One of the original principles of the rochdale Pioneers was that limited interest should be paid on members' share capital. this was to avoid membership based purely on a venture-capital investment relationship in a co-operative. As explained in the guidance to the 3rd Principle, when faced with the challenge of securing capital to fund growth or to remain competitive in a market that requires significant capital investment, co-operatives may need to secure funding from external sources.

Co-operatives should be aware of the dangers this poses to autonomy and independence. too often it has led to loss of control over time, with further capital demands resulting in a greater equity stake for such investors, or effective control over a co-operative's business being exercised through financial covenants and compliance obligations. this can lead to the ceding of control from members to investors.

Co-operatives need to ensure that the relationship with financial markets and financial institutions does not compromise this 4th Principle. In the aftermath of the global financial crisis, banks and other funders have become more prudent in the terms and conditions under which they are willing to lend, the sureties and compliance covenants required from borrowers, and the ability to intervene if the borrower defaults on the terms of a loan agreement.

The risk is greater where major capital requirements are financed in the capital financial marketplace; for example, the acquisition of another business by a co-operative. Default in repayment or breaches of financial and compliance covenants can result in the autonomy, independence and democratic control of a co-operative by its members being compromised by the terms of such capital funding agreements. Autonomy, independence, and member sovereignty can be illusory under such agreements because effective control of a co-operative's business will be in the hands of the financiers. the terms of any financial agreement that has a significant impact on a co-operative's business should be agreed and approved by members in general assembly.

The wording of this 4th Principle cautions against this financial risk to autonomy and independence where it says that where co-operatives "raise capital from external sources, they should do so on terms that ensure democratic control by their members and maintain their co-operative identity".