We’ve been using this diagram to help people understand where coops fit in the world as we know it. It neatly describes how coops slip in between your run-of-the-mill-profit-driven-firm and not-for-profits.
There is often a light-bulb moment around what this is really describing – that there are three different ways that value can be distributed:
- In a for-profit company, shareholders are solely focussed on return-on-capital
- In a not-for-profit, the division of value is determined by its pre-ordained mandate
- In a cooperative, it’s the members who decide how value is distributed
It also helps to makes sense of why coops are democratic organisations, where every member gets one vote, as opposed to for-profits where decisions are based on proportionate holdings of voting shares, and NFP’s where the beneficiaries typically have very little control.
We particularly like the implication that coops can take the best of both worlds!