Meaning of Cooperatives

In simple terms, cooperation means working together. The word "cooperative" is derived from the combination of "co" meaning together and "operative" meaning working. Thus, cooperative means the feeling of working together with many people. For a cooperative to exist, everyone's objective in the cooperative work must be the same.

Therefore, aspects such as occupational equality, capital equality, equality in thought and vision are considered important.

This is a work done voluntarily by more than one person together for the benefit of all. Generally, individuals with weak economic status work together, and this is called cooperation. In this, the principle of "each for all and all for each" is adopted.

For a cooperative to be a cooperative in terms of value, norm, principle, and conduct, the following aspects must be included:

(a) In cooperation, cooperative work is done through a voluntary organization.

(b) Such organizations are formed by people with common needs and objectives.

(c) Joining or not joining such an organization depends on the individual's own will. There is no compulsion to become a member.

(d) Its ownership is collective. It is not the ownership of any single individual. That is, all shareholder members are equal owners of the organization.

(e) To become a member, a fixed amount must be paid as a share, and a fixed responsibility must be accepted.

(f) The organization is not operated by the government or anyone else. The members themselves must operate it. Therefore, a management committee, audit committee, and other necessary committees must be formed by electing (choosing) from among the members.

(g) The organization should only conduct business among its members. If any member defaults, action should be taken against that member according to the organization's decision.

(h) To operate the organization, bylaws and other rules must also be made by the members together.

(i) Even if all members contribute small amounts in cooperation, the organization can conduct business for the benefit of the members.

(j) The long-term vision of the organization should be to assist in the economic, social, cultural, and commercial advancement of the members.

The International Cooperative Alliance defined cooperatives in 1995 as follows:

A cooperative is 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.

Similarly, according to the Cooperative Act, 2048 (1991), a cooperative is an organization formed and operated on the basis of mutual cooperation for the economic and social development of poor, landless, and unemployed individuals with limited capital and low income, and ordinary people.

Cooperation means the collective work done by individuals with limited capital. When doing such collective work, some capital that one has is deposited in the organization. 

This capital is used to generate skills, capacity, and income for business, and through the organization, the economic, social, and cultural development of the member families is possible.

Therefore, a cooperative is not an organization where a trader does business for profit, nor is it an organization that only does the business of a bank like a bank. It is a collective institutional means based in the community, doing business among members for the benefit of the members, and continuously assisting members in becoming entrepreneurs and capable.

Principles of Cooperatives

The main principles of cooperatives are as follows:

(a) Voluntary and Open Membership: Any individual who meets the prescribed qualifications to become a member of a cooperative should not be discriminated against on the basis of politics, economics, caste, gender. They should reside within the working area of the member organization, be willing to accept the responsibilities required by membership, be ready to use the services provided by the organization, and if a member wishes to leave the membership, they can do so. They should not be restricted from becoming a member by imposing any kind of fee or bond.

(b) Democratic Member Control: Cooperatives are formed with the objective of developing the economic and social status of members. Therefore, members themselves should have control over it, the principle of one member one vote should be applied, and all members of the organization should have the opportunity to participate.

The general assembly formulates the policy of the organization, and since the general assembly is the supreme body in a cooperative, it performs the functions of management, policy-making, and justice. The management committee elected by the general assembly from among the members operates the cooperative. In this, there should be no discrimination in service among members, and the representatives involved in the management of the organization should be accountable to the general members individually and collectively to the management committee.

(c) Member Economic Participation: In a cooperative organization, the small capital of each member is accumulated in the form of shares. The economic participation of the members creates commercial strength. However, the increase or decrease in the share amount does not differentiate the rights of the members.

In this context, the main aspects include accepting the cooperative as a means of economic activity and business, the legal status and level of a member taking one share or more than one share being equal, distributing limited profits, receiving returns from the conserved capital fund based on the business done by the member, and setting aside reserve funds and other funds from the surplus (profit) and managing them effectively.

(d) Autonomy and Independence: Cooperative organizations are autonomous and independent, established, operated, and controlled by the members themselves. The organization is free from external control and interference. The members themselves are responsible for the management and control, i.e., if there is any misappropriation or other misconduct in the organization, the members themselves are responsible.

At the same time, the organization has the authority to work with other organizations/individuals/government on the basis of specific terms and agreements, and the authority to make its own bylaws to operate the organization. The autonomy and independence that a cooperative organization uses must be within the framework of prevailing laws, regulations, cooperative values, and principles.

(e) Education, Training, and Information: This principle emphasizes that every member of a cooperative should be made capable and efficient by providing education and training related to cooperatives. Information about every activity in the organization should be provided to the members.

The organization should provide cooperative education to the members and arrange for commercial skill development training as per the need. A cooperative education fund should be managed. Along with contributing to the good governance of the organization by trained/educated members, information dissemination within and outside the organization should be developed, and information should be provided according to the times.

(f) Cooperation Among Cooperatives: Since it is difficult for a single organization to be self-sufficient, cooperation among cooperatives is necessary to increase commercial activities at the small level through cooperatives and to develop strength to compete with the private sector.

Since the beginning, cooperation among cooperatives at the international level has been necessary to develop information and commercial networks, to develop the capacity to compete with other sectors through inter-cooperative cooperation, and to expand the scope of commercial activities through inter-relationships from district-level subject unions, district cooperative unions, central unions, national cooperative unions up to the International Cooperative Alliance.

(g) Concern for Community: Since cooperative organizations are integral parts of the community, along with their members, they should be involved in community activities and undertake community development works.

According to this principle, if one aspect of the community is weak, other aspects also tend to be weak. This principle accepts the concept of interdependence. Since these organizations are formed for the benefit of the community, service to the community has a positive impact on the organization. 

Therefore, they should show concern and increase assistance in activities such as afforestation, education, health, environmental protection, sanitation, drinking water, culture, schools, religious and cultural festivals, and increase participation in relief and rehabilitation works during times of natural disasters.

Importance of Cooperatives

The importance of cooperatives is increasing day by day. The organizational structure from the initial level to the national level has been formed for the development, expansion, and promotion of cooperatives in the country. 

The attraction to start industries and businesses through the cooperative system has increased in sectors such as agriculture, finance, health, education, transportation, communication, electricity, housing, tourism, and insurance.

The attraction of informal groups of targeted communities in rural areas towards cooperatives can be taken as an achievement of the cooperative sector. There is also a strong possibility of utilizing the assistance of national and international agencies to contribute to the economic and social development of the country through cooperatives.

The necessity of a national cooperative policy has been felt for the effective use of cooperatives in industries and businesses to achieve achievements such as social integration, poverty alleviation, creation of productive employment, dignified and positive labor relations, environmental protection, construction of an equitable inclusive society, development of entrepreneurship, creation of a clean and competitive business environment, and increase in production to contribute to the social and economic development of the country through the cooperative sector.