When cooperatives get complicated: do multi-stakeholder coops work?

Can coops work as coops if they have different classes of membership?

Could for example a retail cooperative be structured with two types of membership, one open to its customers and the other to its workers?

Or could a workers’ cooperative invite its supporters to invest in the business and give these investors membership rights?

The answer to both these questions is yes.  Mondragon’s retail arm Eroski in Spain provides a classic example of the first arrangement (customers and workers each have equal stakes in the coop’s governance) and for a forthcoming UK example we can turn to the Midlands cooperative which after its merger with Anglia is proposing to introduce a formal role for employee representatives on its board.

And there’s a good example of the second arrangement in the way that Ethical Consumer magazine has restructured itself, moving from being a traditional workers coop into one which also offers membership to its supporter-investors.

The issues around what are called multi-stakeholder coops are the theme of a piece I have contributed to the Guardian’s social enterprise site, posted at the end of last week. I’m pleased to see it is already attracting some feedback.

Multi-stakeholder coops are not in fact a new idea.  I’ve recently been doing a little amateur research into a nineteenth century producer cooperative in the town where I live where, as well as the workers, local cooperative societies also had ownership rights.  And of course if you look at the present-day governance arrangements for the Co-operative Group you’ll see that it too has representation from the remaining independent cooperative societies on its Board.  In this sense, it isn’t a 100% bona-fide consumer-owned cooperative – it’s a hybrid.

These sorts of arrangements generally seem to work adequately.  There may perhaps be potential conflicts of interest between the different classes of member, but methods seem to be found in practice to ensure that any tensions are creative rather then destructive.

But here’s the really big question:  what if one of the classes of stakeholder is made up of external investors with no particular interest in the cooperative except as a source of profit?  Can coops successfully be structured with investors as members?  Or when it comes to operating genuine cooperative businesses are they heading towards the exit door?

This is a philosophical question with immediate practical relevance, given what is about to happen to the Co-op Bank.  So more soon on this issue.  And please feel free to leave your own thoughts.

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