How Are Cooperatives Managed?

Cooperative business corporations are run much the same as commercial business corporations. The members elect a board of directors which employs a manager and makes other arrangements for providing service. The manager is responsible for running the business, subject to the direction and review of the board of directors, which, in turn, is accountable to the membership of the cooperatives.

The annual membership meeting plays a very important part in a cooperative. At this meeting, not only are the directors chosen, but broad policies are laid down to guide directors and manager. Most cooperatives provide that members who cannot attend the meeting may vote by mail on specific questions referred to them to advance, but most co-ops do not permit “proxy voting.” This is the practice, common in ordinary business corporations, of allowing an owner of voting stock to assign the votes belonging to his shares to somebody else for casting. In a cooperative, a member generally has only one vote, no matter how many shares of the co-op’s stock he may hold. Cooperators feel that proxy voting would violate the essential principle and mutual character of the cooperative.

Because those who are served by a cooperative are members and owners as well as customers, the cooperative must keep careful account of members’ transactions so that savings can be properly returned to them in proportion to their patronage.

In order that members may be able to meet their responsibilities intelligently, cooperatives find it necessary to provide them with lull information on current operations. A cooperative business is the instrument of its members and its success depends largely upon how much and how steadily the members make intelligent use of its services. A cooperative, in other words, must tie together management and patrons as essential parts of a mutual undertaking.