Cooperative Principles

Although cooperation as a basic human impulse has helped humanity thrive, cooperatives as formal businesses are a fairly recent development. Cooperative businesses began to appear a few hundred years ago. These earliest attempts consisted mainly of small groups in local communities, with no larger connections forged. This lack of connectivity ended with the formation in 1844 of the Rochdale Society of Equitable Pioneers.

From very modest means and difficult circumstances, the 28 founders of the Rochdale Pioneers came together to solve a pressing community need – access to affordable, healthy food. Their efforts not only helped the Pioneers feed their families, but their commitment to a set of operating principles sparked a worldwide movement.

The operating principles forged by the Rochdale Cooperative served as a blueprint for other cooperative societies forming in Europe and eventually North America. Formally adopted in 1937 by the International Cooperative Alliance, the Cooperative Principles unify the worldwide cooperative movement. Today, more than 1 billion people are members of co-ops! From food to banking, and taxis to snake catchers, you’ll find co-ops involved in a variety of businesses. Each cooperative has a commitment to community and improving the life of members.

Envisioned by the Rochdale Pioneers as the values that would inform how their cooperative conducted business, the Cooperative Principles continue to serve as guideposts for cooperatives around the world. While the principles have been updated through the years, they continue to champion democracy, equality, ownership and mutual self-help worldwide.

Today, an exciting conversation is taking place around the  Eighth Cooperative Principle for Credit Unions. Envisioned by Local Government FCU CEO Maurice Smith in 2019, the Eighth Cooperative Principle commits credit unions to Diversity, Equity and Inclusion. The principle was formally adopted by the US credit union movement in 2019. The Foundation proudly endorses the Eighth Cooperative Principle and supports its inclusion in both the business practices of credit unions as well as educating employees, directors, members and others about its importance to the future of the movement.

Principle One:

Voluntary and open membership. Credit unions are voluntary, not-for profit financial cooperatives, offering affordable financial solutions to those eligible and willing to accept the responsibilities and benefits of membership, without discrimination.

Principle Two:

Democratic member control. Credit unions are democratic organizations owned and controlled by their members, with equal opportunity for participation in setting policies and making decisions. Therefore, each member has one vote.

Principle Three:

Member economic participation. Members are the owners of credit unions. As such, they contribute to the capital of their credit union and directly impact its financial success. Members realize benefits in proportion to their relationship with their credit union and use of its products and services.

Principle Four:

Autonomy and independence. Credit unions are independent, self-reliant organizations controlled by their member-owners, not outside stockholders. Credit unions entering into agreements with other organizations must ensure continued democratic control by the members.

Principle Five:

Education, training, and information. Credit unions educate and train members, employees and volunteers so they can contribute effectively to the development of the credit union. In addition, credit unions provide financial education for their members and the public.

Principle Six:

Cooperation among cooperatives. Credit unions serve their members most effectively and strengthen the cooperative principles by working with other cooperatives through local, state, regional, national, and international structures.

Principle Seven:

Concern for community. Credit unions work for the sustainable development of communities through policies developed and accepted by the members. Credit unions seek to achieve a greater good through responsible corporate citizenship.

Principle Eight:

Diversity, Equity and Inclusion. Cooperatives believe we are stronger when a proactive effort is put forth to engage everyone in governance, management and representation.

Want to Learn More?

Check out this Eight Cooperative Principles video produced by Vizo Financial Corporate Credit Union.

The Foundation offers principles training opportunities, including the Principles & Philosophy Conference, a two-day “deep dive” into the history and principles of credit unions & co-ops. The Foundation also provides customized principles training events to your credit union upon request. These events are appropriate for all levels of credit union staff and may be from one hour to one day in length. For more information, please contact Jeff Hardin, the Carolinas Credit Union Foundation’s director of collaborative programs, at 336-601-1764.