A major challenge in co-operatives' relationships with government is where government sees the development of co-operatives as a key policy tool, for example in the delivery of services in some economic sectors, or as tools for job creation and poverty alleviation. In many countries co-operatives have been included in national poverty reduction strategies because of their proven capability to economically mobilise the dispossessed. this, in turn, has enabled major donor funding to include co-operative development through internationally funded projects.

In recent years, particularly in some of the post-industrial economies in the Northern hemisphere, co-operatives and mutuals have been seen by governments as a means of delivering services previously delivered by the public sector. Co-operatives are not a 'magic- bullet' solution where national or local governments are no longer able to resource basic much needed services. however, the ability of co-operatives to source additional human and financial capital willing to accept a social return on investment created by a co-operative enterprise is an inspiration for the founding of new co-operatives motivated by social outcomes, not simple economic benefits for members. the growth of social co-operatives in Italy and other countries is a manifestation of this capability of co-operative enterprise.

There is always the danger of policy frameworks creating conditions that can threaten the autonomy and independence of co-operatives as genuine member-owned and controlled organisations. Whilst it is reasonable, and in many cases desirable, for protections to be put in place - for example when publicly owned assets are transferred to new co-operative delivery models - such protection, including the appointment of government officials to boards, should not compromise the rights and responsibilities afforded to members.

ILo recommendation 193 is helpful here too. It says clearly that: "Governments should introduce support measures, where appropriate, for the activities of cooperatives that meet specific social and public policy outcomes, such as employment promotion or the development of activities benefiting disadvantaged groups or regions. Such measures could include, among others and in so far as is possible, tax benefits, loans, grants, access to public works programmes, and special procurement provisions".15 but this should not be done in a way which compromises the overriding recognition in ILo recommendation 193 of the Alliance's Statement on the Co-operative Identity that: "'cooperative' means an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise".16

The core principle is that government support of and for co-operatives must not equate to government control of co-operatives. the autonomy and independence of co-operatives, and members' democratic rights to control them, must always be respected by government.