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What is a cooperative ?

Submitted by coordinator on 13 July, 2012 - 14:21

A cooperative is different from other forms of private or public organisation in that it is owned by its members who directly run the organisation, make decisions democratically and use capital for mutual rather than individual benefit. A co-op, in other words, is a democratic organisation owned and controlled by the people it serves who voluntarily join together for a common and mutual benefit. A co-op is, in essence, its members.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. Their members believe in the ethical values of honesty, openness, social responsibility and caring for others.

While its activities may be commercial, a co-op exists primarily to serve the needs or aspirations of its members and the community, rather than as a vehicle for the investment of capital. A co-op is a means of organising activity, not the activity itself.

It may be formed to provide goods and services to its members and/or to the general public, or for other purposes benefitting the community.

A registered cooperative may carry out any activity or activities contained within its rules. These activities will reflect the nature of the cooperative’s involvement in areas such as primary production, manufacturing, trading, community or social activity.

The extent of the operations of a cooperative depends on the support given to it by its members, whether this be by the amount of share capital subscribed, personal efforts as directors or other officers or by their own patronage of the co-op.


  1. Co-ops have corporate status, that is, they have a legal existence separate from that of the members and the organisation may sue or be sued in its own name. Co-ops in NSW are registered with the Registry of Cooperatives attached to the Department of Fair Trading, and administered under the NSW Cooperatives Act 1992 (the Act).
  2. Alfalfa House has limited liability, that is, should it be wound up, a member will not be required to pay for any losses of the organisation.
  3. The Act enshrines the centrality of the Cooperative Principles, which are at the very heart of a co-op's existence. These principles provide the necessary framework for organising activity within the co-op and so a co-op should ensure its policies comply with those principles.




Official definition

The International Cooperative Alliance, an independent, non-government association established in 1895, which unites and represents cooperatives worldwide, has provided the universally accepted definition of a cooperative as being:

. . . an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.