The case for cooperative legal and regulatory reform

Cooperative businesses have been around for centuries, providing communities with a way to pool resources and achieve common goals. These unique people-centered enterprises are owned and governed by their members, who are also the customers of the business. Their democratic structure ensures that the profits and benefits of the enterprise are shared among its members. From agriculture to housing, from finance to retail, cooperatives have played a vital role in creating a more equitable and sustainable world.

The benefits of cooperatives are clear. They empower communities to take control of their own destiny, providing them with a voice and a stake in the future. They help to build stronger and more resilient communities, providing people with a sense of belonging and a shared purpose. They also play an important role in reducing poverty, providing access to credit and other financial services, and promoting sustainable economic growth.

But for cooperatives to deliver these benefits, they require a supportive legal environment governed by laws and regulations that are fit for purpose. Out-of-date laws and regulations designed for a different era hold cooperatives back, limiting their potential to grow and innovate. Cooperative law and regulation should be designed to enable cooperatives to be more flexible, innovative, and responsive to the needs of their members and to take into account the changing needs of communities and the evolving nature of the global economy. This includes clear laws that recognize the unique nature of cooperatives, as well as regulations that encourage their growth and development.

Why should cooperative legal and regulatory reform be of interest to cooperative leaders, policymakers, and international development institutions?

• Cooperative law and regulation reform can contribute to the development of inclusive and sustainable economies. By empowering people to come together and create their own businesses, cooperatives can provide a pathway to economic empowerment for those who have been marginalized and excluded from traditional economic systems.

• An enabling legal and regulatory environment provides a level playing field for cooperatives to compete with traditional businesses. It also ensures that cooperatives are not burdened with regulations that are designed for conventional businesses and are instead tailored to their specific needs.

• Well-designed laws and regulations can foster innovation and creativity in the cooperative sector. This can lead to the development of new and innovative cooperative models, which can provide new solutions to social and economic challenges.

• Cooperative law and regulation reform can help to promote transparency, accountability, and good governance in cooperatives. Because cooperatives are owned and governed by their members, they have a vested interest in the success and sustainability of the enterprise.

• Cooperative law and regulation reform should promote cooperation and collaboration between cooperatives, which includes strong national and sectoral cooperative associations that promote cooperative development. By working together, cooperatives can achieve more than they can alone, and they can help to build stronger and more resilient communities.

The Cooperative Law and Regulation Initiative (CLARITY) is a methodology developed by members of the U.S. Overseas Cooperative Development Council that provides processes and tools to guide and support national cooperative movements through four distinct phases of cooperative legal and regulatory reform:

1. Understanding and analyzing the legal and regulatory environment through a CLARITY Analysis tool which evaluates 28 cooperative law and regulation reform issues using cooperative and good governance principles and best practices from international comparative law. A CLARITY Scorecard and Dashboard help identify potential reform priorities for consideration.

2. Evaluating, prioritizing, and reaching consensus on reform issues.

3. Developing proposals for reforms and strategies for advocacy and communication.

4. Implementing campaigns for advocacy and communication of reform proposals.

Since its launch in 2005, the CLARITY methodology has been used in different ways in 18 countries worldwide. Currently, CLARITY Analysis reform proposals are under consideration by national legislators updating cooperative laws in Ecuador, Guatemala, and the Dominican Republic. CLARITY works as a catalyst and pathway in the larger and more complex process of framing a dialogue for reform between cooperative leaders, government agencies, legislators, and other stakeholders. During the process that they lead, cooperative leaders develop their own political voice, proactive leadership, and advocacy skills through participation in the democratic process.

By providing a supportive legal and regulatory environment for cooperatives, we can help to build a more sustainable and inclusive future for all. By creating a legal framework that is fit for purpose, we can help to ensure that cooperatives continue to play a vital role in promoting equity, sustainability, and resilience. By fostering a culture of cooperation and collaboration, we can help to build a better world for generations to come.

Edward Potter, CAE