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Business LibreTexts

2.1: Cooperative Principles and Policies

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  • A principle is described as a governing law of conduct, a general or fundamental truth, or a comprehensive or fundamental law. Many state cooperative incorporation statutes reflect principles. Many laws are based on a state’s view of appropriate principles. For example, one widely supported principle is democratic control. In some people’s views and according to some state laws this means “one member, one vote” with regard to control. For other people and state laws it means voting by members where voting power per member may include voting proportional to use of patronage


    Substantial flexibility exists in following practices that help achieve the objectives of the business while simultaneously remaining compatible with the cooperative definition, principles, and policies, and recognizing the need to achieve an economic purpose. However, guidelines that are called cooperative principles are generally applicable to all cooperatives and are compatible with the definition of a cooperative and its ability to provide the benefits desired by members who are customers. Many of these principles have their roots in early cooperatives formed in the United Kingdom in the early 19th century.

    HEALTH CARE COOPERATIVES are a lot like mutual insurance firms in that their objective is to pool risk across its members and provide health care with lower fees. Examples of health care cooperatives include HealthPartners and Group Health Cooperative.