index, the News presented extensive coverage of how co-operatives today are having an impact on their local communities. The Index provides evidence of what co-operatives are doing under the seventh principle, concern for community, and it is good to see this celebration of the vital contribution which societies make to their communities. Co-operation wasn’t and isn’t just for its members: it contributes to the common good.

Furthermore, it isn’t just the contributions to local good causes and emerging public services which are paid out of surpluses. Or the 2.5% levy for the education fund enabling people to improve their own circumstances through access to learning and development. The very laws which enabled co-operative societies to be formally registered had built into them, and retain today, crucial features which clearly separate co-operative businesses from those trading for the benefit of private investors.

Related: How co-ops are giving back 12% to communities

None of these features existed in the company law tradition under which most businesses operate. While such businesses might also have made generous contributions to charitable causes and do so today, that was not part of their core purpose, which was essentially focused on generating shareholder value. Investor-owned companies were and remain today enterprise for private benefit. Co-operatives, we would argue, are enterprise for the common good.

The outward-facing nature of co-ops is clearly visible in the ICA Statement on the Co-operative Identity, through open and voluntary membership, the limits on interest on capital, the commitment to education, co-operation amongst co-operatives and concern for community. The last three principles in particular, together with the ethical values of social responsibility and caring for others, firmly commit co-operation to an outward-looking dynamic, which clearly goes beyond the direct interests of members, their families and communities.

The global appeal fund will help countries hit by the recent spate of natural disasters, including Bangladesh

This is wonderfully captured in the background paper to the 1995 ICA Statement where Dr Ian MacPherson wrote: “Throughout its history, the co-operative movement has constantly changed; it will continuously do so in the future. Beneath the changes, however, lies a fundamental respect for all human beings and a belief in their capacity to improve themselves economically and socially through mutual self-help. Further, the co-operative movement believes that democratic procedures applied to economic activities are feasible, desirable, and efficient. It believes that democratically controlled economic organisations make a contribution to the common good. The 1995 Statement of Principles was based on these core philosophical perspectives.”

It is interesting to note how societies today are increasingly looking to distinguish themselves from private corporate competitors by emphasising not just their distinctive ownership and governance arrangements, but their distinctive purpose. Look at the home pages of leading societies today, and you will see a high level of emphasis on member ownership and control; on supporting and responding to the needs of their local communities and suppliers; and their commitment to social purpose.

How things have changed from the days of the Co-operative Commission in 2002, and its recommendation to return to the focus on social goals and the “virtuous circle” to drive co-operative growth.

We have become so used to reading negative stories about businesses, about their focus on profits for shareholders, and their disregard for their impact on workers, customers and the wider community, that there is a danger that we fall into the lazy assumption that it must be like that, that business must operate simply for private benefit.

But it’s just not true. Co-operative businesses contribute so much more.

A brief review of the home pages of the websites of the largest UK retail co-operatives, compared with the homepages of investor-owned competitors, reveals a common pattern.

  • Co-ops strongly feature membership, participation and ownership
  • They all feature community in some way: making a difference, supporting communities, local businesses and suppliers, being a business for the community, being there for the future, and in some cases even referring to the common good
  • On the homepage, the core business of selling food is not so dominant – in some cases, it even seems secondary to the nature of the organisation as a co-operative
  • In most cases, membership and community are two of the main tabs on the homepage alongside the different areas of the society’s business.

Much more could be said – about their individual focus on values and principles, explaining what it means to be a co-operative, campaigning on social justice issues – but three important points emerge from this very brief look at societies’ websites.

First, individual participation or membership, and member ownership are at the forefront of how these businesses present themselves to the public. How they are owned and democratically controlled is as important as what they sell. Second, these businesses are all looking beyond the society itself to the community within which they are trading, to their impact on that community, supporting and striving to make that community and the world beyond a better place. Third, they are projecting these features prominently on their homepage, their shop window, alongside and sometimes before projecting their core business.

In other words, a key part of the promotional message of these large co-operatives today, and how they distinguish themselves from investor-owned businesses, is how they benefit a wide range of people, members, communities and future generations. This isn’t about corporate social responsibility or philanthropy; this is about enterprise serving a much bigger and wider objective, and the corporate entity itself having a fundamentally different reason for existence.

  • Co-operation for the Common Good is the title of a document written by Cliff Mills and David Alcock of Anthony Collins Solicitors, and can be read here.
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