Who Can Serve on a Cooperative Board?

September 25, 2023

A cooperative is a unique business structure owned and controlled by its members, who equitably share its benefits based on their participation. Due to the complexity and amount of decisions required for its smooth operation, it's impractical for all member-owners to make every decision. Hence, a democratically elected board of directors is essential to represent members' interests, make key decisions, and oversee the overall management of the cooperative.

The board of directors serves as a crucial link between the members and the management. They represent the members who use the cooperative’s services, so they must be well-informed about the members' needs and aspirations. 

The board must always remember that the cooperative exists for the benefit of its members. This underscores the importance of voting for co-op members, ensuring that the board comprises individuals who truly understand and represent the members' interests.

Who Is Eligible to Serve on a Cooperative Board?

In most cooperatives, the president of the board of directors appoints a nominating committee. This committee is tasked with developing a list of candidates for the board election. These candidates should be cooperative members who the committee believes can guide the cooperative toward achieving its overall goals and enhancing its operations. Critical qualifications for candidates include being eager to learn, having good judgment and business sense, and being a loyal and active cooperative member.

Candidates should demonstrate a solid commitment to active participation in board meetings and possess comprehensive knowledge about cooperatives and the responsibilities of a director. They must be prepared to shoulder the duties and obligations of the director's role. 

Essential qualities include the ability to collaborate effectively as part of a team, supporting majority decisions even when they differ from personal views, and approaching issues with an open mind. Candidates should align with and represent the members' objectives, have a reputation as community leaders, and exhibit honesty and fairness in all interactions and decisions.

How many directors are in a cooperative? The number of directors in a cooperative can vary, but the incorporation law typically requires an odd number, such as five, seven, or nine. It is often more practical for a cooperative to maintain a smaller, odd-numbered board for more efficient and effective operations.

What Are the Board’s Responsibilities?

The board of directors plays a pivotal role in the smooth functioning of a cooperative; they are tasked with making key decisions influencing the cooperative's direction and operation. 

Here’s a list of their typical responsibilities:

Hiring a Competent Manager

The board is responsible for hiring a skilled manager, deciding the salary, defining the roles and authority of the position, and conducting a formal performance review at least once a year.

Adopting General Policies

The board must adopt broad, general policies to guide the manager. These may include rules for lending to members, where supplies come from and how much can be kept in stock, and general rules for staff. 

The manager is responsible for making detailed decisions on implementing the board’s policies; the board should monitor and review these policies annually and make necessary changes. It’s also important to note that board members are responsible for making high-level decisions and should not get involved in everyday tasks and activities.

Developing Long-Range Business Strategies

The board of directors is responsible for developing and adopting long-term business strategies to guide the cooperative toward achieving its overall objectives and improving its operations. This involves analyzing the cooperative's current position, setting strategic goals, and creating a detailed plan of action to achieve these goals. The board must continuously monitor and adjust these strategies as necessary to ensure the cooperative's success and sustainability in the long run.

Requiring Monthly Financial Reports

The board must ask the manager to create a budget for the upcoming year before the current year ends. This budget should include expected sales, total income, expenses by type, and predicted net income–this is essential for planning ahead. 

The budget should be checked regularly throughout the year to identify business trends. The board should also ask for monthly written financial and operational reports for their meetings to stay updated on positive and negative developments.

Planning and Conducting the Annual Meeting

With the aid of the manager, the board should plan and conduct the annual meeting to keep the membership informed about the status of their business, including operations, finances, and policies.

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