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WHAT IS A CO-OPERATIVE/MUTUAL ENTERPRISE?
When a group of people come together to form an enterprise they will have one of two different underlying motivations, either the ‘profit motive’ - because they want to make money for themselves; or a ‘not-for-profit motive’, which means that the enterprise has objectives that are more important to the group than generating profits for themselves. We usually call the first form of enterprise a ‘commercial business’ and the second form a ‘not-for-profit enterprise’.
Not-for-profit enterprises can be a further divided into two main groups, there are those that are run with the main intention of benefiting others, where the beneficiaries may be a specific group of people or the general public, such enterprises are generally referred to as ‘social enterprises’. There are also not-for-profit enterprises in which the people involved are working together because they want to get a ‘better deal’ both for themselves and for other members of their group - this form of enterprise can be identified as ‘member-controlled enterprises’, which includes all forms of co-operatives and mutuals. Co-ops & mutuals intervene within the market on behalf of their members, whereas there are also many other organizations that have members, such as special interest clubs and societies, but do not have any significant economic purpose, these groups are not enterprises and therefore not co-operatives or mutuals.
UNDERSTANDING ENTERPRISE
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Co-operative and mutual enterprises
Co-operation underpins a wide variety of enterprises of many different types (including: co-operative societies, building societies, credit unions, friendly societies, community benefit societies, all kinds of member-owned enterprises, etc.) It is also at the heart of many other enterprises even though they are not necessarily registered under any specific law designed the use of co-operatives or mutuals. CMEs are enterprises that are based upon self-help and mutual help.
Co-operatives and mutuals are two sides of the same coin. Co-operatives are based upon mutuality and both mutuals and co-operatives are based upon the concept of beneficial interdependence; both are reliant upon the practice of co-operation. An organisation that is fully mutual services only its members. The main reasons for the distinction between co-operatives and mutuals arise from their historical origins and the different forms of legislative arrangements that were available to their founders.
Co-operatives and mutuals - to be valued for what they deliver
last updated: February 2012 © Edgar Parnell 2012