co-ops as social enterprise

Replies to This Discussion

Permalink Reply by Simon Roberts on May 19, 2010 at 10:40

Assume there is a co-operatively-owned business designing missile guidance systems. Social Enterprise? I think not, however good its CSR activities.

Strikes me that there are (at least) three dimensions upon which a social enterprise must 'score' in some way to be worthy of that rather slippery moniker:

a. What is it the enterprise does? - where's the social, environmental or cultural value being added by the enterprise

b. How does the enterprise do it? - its approach to service delivery, staff welfare and remuneration, and relationships with stakeholders and 'customers'/'clients'/'funders'

c. What is the legal form and approach to use of, or distribution of, surplus/profit? - how it is governed, lines of accountability, who gets enriched (in what way) by the enterprise.

So co-operatives come under c (and might 'score' on this dimension). but, being merely a legal form, tell us nothing about how they do on a. or b.

Any thoughts?

So

Permalink Reply by Shaun Fensom on May 27, 2010 at 18:20

You are right: 'social enterprise' is a slippery moniker.

'Cooperative' is much less slippery. That's because there is an internationally accepted 'statement of cooperative identity' (http://www.ica.coop/coop/principles.html). This is not perfect - there is 'wiggle room' but it pretty much makes it impossible to create a bona-fide cooperative that makes missile guidance systems. I've never come across a coop like that.

It also answers your other questions:

a. values and principle 7
b. values and principles 2, 3, 5, 6 and 7
c. principles 2 and 3

Funnily enough, one thing that cooperative does not denote is any particular legal form - at least not in the UK. Many coops are companies limited by guarantee as well as Industrial and Provident Societies. But coops can also be CICs, LLPs and partnerships and even share companies. Just so long as they keep to the principles.

I'd turn it round the other way and ask what definition of social enterprise ensures that they keep to the mission? Who calls them to account? The notion of 'social entrepreneur' shows the focus on individuals and their values rather than employees and customers. We don't accept or believe in the notion of a benevolent dictator for a country, so why do some people think this is acceptable for a social enterprise?

Permalink Reply by Jim Pettipher on May 28, 2010 at 12:11

Spot on Shaun. Weapons systems and co-operation are mutually exclusive (see - for example - the ICA's founding values as listed in the link of "social responsibility and caring for others".

Co-operatives are much misunderstood and in my view, offer the gold standard for truly responsible business, with responsibility enshrined (through their shared values & principles) in their corporate DNA.

And as such, I believe co-operation is a commitment way beyond other "wiggle room" loose concepts such as corporate social responsibility & social enterprise.

You are either responsible, or you are not. In our view, you could not be a socially or corporately socially responsible missile manufacturer, which is why the co-operative movement wouldn't have you if you made missiles... if you see what I mean!

Permalink Reply by Alastair Irvine on May 28, 2010 at 13:02

I recently discovered these principles for coops, but I stil wonder who polices them?

I always thought that a co-op merely referred to joint ownership of the entity. Where all staff, rather than a few, are partners in some way.

If no-one polices coops, what is to stop me from creating a coop missle manufacturer?

Does anyone own the Intellectual Property of the term coop?

Jim Pettipher said:

Spot on Shaun. Weapons systems and co-operation are mutually exclusive (see - for example - the ICA's founding values as listed in the link of "social responsibility and caring for others".

Co-operatives are much misunderstood and in my view, offer the gold standard for truly responsible business, with responsibility enshrined (through their shared values & principles) in their corporate DNA.

And as such, I believe co-operation is a commitment way beyond other "wiggle room" loose concepts such as corporate social responsibility & social enterprise.

You are either responsible, or you are not. In our view, you could not be a socially or corporately socially responsible missile manufacturer, which is why the co-operative movement wouldn't have you if you made missiles... if you see what I mean!

Permalink Reply by Shaun Fensom on May 28, 2010 at 14:31

There isn't really a body of law in the UK that you have to abide by in order to call yourself a cooperative. Industrial and Provident Societies have to have their rules agreed by the FSA, but cooperatives can take other legal forms.

It is possible and has happened that organisations that aren't really cooperatives have passed themselves off as such. The worst examples of this have been the state-sponsored cooperatives in some communist countries and parts of the developing world. This is much less of a problem than it was and it is rare to find an organisation in a country like the UK that makes an entirely bogus claim to be a cooperative. I've not come across one.

Of course, there are always plenty of people ready to point the finger and say "call yourself a cooperative?".

