Approval for changes to Alliance subscription formula

The findings of a review into the global subscription formula have been presented at the International Co-operative Alliance conference in Antalya, Turkey. A new subscription formula has been...

The findings of a review into the global subscription formula have been presented at the International Co-operative Alliance conference in Antalya, Turkey.

A new subscription formula has been approved by members of the International Co-operative Alliance.

A review aimed to address inherent problems in the design which would have resulted in large increases for a number of members, had a temporary 10% cap on subscription increases not been imposed.

The current formula, established in 2009, set a global annual subscription payment for each member which entitled them to participate in relevant global, regional and sectoral activities. The formula was based around:

  • a representation multiplier, to reflect the number of individuals the member represents.
  • an economic multiplier, to reflect the development of the economy in which the member worked.

Currently to work out the subscription fee for each member, this formula is used:

subscription graphic current

The base fee is multiplied by their membership tier, and by the World Bank Country Income Index. The final amount is the member’s annual subscription for a four-year period. The first four-year period ended in 2012, at which point the Alliance attempted to recalculate subscriptions when it became clear that a number of members would experience substantial increases.

Kathy Bardswick, chair of the audit and control committee, told delegates that the current subscription formula is “problematic and unworkable”. Ms Bardswick added that the increase of some subscriptions based on this model can be “quite significant”, with “substantial increases” including up to 300% in some cases.

The problem lies in the fact that the representation multiplier and the economic multiplier are worked out by tables that each have a limited number of tiers. Moving from one tier to the next can have a deceptively large impact

Main changes

The key change in the system would be to replace the tables with a proportional system, where individual multipliers would be worked out for each member, rather than assigned into a generic group.

Representation multiplier –

The average number of individuals that are represented by each of the Alliance’s members would first be determined (currently approximately 2.5 million individuals). Each member would then be compared to that average in order to set its Representation multiplier.

So, if the average number of individuals represented by the Alliance’s members is 2.5 million and the member in question represents five million individuals, its multiplier would be two (5 million divided by 2.5 million).

Economic multiplier –

Replace the World Bank Country Income Index (WBCII), which has only four rough levels, with a more country-specific reference – for example the GDP.

To work out a member’s Economic multiplier, its country’s GDP would be compared to the World mean. For example, if the average GDP per capita for all countries is approximately USD $17,600 and the country where the member in question is located has a GDP per capita of USD $35,200, its Economic multiplier would be 2 (35,200 divided by 17,600).

Both of these key proposals would see a much more modest change to the multipliers – and therefore the fee – as it smooths out the adjustments a member experiences to its subscription over time.

subscription graphic proposal
The subscriptions would be set for each member for a four year period (2017-20) and based on representation and GDP data from 2015. Subscriptions would then be recalculated in 2020 for the 2021-24 four-year subscriptions. There is also a 10% maximum increase for any given member for each four-year period.

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