What is cooperativism? Everything you need to know about cooperatives

It would be difficult for you not to have heard about them, but you might never have stopped to think exactly what cooperatives are or how they work. If you continue reading, we will dispel your doubts, making sure that you understand what cooperativism involves.

Firstly, let us define what a cooperative is. It is an independent association of people who join together to develop a business. In these associations, all the members have the same participation and decision-making power: one member, one vote.

According to the International Cooperative Alliance (ICA), a cooperative is an independent association of people who voluntarily join together to meet their common economic, social and cultural aspirations through a company that is jointly owned and democratically controlled.

Cooperatives may be considered to be people-centred companies: their workers, that is to say, their members control and direct the organisation, allowing it to respond to the requirements from within. Cooperatives do not only seek economic profit; the social and cultural development of the organisation is equally important, which is managed using democratic values.

In cooperatives, decisions are made democratically: one member, one vote.

The cooperative movement

The history of cooperativism dates back to 1844 in the United Kingdom, and this was the starting point for this innovative model to spread around the world. According to the United Nations Organisation, social movements are joint efforts by citizens, groups and communities brought together by common goals to overcome their condition, tackle social problems or to stand up to domination.

Social movements grow in an organised way amongst people in an organic way, promoting a joint culture that faces up to the rules in order to challenge them and promote change.

This is how the cooperative movement managed this idea, offering an alternative to capitalist companies. The values of cooperativism have spread around the world and they take into account principles such as mutual aid, democracy, equality and solidarity.

Currently this movement has formed a community with common values and a goal that is shared amongst all its members. Proof of this is the social impact that it has had on the world, promoting sustainable development and reducing inequalities.

The cooperative movement has spread all around the world, forming a community with common, shared values.

What is the business model used by cooperatives?

An essential characteristic of cooperatives is their shared ownership, which allows the decisions to be made democratically. Each member has a vote, regardless of their economic contribution, which promotes equality and participation in the governing process.

Depending on their purpose, cooperatives may adopt different business models. There are five main types of cooperative:

• Work cooperatives: Formed by workers who join together to generate their own jobs in fair conditions.
• Consumer cooperatives: composed of consumers who team up to gain access to goods or services under better conditions.
• Savings and credit cooperatives: They offer financial services to their members.
• Production or agricultural cooperatives: Common in the agricultural sector, where the producers join together to market their produce.
• Housing cooperatives: Formed to make access to housing easier for their members.

The legal framework used for cooperatives

Cooperatives are subject to special legislation that regulates their functioning and defines aspects such as profit sharing, the governance structure and the tax system.

In Spain, the Constitution recognises the duty of the public authorities to promote cooperatives. Specifically, the regulation of cooperatives is decentralised and has been passed over to the Autonomous Communities, therefore, the regulation varies according to each region.