Most cooperatives that proclaim themselves as such in the UK are members of Cooperatives UK - that means making a commitment to abide by the principles. I'm not

Permalink Reply by Shaun Fensom on May 28, 2010 at 15:17

Hmm, cut my reply off. As I was saying:

I'm not sure if the organisation has ever had to expel someone, but it's over 100 years old, so it probably has happened.

To use the Internet domain name ".coop" you have to be prepared to show that you abide by the seven principles. This is policed by DotCooperation LLC on behalf of the international movement. Again, I don't believe anyone has ever been stripped of the right to use a .coop name.

Cooperatives are not necessarily owned by their staff - these are 'worker cooperatives' or 'employee cooperatives'. Others, such as The Cooperative ("the Co-op") are owned by their customers - they are 'consumer cooperatives'. Farmers and others often form 'producer cooperatives' to market their produce. And there are other forms.

Permalink Reply by Simon Roberts on May 28, 2010 at 16:03

Hmm. Can of worms truly opened by Adrian as he predicted when he started this topic.

Strikes me from the above that there is clearly a set of principles for co-operatives to sign up to which means that, by virtue of them signing up (and keeping to!) the principles, they are likely to be scoring on my three required dimensions of a 'social enterprise' .

However, signing up to, and abiding by, these principles are NOT pre-requisites for calling yourself a co-operative enterprise and thereby claiming some sort of social enterprise status (irrespective of the two other dimensions). I suspect the reason there aren't any co-operative missile manufacturers isn't because they wouldn't be allowed to have a co-operative legal form of company, but that they choose not to (probably for the same reasons they choose to manufacture swords rather than ploughshares)!

Permalink Reply by Jim Pettipher on May 28, 2010 at 17:47

OK... the statment of co-operative identity is owned by the International Co-operative Alliance, which is the global representative body comprised of national representative bodies, such as Co-operatives UK in - as the name would suggest - the UK and the National Co-operative Businesses Alliance in the US.

Funnily enough, although the UK invented the co-operative model (either in Rochdale or in Brighton - just don't go there!) it is now slightly unusual amongst legislative territories in not having the equivalent of a Co-operatives Act, enshrining and protecting the use of the term co-operative in law. However, the word co-operative is a protected term at Companies House, which in theory means that if a company tries to register using the word, then Companies House will notify Co-operatives UK's legal team, who will then be able to test the company's governing document against the statement of co-operative identity for compliance.

It does occasionally happen that a company is registered and / or trades using the word but without actually being a true co-operative, but not very often. All the evidence suggests that this is because the upside of promoting an enterprise as a co-operative (trust) is ever so slightly undermined when people realise you're just using the word as a marketing gimmick.

My experience is that the values & principles matter most to the co-operative's members. For example, a large retail society in the UK regularly surveyed its staff to see if they knew anything about values and principles and awareness was shockingly low (a matter that the society has spent a lot of time and money recently addressing). This was not the case with members. It most especially was not the case with active members.

In much of the rest of the world the situtaion regarding the use of the word co-operative is much more regulated, which is surprising to us in the UK, although when we stop and think about it we shouldn't really be surprised.

For example, there are almost 5,000 co-operative businesses that we know about (only 10% of the ones we have identified are members of Co-ops UK, no-one knows how many there may be that we haven't identified) with about 10,000,000 members between them. We can be pretty confident of this figure, as the majority of the members belong to the big retail societies who spend a lot of time and money making sure they know who their members are.

It is lesser known that co-operatives globally employ more people than multi-national global companies that are not co-opertaives. Again, we shouldn't really be surprised (I was) since many of the co-operatives in developing countries, for example, are about people coming together to achieve as a co-operative what they cannot achieve individually. For example, small coffee producers banding together to market their coffee globally through Fairtrade. They need to form a co-operative or their individual businesses / farms wouldn't survive.

Which brings me to Simon's last point, which was to surmise that missile manufacturers may not form co-operatives not because they wouldn't be allowed to join the club but because they might not want to.

You might or might not be right Simon, but in the words of a former law lecturer, "And so?"

That is to say, the term co-operative offers a missile manufacturer no market advantage. Why not? Because of what the word co-operative means, which is enshrined in the statement of identity.

I can't see shared ownership (a prerequisite) or social responsibility figuring much on the radar (I apologise for that, I just couldn't resist it) of prospective or existing arms manufacturers. So of course they won't choose to form co-operatives, which itself accords with the first co-operative principle of voluntary membership.

The fact that an arms manufacturer would not choose to form a co-operative or even call themselves a co-operative does not weaken the value of the co-operative "brand" any more than the fact that they also chooose ot to set up missile manufacturing charities weakens the argument for charity.

