Multistakeholder Co-operatives

Widening participation without diluting democracy

Two shops, two stakeholders

Swindon Pulse Wholefoods – a workers co-op in which customers have no voice.

Coniston Co-operative Society – a consumer co-op in which workers have no voice.

Both work well, but shouldn't it be possible to have a co-operative business in which all key stakeholders have a voice?

Some solutions...

Community co-ops include everyone – but consumers tend to outnumber workers at general meetings, while workers might find it easier to participate on the committee.

Secondary co-ops can operate a partnership between a consumer co-op and a workers co-op; but this is unwieldy.

'Golden shares' and reserved places on the board can be used, but they don't provide for participation throughout the governance of the co-op.

Stakeholder analysis: who to include?

Different classes

Our solution is to create different 'classes' of share for each stakeholder group. These groups then control the co-operative at its general meeting in fixed proportions.

This is useful for a number of different types of co-operative:

- Community supported agriculture

- Community land trusts

- Employment creation projects

- Vertical integration

Co-operative capital

Another stakeholder group that might be relevant is investors. In other European countries, workers co-operatives in particular have grown by raising share capital from investors.

They need enough of a say in the co-operative to protect their investment – but not so much that they can control its activities.

Non-user members

In 2007, the FSA ruled that – for reasons of consistency across Europe – non-user members (such as investors) would be allowed to join co-operatives provided that their powers were limited.

A multistakeholder co-operative can create a class of membership for non-users. This class can have 25% of the voting strength in general meetings: enough to block rules changes, but not enough to set the strategic direction.

Voting at general meetings

2

10

5

2

+

3.9

+

3

=8.9 out of 22

Consumers

Workers

Investors

100%

39%(5.5/14)

61%(5.5/9)

The board of directors

There are a number of different methods that could legitimately be adopted: candidates could stand in one constituency only, and each constituency elects a fixed number of Directors or each class could prioritise a single list of candidates, or candidates could be voted on in turn.

However, there must be a resolution to appoint the board that is approved by the whole meeting.

Are they consistent with co-operative principles?

Principle 1: open membership

Principle 2: one member, one vote

This remains true within each class; you can think of a multistakeholder co-operative as being like a secondary co-operative, where voting is fair but not necessarily equal.

Principle 4: autonomy and independence

It is generally recognised that provided that non-user members are limited to 25% of votes and cannot vote for demutualisation, this is upheld.

The Somerset Rules IPS Co-operative Multiple classes and non-user members Organised around the co-operative principles – including 4, 5, 6 and 7 which are often neglected Commonwealth Council Mission led Social accounting 'Key decisions'

After two years of the Somerset rules

Used by GOCO, Ecological Land Co-op, Manchester Veg People, Fresh from the Fields Community Composting, Worcestershire Coalition for Independent Living, Somerset Co-op Community Land Trust, Co Cars...

Revised and updated in the light of experience