Why a co-op needs to be ‘open’

A cooperative must be transparent to all its members, so everyone understands and accepts its constitution, writes Susan Pletts.

Members of a cooperative business group “cooperate” with one another to improve profits. The constitution of a cooperative allows a board of directors to make certain decisions without the approval of the general members. This makes doing business easier and members show they accept the constitution by signing it. But accepting isn’t the same as understanding, and too many co-op members don’t fully understand the terms and conditions of the constitution.

The Basic Conditions of Employment Act requires an instruction to be translated into a language the employee can understand. A disciplinary action could be reversed if it can be proven that the employee didn’t receive counselling or instruction in their own language. But this isn’t the case with the co-op constitution – “own language” isn’t a requirement before registering the co-op.

The misunderstanding that can arise from members not understanding the constitution should be obvious. Members might feel they’re being cheated, and if there’s a lack of transparency between the board of directors and the members, feelings will worsen. Members might be right to be suspicious. A lack of transparency often means there’s something to hide. Where there’s access to money, there’s often a temptation to manipulate what’s done with the funds without the knowledge or approval of the other co-op members.
 
When voting members onto the co-op board, beware of only choosing those who seem better educated than yourself. This isn’t a qualification for good character. Character should be assessed before voting.Funds can be protected by having two people sign cheques. If you’re one of these people, be careful if the other person asks you to sign blank cheques or requisitions.

With a blank cheque, the person being paid and the amount to be paid aren’t written onto the cheque before signing. The reason for this could be legitimate, as the person making payment might not want to wait for their colleague to sign, delaying the payment. But this process has been abused for fraudulent acts. When voting a board into office, choose people who are interested in serving the group objectives and not their own private business interests.

Susan Pletts runs Wanyuka Consultants in KwaZulu-Natal, which provides various services, including farming training and mentorship for emerging farmers in KZN. Call her on 082 572 3724 or e-mail [email protected].