Principles of Cooperation (Rochdale Principles)

The modern cooperative movement traces its principles to the Rochdale Society of Equitable Pioneers, a group of 28 weavers who started a cooperative store in Rochdale, England in 1844. The operating rules they worked out proved so sound that they became the model followed by cooperative societies everywhere, including in India, and are known as the Rochdale Principles.

1. Voluntary and open membership: Membership is open to all persons who can make use of the society's services, without artificial restriction, and no one is compelled to join or forced to continue. A member is equally free to leave the society after giving due notice.
2. Democratic control (one member, one vote): Irrespective of the number of shares a member holds or the amount of capital contributed, every member gets exactly one vote in the society's general body. This is the single feature that most sharply distinguishes a cooperative from a joint stock company, where voting power follows shareholding.
3. Limited interest on capital: Capital contributed by members earns only a limited, fixed rate of interest — enough to attract the capital needed, but not so much that capital, rather than service, becomes the society's dominant motive.
4. Distribution of surplus in proportion to patronage: After paying a limited interest on capital and setting aside statutory reserves, any surplus is distributed to members not according to how much capital they hold, but according to how much business (patronage) each member transacted with the society during the year — for example, a consumer store distributes surplus as a "dividend on purchases."
5. Cash trading: Business is transacted strictly on a cash basis, not on credit, so that the society is not exposed to bad debts and members are encouraged to live within their means.
6. Promotion of education: A part of the surplus is set aside to educate members, employees and the public about the principles and advantages of cooperation, so the movement keeps renewing itself. …