Consideration should be given, in some types of co-operative particularly those which have wider public benefit objectives, or are based on assets transferred from the public sector, to permit admission into corporate membership national, regional, and local public authorities. The contribution made by these authorities should come from purchasing specific shares of amounts higher than those of individual co-operative members; indeed their financial contributions can be uncapped. Where this is permitted, the creation of a specific category of membership for public authorities will be advisable. This category of membership should not hold a blocking minority of voting rights: the challenge is how to balance the power of this category of member with that of a co-operative's other members and without compromising the independence and autonomy of the co-operative, which must be respected.
Co-operatives promote the economic and social development of their members and the development of co-operatives and other socially responsible economic actors in the fabric of local economies. Many do so without aiming to make a financial profit, but aiming instead to develop and strengthen local economies for the benefit of their members and the wider community.
The economic and social contribution of co-operatives to a local or regional economy is a social impact contribution benefitting the community and civil society. Co-operatives making such a contribution can be described as "managing common-wealth" to benefit the local community, its economy and society.
Where this contribution is a dedicated objective and purpose of co-operatives, it is appropriate for it to be recognised by the public authorities by awarding them specific legal and tax treatment that recognise their wider contribution to tackling wealth inequality. This issue is worthy of discussion with national governments.
Some large well established co-operatives have raised additional capital by issuing equity shares to external non-member investors, which are listed and traded on stock markets. Financial co-operatives which regulators require to increase their capital adequacy ratio to total risk-weighted assets may also need to seek equity capital investment as part of resolution plans to meet regulatory requirements. These arrangements create what, in effect, are hybrid co-operatives that merge two organisational models; a co-operative and investor ownership. Creating these hybrid co-operative/equity investor businesses challenges co-operatives to do so in a way that retains the key generic characteristics of a co-operative specified in the Statement on the Co-operative Identity and detailed in the 1st, 2nd, 3rd and 4th Co-operative Principles. Consideration also needs to be given to, what, if any, are to be the voting rights of non-member equity shareholders and what caps and other controls are to be placed on them to ensure that equity investors do not usurp the democratic control of co-operative members. These are challenging issues but not insurmountable.6
Some successful co-operatives have purchased commercial investor-owned business enterprises, some in other countries, and integrated them into group business structures. The motivation for doing this varies, but on occasions it has simply been to gain the profits these commercial business create and increase surpluses for the benefit of members. This raises a number of significant ethical issues for co-operatives. The Alliance may wish to issue guidance on this matter in due course.
Co-operatives need to continue to press for the consistent global accounting treatment of members' share capital and indivisible reserves to be treated as part of a co-operative's equity capital, not as a liability because this capital can absorb a co-operative's losses. In order to achieve this and strengthen the co-operative, co-operatives must ensure that members' share capital and indivisible reserves cannot be subject to any risk of distribution to current co-operative members. Indivisibility must remain the rule to prevent any appropriation or drift in the task of achieving this global accounting treatment.
Co-operatives face the challenge of meeting regulatory requirements imposed on them because of the lack of understanding of the nature and essence of a co-operative business that is different to the investor/capital owned joint stock company, which is the standard business model taught in business schools and most economic texts. There is a need to develop greater understanding among governments and regulatory bodies of the co-operative form of business enterprise, its place in the modern economy and its capacity to be economically, culturally and socially transformational when they are able to-operate within an appropriate legal and regulatory regime.