Understanding co-operative members and governance

Co-operatives thrive on the active participation and support of their members. For a co-op to succeed, it’s essential that members understand their roles and responsibilities, as well as how they can contribute to the co-op’s overall success.
The Role of Co-operative Members
Joining a co-op makes you more than just a user of its services—you become an owner. This ownership comes with several benefits:
- Members typically have the right to vote on major decisions affecting the co-op.
- Members can run for positions on the board of directors.
- Members may receive a share of the co-op’s profits.
- Members have the right to stay informed about the co-op’s operations.
However, membership also entails responsibilities:
- Members are expected to contribute financially, either through purchasing shares or paying membership fees.
- Members should engage in governance activities, provide feedback, and hold directors and staff accountable.
- Offering constructive suggestions can help the co-op grow and improve.
Types of Co-op Shares
Co-operatives often issue different types of shares to cater to various interests and to raise funds. These include:
- Membership Shares: Also known as “common shares,” these are typically less expensive and grant more control over the co-op. Purchasing these shares makes you an owner with voting rights and eligibility to run for the board.
- Investment Shares: Also called “preferred shares,” these require a higher investment but offer a better return. However, these shares do not grant ownership rights. Investment shareholders may be limited in the number of board seats they can hold and often need to buy a membership share to gain those rights.
Multi-Stakeholder Co-operatives
Some co-operatives use different classes of membership shares to cater to various groups of stakeholders. For example, a grocery co-op might have separate shares for employees and customers. Employees might receive a larger share of the profits and more board representation compared to customer shareholders. This structure ensures that different interest groups are fairly represented and their concerns addressed.
Board Representation and Governance
A co-op’s board of directors is responsible for overseeing its operations. The board is elected by the membership shareholders, and it‘s crucial to set up a governance system that allows all members, and different classes of members if applicable, to have input into the co-op’s management. Ensuring broad participation helps address issues before they escalate and aligns the co-op’s operations with members’ expectations.
To establish an effective board:
- Define the board’s structure in the co-op’s bylaws.
- Form a committee to recruit and vet new board candidates.