What Is A Co-Op?

Cooperatives are member-owned, member-governed businesses that operate for the benefit of their owners according to common principles agreed upon by the international cooperative community.

In co-ops, owners pool resources to bring about economic results that are unobtainable by one person alone. Most simply put, a cooperative is a business

  1. voluntarily owned by the people who use it, and
  2. operated for the benefit of its owners.
 

Regardless of the goods and services provided, co-ops aim to meet their owners’ needs.

Most food co-ops are consumer cooperatives, meaning that most retail co-ops in the U.S. are owned by the people who shop at the stores. Owners exercise their ownership by patronizing the store and voting in elections. The owners elect a board of directors to hire, guide and evaluate the general manager who runs day-to-day operations of the retail store.

 

Consumer cooperatives are very different from privately owned “discount clubs,” which charge annual fees in exchange for a discount on purchases. The “club” is not owned or governed by the “owners” and the profits of the business go to the investors, not to owners. In a cooperative, the owners own the business and the profits belong to the community of owners.

The specific goals of a cooperative are determined by its owners, but all cooperatives adhere to the principles of cooperation that are based on practices of the first successful consumer cooperative in Rochdale, England (founded in 1844). There are consumer, producer co-ops (usually agricultural) and worker-owned cooperatives. There are also housing co-ops, health care co-ops (the original HMOs were co-ops) and financial co-ops (credit unions).

The overall goal of the cooperative movement is to create organizations that serve the needs of the people who use them. Cooperative businesses provide goods and services in a way that keeps community resources in the community.

Cooperative Principles

The cooperative principles are guidelines by which cooperatives put their values into practice.

  1. VOLUNTARY AND OPEN MEMBERSHIP – Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept responsibilities of membership, without gender, social, racial, political or religious discrimination.
  2. DEMOCRATIC MEMBER CONTROL – Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives, members have equal voting rights (one member, one vote), and co-operatives at other levels are also organized in a democratic manner.
  3. MEMBER ECONOMIC PARTICIPATION – 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 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 cooperative; and supporting other activities approved by the membership.
  4. AUTONOMY AND INDEPENDENCE – Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
  5. EDUCATION, TRAINING, AND INFORMATION – Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. Many co-ops also educate the general public about the possibility of doing business co-operatively.
  6. CO-OPERATION AMONG CO-OPERATIVES – Co-operatives serve their members most effectively and strengthen the Co-operative Movement by working together through local, national, regional and international structures.
  7. CONCERN FOR COMMUNITY – Co-operatives work for the sustainable development of their communities through policies approved by their members.