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 in a housing cooperative ensures that the organization runs effectively, ethically, and in the best interests of its members.

The Five Elements of Good Governance for a housing cooperative are:

1. Cooperative Principles

The core values that guide the operation and management of cooperatives. They ensure that the cooperative remains true to its foundational ethos.

•  Voluntary and Open Membership: Cooperatives are open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination.
•  Democratic Member Control: Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.
• Member Economic Participation: Members contribute equitably to, and democratically control, the capital of their cooperative.
• Autonomy and Independence: Cooperatives are autonomous, self-help organizations controlled by their members.
• Education, Training, and Information: Cooperatives provide education and training for their members, elected representatives, managers, and employees.
• Cooperation Among Cooperatives: Cooperatives serve their members most effectively and strengthen the cooperative movement by working together.
• Concern for Community: Cooperatives work for the sustainable development of their communities through policies approved by their members.

2. Training and Education

 Continuous learning and development for members, board members, and employees.

• Member Education: Regular workshops and informational sessions to ensure members understand their roles, rights, and responsibilities.
• Leadership Training: Specialized training for board members and committee leaders on governance, financial management, and strategic planning.
• Employee Development: Ongoing professional development opportunities for cooperative staff to ensure they have the skills and knowledge needed to serve the cooperative effectively.
• Awareness Programs: Initiatives to inform members about cooperative principles, the importance of active participation, and current issues affecting the cooperative.

3. Role and Duties of Governance

 Clear definition and separation of roles and responsibilities within the cooperative’s governance structure.

• Board of Directors: Responsible for setting policies, strategic direction, and overseeing the cooperative’s operations.
• Committees: Various committees may be established to handle specific areas such as finance, membership, and community relations.
• Management: Day-to-day operations are handled by managers or management teams who execute the board’s policies and directives.
• Members: Active participation in meetings, voting, and other cooperative activities, ensuring their voices are heard and represented.

4. Democratic Functioning

 Ensuring that all members have a voice and can participate equally in decision-making processes.

• One Member, One Vote: Each member has an equal vote, regardless of their investment or tenure in the cooperative.
• Inclusive Meetings: Regular, well-publicized meetings that encourage and facilitate member attendance and participation.
• Transparent Elections: Fair and transparent processes for electing board members and committee representatives.
• Member Engagement: Opportunities for members to be involved in committees, task forces, and other participatory bodies.

5. Accountability and Transparency

 Practices that ensure the cooperative operates openly and its leadership is answerable to the members.

• Financial Transparency: Regular, clear reporting of financial statements and budgets to members.
• Performance Reporting: Annual reports and updates on the cooperative’s performance, strategic initiatives, and key achievements.
• Open Communication: Regular communication channels such as newsletters, websites, and meetings to keep members informed.
• Ethical Standards: Establishing and enforcing codes of conduct for board members, employees, and members to ensure integrity and trustworthiness.
• Feedback Mechanisms: Systems for members to provide feedback, raise concerns, and suggest improvements, ensuring their voices are heard and acted upon.

By adhering to these elements, a housing cooperative can foster a strong, vibrant, and resilient community that effectively meets the needs and aspirations of its members.

Signs of Governance Issues in Cooperative Organizations

Recognizing signs of governance problems within a coop 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, the success of a housing cooperative depends greatly on the performance and diligence of its board of directors. Even with a capable manager, a proficient auditor, informed guidance from the coop housing sector, and support from government partners, the coop can encounter significant challenges if the board fails to fulfill its responsibilities. This is because the board has the authority to make critical decisions, provide valuable recommendations, and take actions that can significantly impact the coop’s well-being, for better or for worse.