What is a Cooperative?

According to the International Cooperative Alliance (ICA), a cooperative is “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.” Because they take on many different forms (e.g. producer, consumer, and worker cooperatives) within a variety of sectors (i.e. social care, tourism, credit unions, electricity, housing, retail) cooperative design is variable and is dependent on the decisions of members (Curl, 2009).

Today, as in the past, cooperatives serve as a valuable means of protecting communities against poor living and working conditions. Arising in the 19th century as both a remedy for market failure and a social movement for greater equality, cooperatives continue to react against social and economic injustices by fostering economic productivity, democratic accountability, mutual benefit between members and their respective communities and on-going education.  This section of the site introduces different types of cooperatives, facts and figures relating to the scope and depth of cooperative activity, and the core principles and practices that shape their identity.

Types of Cooperatives

There are many different types of cooperatives and importantly, many different ways the cooperative label is used.  As noted by the Cooperative Development Institute (CDI), cooperative labels may refer to the ownership structure, the product or service the co-op offers, or the activity the group engages in collectively and just about any co-op can have more than one label.  Below you will find a brief explanation of the different co-operative forms, as summarized by the CDI.

Producer Cooperatives

In this type of cooperative separate business owners come together to purchase items, hire staff,  process items or provide services to benefit the whole collective.  These items, staffers or services are then shared with all of the members to be used in their own respective companies.  Separate farmers buying a tractor or a land and then sharing the equipment or the use of sections of the land are a good example of this type of co-op.

Worker Cooperatives

In a worker cooperative the members own the business.  More often than not, they are smaller in size and always, the members are the direct policy makers for the specific company.  Common examples are construction companies, auto-repair shops and bakeries.

Consumer Cooperatives

Consumer cooperatives are defined by the very people who buy from them.  The individual clients are also collectively the owners and governors of the company.  For example, at 74 years old (as of 2011) Recreational Equipment Incorporated (REI) is the largest consumer cooperative in the United States.  Its consumers elect its board members, oversee the company’s policy and provide the future direction for the business.

Credit Unions

Credit unions are similar to consumer cooperatives in that each depositor is a member and an owner.  Consumer-members may attend annual meetings and help elect the board of directors that govern the financial institute.  Unlike consumer cooperatives though, the label of credit unions is strictly given to financial institutions.  Examples of credit unions can range from multi-branch operations such as Desert Schools Federal Credit Union in Phoenix, AZ to community development credit unions, like the Syracuse Cooperative Federal Credit Union that serves lower income communities.

Retail or Purchasing Co-ops

These cooperatives, sometimes called shared service cooperatives, are owned and governed by independently owned business owners.  They are different than producer cooperatives because they are usually larger cooperative business chains that do not produce specific products but provide services or sell materials regionally or nationally.  Their common goal is to buy goods and services in bulk and use them for each individual business. Best Western, True Value and ACE hardware are common examples.

Social Co-ops

Social co-ops are owned and operated by their members as well, but they have a social mission outside of their core business.   An example of a social cooperatives is the organization WAGES (Women’s Action to Gain Economic Security), which helps improve working conditions for immigrant women.  Another example is the Third Root community health center in Brooklyn that provides affordable health services.

Facts and Figures

In all forms of business there is the need for research and accountability.  This section and the report below are designed to show you how cooperatives affect the current economy and how their role impacts the people of the United States.

University of Wisconsin – Research on Economic Impacts of Cooperatives
The following study dictates facts and figures of almost 30,000 cooperative firms in the United States in terms of their national economic impact.  Specifically, the study provides information on: types of co-ops, revenue, income, wages, employment and distribution by sector.

http://reic.uwcc.wisc.edu/impacts/

Some of the main highlights regarding the role of cooperatives in the US economy include:
– Aggregate Revenue = $220B Annually
– Aggregate Jobs = 440, 198 Jobs Annually
– Aggregate Added Economic Value: $37B Annually
– Aggregate Wage Impact: $13B Annually

Principles and Practices in Governance: Cooperatives: Principles and practice in the 21st century
Kimberly Zeuli and Robert Cropp
discuss the structure, control and responsibilities related to governing a cooperative in their book.  Special attention should be paid to chapter 1 and 2 as it provides facts and figures related to the United States and Cooperatives that can be extremely informative. Zeuli Cropp Cooperatives


Cooperative Identity
The identity of a cooperative is tightly linked to the core values of solidarity, equity, and participatory democracy.  Horizontal management structures and inclusive governance systems facilitate social embeddedness and community involvement.  Additionally, the ethics of personal integrity and social responsibility help to generate both solidarity among members and greater accountability to external constituencies.

Principles and Practices in Governance: Cooperatives: Principles and practice in the 21st century – This book, specifically chapter 3 highlights the type of identity cooperatives can and have formed in order to be successful. (Kimberly A. Zeuli and Robert Cropp) Zeuli Cropp Cooperatives

What Makes Cooperatives Different?
What differentiates cooperatives from other business entities is their capacity to meet the collective  needs of the communities in which they are embedded.  Among most cooperatives, creating a business and/or generating profit is highly enmeshed with the goal of  serving a broader public interest.  Consequently, cooperatives normally have more democratic governance structures, allocate their proceeds more equitably among members/owners, and aim to make a productive contribution to social and economic development in addition to advancing the collective needs of members. http://www.coopscanada.coop/en/about_co-operative/How-are-Co-operatives-Different

Core Principles and Practices That Guide Cooperative Practitioners
There are many principles and practices that characterize cooperatives.  However, as outlined by the International Cooperative Association (ICA)  principles.html, all co-ops are guided by the follow core set of values.

Voluntary and Open Membership:  Cooperatives and their services are open to all persons willing to accept the responsibilities that go along with membership in a cooperative without discrimination based on gender, social, racial, political, religious or sexual preference.

Democratic Member Control: Democratic organizations controlled by their owners and members that actively participate in the governance of the organization.


Member Economic Participation/One Person, One Vote: In connection with democratic control, each member has equal participation in the governing process in proportion to their activity in the organization.


Autonomy and Independence: Cooperatives are autonomous entities controlled by members and owners. If they conduct business with other firms the transactions are completed through the practices set forth in the democratic governing structure.


Education, Training and Information: Cooperatives provide education and training for  members and parties involved.  In addition, they work to educate the public on the benefits of cooperatives.


Cooperation/Solidarity: Cooperatives are most successful when they work together through all levels of structure, local, national, regional and international.

•    Concern for Community: Cooperatives strive to meet the social needs of their community and in the process create sustainable development for the future.

Legal Basis for Cooperatives
For a better understanding of the legal basis of cooperatives go to the link for the USDA Rural Business-Cooperative section below.  Understanding Cooperatives: Legal Foundations of a Cooperative provides information regarding personal liability, ownership and control, incorporation under state statues, organizational documents, policies and other useful information.
http://www.rurdev.usda.gov/rbs/pub/cir459.pdf

For Additional Information on Cooperatives Please See:
http://www.ica.coop/activities/iyc/
http://www.coopscanada.coop/en/about_co-operative/InternationalYear
http://www.cccd.coop/coop_year
http://www.rurdev.usda.gov/rbs/pub/cir452.pdf

NEED BOOK – opnly have ch. 6 and 8.

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