Financial Co-operation Among Co-operatives

Financial co-operation among co-operatives can provide an essential source of capital. Working in a federation allows smaller co-operatives to gain power and resources and share in the benefits of research and development. Financial co-operation between start-up or struggling co-operatives and larger or well-established co-operatives and through sector-based financing mechanisms can be a unique path to leveraging capital resources that would be hard to obtain from other sources, and investing part of their surplus back into the co-operative economy, rather than into non-co-operative ventures. In some countries, co-operatives have successfully created solidarity funds engineered to pool financial resources among co-operatives. Through these applications of the 6th Principle new and smaller co-operatives receive needed financial support and technical assistance while larger co-operatives gain the benefit of seeing a social return on their investment in addition to a fair capital return where this is required, through the growing strength and diversity of the co-operative economy.

Financial support and assistance from established co-operatives to new co-operatives through grants or soft loans within countries or at the international level is an important aspect of the application of this 6th Principle. Technical assistance too, in the form of business management support, education and training and the secondment of experienced staff and leaders, is an important expression of this 6th Principle and an expression of international co-operative solidarity where it occurs between new and emergent co-operatives in both developed and developing economies. When co-operatives actively choose to reinvest financial resources in emerging and existing co-operatives, these cycles of wealth generation are amplified and reinforced.