Sound Governance

Good governance is essential for the success of any cooperative housing organization. It requires a competent and engaged board of directors and active involvement from cooperative members. Sound governance and management practices are crucial for ensuring the smooth functioning of cooperative housing. Skilled managers with the necessary expertise, coupled with an effective board, play a vital role in the successful operation of cooperative housing.

A true housing cooperative is one in which the members collectively own the housing for their mutual benefit. They make decisions democratically for the good of the cooperative and its community. The members elect a board of directors to govern the coop’s affairs, and they adhere to the seven international cooperative principles.

Housing cooperatives serve important social purposes. They offer affordable housing and build communities where the members work in support of each other, sharing common values. To meet these purposes and to continue meeting them, coops must be strong and stay that way. They must take care of the business of running a coop, and that means sound governance.

Elements of Good Governance

Good governance ensures a housing cooperative runs efficiently, ethically, and in the best interests of its members. Below are the five key elements essential to effective governance.

These core values guide the cooperative’s operation and management:

• Voluntary and Open Membership: Open to all without discrimination.

• Democratic Member Control: Members actively shape policies and decisions.

• Member Economic Participation: Members contribute and control capital equitably.

• Autonomy and Independence: The cooperative is self-governed by members.

• Education and Training: Ongoing learning for members and staff.

• Cooperation Among Cooperatives: Strengthening the movement through collaboration.

• Concern for Community: Commitment to sustainable community development.

Training and Education

Continuous development for all involved:

• Member Education: Workshops to clarify rights and responsibilities.

• Leadership Training: Focused sessions for board and committee leaders.

• Employee Development: Professional growth opportunities for staff.

• Awareness Programs: Informing members about cooperative values and current issues.

Roles and Responsibilities

Clear separation of duties ensures smooth governance:

• Board of Directors: Sets policies and oversees strategy.

• Committees: Handle specialized functions like finance or membership.

• Management: Executes board policies and manages daily operations.

• Members: Participate actively in meetings and decisions.

Democratic Functioning

Ensures equal member participation:

• One Member, One Vote: Equal voting rights for all members.

• Inclusive Meetings: Regular, accessible meetings for member engagement.

• Transparent Elections: Fair processes to choose leaders.

• Member Engagement: Opportunities to join committees and task forces.

Accountability and Transparency

Builds trust through openness:

• Financial Transparency: Clear reporting of budgets and finances.

• Performance Reporting: Updates on progress and achievements.

• Open Communication: Newsletters, websites, and meetings to keep members informed.

• Ethical Standards: Codes of conduct for integrity.

• Feedback Mechanisms: Channels for member input and concerns.

By following these elements, housing cooperatives create strong, resilient communities that serve members’ needs effectively.

Ten Signs of Governance Issues

Recognizing signs of governance problems within a cooperative is important for its ongoing success.

To evaluate your coop’s governance, look for the following signs:

1. Changing Decisions: The board frequently reverses its decisions due to making hasty or ill-informed choices.

2. Too Many Meetings: If the board holds frequent meetings without achieving results, it may indicate internal issues or inefficiencies.

3. Conflict Between Board and Management: Ongoing conflicts between the board and management can be an indication of unclear roles.

4. Difficulty Retaining Directors: Struggling to keep a full slate of directors may point to underlying problems and an unappealing director role.

5. Member Distrust: If the board is not transparent or fair in its decisions, the members may lose trust.

6. High Staff Turnover: Losing good staff indicates poor board-staff relations and unfavourable working conditions.

7. Changing Direction: Each new board altering the coop’s direction may indicate personal and political motives overriding the coop’s well-being.

8. Non-Compliance with Rules: Directors not following the coop’s rules undermines their ethical standing.

9. Lack of Director Training: If directors are not taking advantage of training opportunities, they may not understand their responsibilities.

10. Contentious Member Meetings: Significant governance improvements may be necessary if members’ meetings are controversial.

Differences Between Governance and Management

Governance

Boards make decisions that require action to be taken and managers take action. Governance is how directors, and the members who elect them, set and control the overall direction of the coop to ensure its success as a viable business and a cooperative community. 

Key governance tasks include: 

• identifying goals, setting priorities, and planning 
• establishing rules and policies 
• selecting, supervising, and evaluating management
• evaluating outcomes

Management

Management is taking care of the day-to-day business of the coop to achieve the goals set by the members and directors. 

Key management activities include: 

• managing the finances
• keeping the coop in good repair 
• keeping the coop full 
• meeting legal responsibilities
• supporting good governance

Conclusion

In conclusion, a housing cooperative’s success depends heavily on the dedication and effectiveness of its board of directors. Even with a skilled manager, a competent auditor, expert advice from the cooperative housing sector, and support from government partners, the cooperative can face serious problems if the board does not fulfill its duties. This is because the board holds the power to make key decisions, offer important recommendations, and take actions that directly affect the cooperative’s health—either positively or negatively.