Kate Duggan - Member economic participation: turning co-operative supporters into co-operative investors

Oct 8, 2015

The path to member economic participation, one of the core co-operative principles, never did run smooth.

In the International Co-operative Alliance’s definition, co-op members allocate surplus capital “for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.” A very democratic, ethical approach to finance.

But for members to contribute equitably to, and democratically control, the capital of their co-operative, there first has to be engagement. Members who feel fully engaged are then more likely to want to support it, whether that’s through increased productivity, innovation, word-of-mouth promotion or increased spend.

Unfortunately, there is not a one-size-fits-all approach to member engagement, but there are certainly elements that are relevant to all co-operatives, from small worker co-ops, to large retail societies.

Governance

The extent to which members can become involved with the governance of a co-operative does depend, in part, on the number of members. Whatever the size of co-op, it is crucial that members feel that they can play a valid role if they desire, as John Atherton, membership officer at Co-operatives UK, explains. “Because they are the owners, it is vital members have the opportunity to participate in how the co-operative is run. One way is through formal governance arrangements – from voting to standing for the board. Making co-operative governance work effectively is essential. And it is important to remember other channels that can be introduced to strengthen the relationship between member owners and the co-operative, and enable members to influence the direction of the business. A well-run co-operative is a member-run co-operative.”

Some co-operatives put safe-guards in place to help ensure that members are fully committed to the co-operative before they are able to influence how it is run. Members of the Radstock Co-operative society, for example, can stand for election to the board of directors once they have been a member for two years and have accrued at least £50 in their share account.

Social Action

With ‘concern for the community’ being another  co-operative principle, it’s no surprise that many co-operatives have a community benefit scheme, and that members are often invited to get involved.

Along with fundraising, some co-ops engage members with campaigning for social change, or open up ways for them to volunteer. The Co-operative Group, for example, recently announced its charity partnership with the British Red Cross, where together they will fundraise and campaign to tackle loneliness in communities across the UK. The partnership represents a radical departure from previous ones, as members have been engaged in all stages: from helping to identify the issue to champion, and voting for the charity partner, to fundraising and campaigning.

Offers

Member-exclusive offers can include discounts, products and services, special events and previews. Some co-ops offer points on purchases, which are then exchanged for money-off vouchers or a dividend. Member benefits will usually be related to the nature of the co-operative.

SidEnergy is a community energy co-operative in Devon. Along with seeking to generate renewable energy locally, the co-operative is working with suppliers to offer members discounts on renewable energy and energy saving technologies.

Communications

Members usually expect to receive tailored communications that recognise the relationship that they have with the co-operative. As with any marketing communications, an organisation should aim to communicate with their members using the medium that they prefer – whether it’s social media, emails, letters or another platform.

David Douglas, director at Membership Matters, a specialist agency providing training and consulting to membership organisations, says: “How members view your organisation differs widely, not just in terms of what they believe an organisation’s primary purpose should be or who it should serve, but also what activities they feel it should be involved in, and what benefits and services they perceive as most valuable. The cornerstone of successful member engagement is understanding these differences, segmenting your communications and demonstrating the value of membership from the perspective of each segment.”

Finance

Finance is a tricky area and varies greatly between co-operatives. Many people still remember the ‘good old days’ of share books, but most co-ops are not banks and member capital is usually not protected by the Financial Services Compensation Scheme. Some co-ops choose to go down a more mainstream investment route. The Phone Co-op, for example, invites members to invest anything from £1 up to £100,000. Shareholders receive interest in the same way that they would if they held shares in a company, and they can withdraw their money at any time. The Midcounties Co-operative, on the other hand, offers Development Share Bonds, which have a fixed rate for a set term.

Community shares are an increasingly popular way to raise funds, as Simon Borkin, Programme Development Lead of Community Shares, explains: “The growing number of co-operative and community enterprises raising investment through community shares has been a welcome innovation to the longstanding consideration of effective member engagement. These ventures recognise that membership is the key driver for not only attracting the investment they need to start up, but also for their ongoing sustainability. Community enterprises running businesses as varied as retail, pubs, sports clubs and workspaces recognise that through active communication and engagement, they are also ‘baking in’ their loyal customers and pulling in the skills and abilities of volunteers. With this, we see groups exploiting both online and offline approaches to interact with members, whether it’s open days and other events, or regular email communication.”