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Member economic participation is one of the defining features of Co-operative Societies, and constitutes the third Rochdale Principle in the ICA's Statement on the Co-operative Identity. According to the ICA, Co-operatives are enterprises in which "Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership."^[1] This principle, in turn, can be broken down into a number of constituent parts.

The first part of this principle states that "Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative."^[2] This enshrines democratic control over the co-operative, and how its capital is used.

The second part of the principle deals with how members are compensated for funds invested in a Co-operative, and how surpluses should be used. Unlike for profit Corporations, Co-operatives are a form of social enterprise. Given this, there are a three purposes for which surplus funds can be used, or distributed, by a Co-operative.

• "Members usually receive limited compensation, if any, on capital subscribed as a condition of membership."^[3]
• "Developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible;"^[4] in other words, the surplus can be reinvested in the Co-operative.
• "Benefiting members in proportion to their transactions with the co-operative;"^[5] for example, a Consumers' Co-operative may decide to pay dividends based on purchases (or a 'divvi').
• "Supporting other activities approved by the membership."^[6]

1. ^ http://www.ica.coop/coop/principles.html
2. ^ http://www.ica.coop/coop/principles.html
3. ^ http://www.ica.coop/coop/principles.html
4. ^ http://www.ica.coop/coop/principles.html
5. ^ http://www.ica.coop/coop/principles.html
6. ^ http://www.ica.coop/coop/principles.html

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