Directors represent members and are legally responsible for the performance and conduct of the co-operative. Depending on the complexity of business operations, the board may delegate responsibility for daily operations to a hired manager. The manager, in turn, selects and manages the staff of the co-operative.

Questions often arise as to the division of responsibilities between the board and hired management. Sometimes they overlap and an exact division cannot be made. One factor to consider is the time period-long-term decisions are the responsibility of the board, while management makes short-term decisions. For example, decisions involving policy are the responsibility of the board, and day-to-day functions are handled by management. The use of policy and procedure manuals and job descriptions along with frank discussions of questions when they arise can help maintain an understanding of the division of responsibility in the governing and operation of a co-operative enterprise.

Board responsibilities include:

• functioning as trustees for the members in safeguarding their assets in the co-op;
• setting the goals, objectives, and general policies of the co-op;
• adopting long-term strategic plans; employing a competent manager and evaluating performance;
• preserving the co-operative character of the organization; establishing an accurate accounting system;
• adopting an annual operating budget
• appointing an outside firm to perform an annual audit;
• controlling the total operation;
• authorizing the distribution of the co-operative's net earnings and the redemption of members' equities;
• keeping the membership informed about activities in the co-operative.

Management responsibilities include:

• managing or directing daily business activities;
• carrying out policies set by the board;
• setting goals and making short-term plans;
• employing, training, and discharging employees;
• organizing and coordinating internal activities in compliance with co-operative goals and objectives and board policies;
• keeping complete accounts and records and developing an annual operating budget providing the board with periodic reports.

Set up record keeping and accounting systems.

Accurate accounting of money is critical to operating on a sound business basis and to avoid year-end losses. Requirements include:

• developing and installing an accounting system;
• preparing financial reports, including operating and capital improvement budgets;
• reporting to the membership in a clear and timely manner;
• providing for auditing services;
• conducting long-term planning.

In addition to the complete and accurate documentation of income and expenses for planning and tax purposes, a co-operative must keep exact member records. Member records account for members' initial and subsequent investments and track members' patronage. The information included in member records is needed to determine the amount of net earnings members are entitled to at the end of the fiscal year. Members will also need these records for their own personal accounts, particularly for income tax purposes.

An annual independent audit serves as an outside appraisal of the co-operative's financial condition, and as a check on business procedures and compliance with tax and other legal requirements. A professional independent audit may be required by the Superintendent of Co-operatives, particularly
if the co-op has a broad base of membership. Other agencies may require an independent audit as well, such as government funding agencies or major lenders.

Select a manager.
Selecting the manager is one of the most critical tasks for the new board of directors. Begin the task by developing a position description. Include a supplemental statement outlining the relationship between the manager and the board of directors in a co-operative, and the responsibilities of each

Qualities to seek in a manager include education, experience, and the ability to work with people. Judge these qualities from three perspectives: commodity expertise, management skills, and a knowledge of co-operatives. The candidate will need to understand the special nature of the co-operative's patrons because they are both customers and owners. This dual relationship adds a unique dimension to a candidate's requirements to work with people on a daily business basis.

Good managers are hard to find, especially for co-operatives. For leads, contact the managers of other co-ops, directors of co-op associations, the advisers who helped form the co-operative, and employment agencies.

Publicize the co-op's activities and develop community recognition.

Publicizing the co-op's accomplishments and activities will help to:

• create a positive image of the co-op in the community;
• increase awareness about the benefits of membership;
• keep current members appraised of the co-op's progress.

Ways to develop community recognition of the co-op include:

• writing news releases for local papers and association newsletters;
• having board members do presentations for the chamber of commerce and other community groups;
• celebrating milestones such as opening a facility, installing major equipment, signing a contract or receiving a grant.

Remember to involve local politicians, from all levels of government. Their support can be critical to the co-operative's ongoing success.