Incidentally, there are some significant keepers of the co-operative gate. In the UK, for example, The Co-operative (as in the Co-operative Group), has an entire department policing the many co-operative brands it owns (including the bank, the food shops, the pharmacies etc).

I suspect that any enterprise wishing to trade as a UK based co-operative missile manufacturer would very swiftly be receiving a visit, writs in hand, from their solicitors. The Co-operative is very, very precious about the use of its brand (estimated value £10 billion) which is basically the word, "co-operative".

I'll leave you all alone now. It's Friday evening and so it's Faitrade-co-operative-Rioja o'clock.

Permalink Reply by Shaun Fensom on May 28, 2010 at 18:16

Jim answers Simon's point: why on earth would a missile manufacturer want to call itself cooperative? Of course, that does not preclude any arms manufacturer being employee-owned and even controlled, but I'm sceptical.

I did not know that Companies House alerted registrations using the word "Cooperative" to Cooperatives UK. Fascinating.

But the big question remains unanswered: what principles are pre-requisites for calling yourself a 'social enterprise' (to paraphrase Simon)?

It seems to me that businesses passing themselves off as a 'social enterprise' is a much bigger problem because the term merely refers to stated aims and objectives and is not anchored to any structural mechanism. This is what the 2nd cooperative principle 'democratic member control' does. It provides a mechanism for accountability.

Permalink Reply by Adrian Ashton on May 28, 2010 at 18:17

ooh - been itching to mention the following 2 co-ops every since Simon aked about the existence of a missle guidance co-op;

sadly no missle guidance co-ops that I'm aware of, but there is a lap dancers co-op in Thailand, a sex workers co-op in India and a tobacco growers co-op in Africa... (the first two have both been subject to attemps by their governments to dissolve them, but have failed to do so)

Permalink Reply by Simon Roberts on May 28, 2010 at 19:07

OK. Let me put it another way. I still don't think being a co-operative 'automatically' qualifies you as a social enterprise. I'm aware, for example, that The Co-operative has, in the past at least, been accused on deeply unsustainable farming practices etc etc.And Adrian's examples - particularly the tobacco growers - are telling. But I do accept that the probability is much higher than for other enterprises who haven't adopted this organisational model and its aaccompanying principles.

I also think it is perfectly possible for non-co-operatives to be social enterprises. But not just because they say so.

My main interest in responding to Adrian in the first place was to posit 3 tests against which social enterprises need to be assessed. In other words, to try to nail this 'rather slippery moniker' before it is further co-opted by the CSR lobby and applied to any business (or entrepreneur) which/who professes a concern for the climate or the poor or donates a bit of profit to charity.

The subsequent discussion - informative though it has been - seems to have side-stepped that objective (even though I sense it is shared by all the contributors to date on this topic). So I'd appreciate any ideas on (a) whether those 3 tests cover the appropriate bases for you too, and (b) if they do, how to introduce these more widely into the network and then defend them!

Permalink Reply by Geof Cox on May 28, 2010 at 22:49

I'm afraid I'm going to side-step the question too – but for good reason. You see I think the real problem behind much of this discussion is precisely the defensiveness of both the co-operative movement and social enterprise more generally. It is this defensiveness that leads up the blind alley of structure-based definitions, and - as somebody has already pointed out - the widespread use of the term 'co-op' just as a description of organisational model rather than taking in the whole spectrum of co-operative principles. It also leads to such nonsense as the social enterprise mark.

For goodness sake – do we really need to worry about defending our principles or being co-opted by the CSR lobby? Aren't the principles that really cut it – doing business in order to do good, putting people and planet before profit, rejecting business models based on greed and exploitation – aren't these just so simple, powerful and appealing that if we can just forget the how-many-co-operators-can-dance-on-the-head-of-a-pin stuff and look outwards, we will keep pushing back the old business models? Shouldn't we be delighted, in fact, that the PR/CSR departments of big business want to pass themselves off as social enterprise?

Of course we are engaged here in an ongoing negotiation, in which we'll have to keep pointing out that CSR as part of PR is not the kind of whole-organisation change to values-based business that we are about.

All social enterprise is partial – the co-op that grows tobacco, the fair trader that transports commodities half way around the world, the charity that expects too much of its own staff – I'm not complacent about these shortcomings – but when it comes down to it, moving Tescos et al a bit our way is far more important than crossing the Ts and dotting the Is of social enterprise definitions.

For another perspective on this see
http://www.geofcox.info/index.php?q=node/111