In the weeks ahead, you may hear a lot about the subject of capital. Do you know what capital is, or why it’s important?
I know this sort of thing can sound tedious. But it’s good to understand the basics of capital so you know why it matters.
Capital is simply the money needed to run a business. Initially, this money comes from you, our members. It enables us to run your business. All businesses need working capital to make investments, improvements, and maintain operations. Net savings, money left over after expenses are paid, adds to our capital. Without capital, you have to borrow money. Borrow too much and you won’t be in business for long. So as you can see, part of our capital actually belongs to all the members collectively.
We didn’t come up with this inspired idea. The founders of the cooperative moment did. The third Cooperative Principle, Member Economic Participation, states that members will contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative.
So in short, members provide the capital equally, and part of that capital is common property, belonging to everyone. This is a just and equitable way to run a business. My favorite thing about co-op capital is not what it is, but what it isn’t. The co-op model is very different from stock purchased in a business for one objective—financial gain. The capital in a co-op does not increase in value and is intended solely for the collective benefit of the co-op, the members who own it, and the communities that depend on it.
Have questions or want to learn more? Reach out to me anytime. My door is always open.