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What is a Co-op?
A cooperative is a business with certain unique characteristics. A cooperative business is owned
and democratically controlled by its members -- people who have organized to provide themselves
with needed goods and services. A cooperative is voluntary, and operated for the benefit of its
member-owners. A cooperative takes advantage of economies of scale by pooling buying power.
A cooperative returns any profits, after bills are paid and money is set aside for operations and
improvements, to the co-op members.
Co-ops are Everywhere
Four out of every ten Americans have come to depend on cooperatives for a range of goods and
services. There are consumer-owned cooperatives selling clothing, appliances, camping gear,
bicycles and books. There are cooperative wholesalers providing products, branding and other
services to independent hardware, grocery and natural foods businesses. There are co-ops
disseminating news and photographs, and co-ops for the arts community. There are cooperatives
that provide electricity and telephone service. By nature, credit unions and mutual insurance
companies are cooperatives because they are member-owned. There are thousands of
agriculture co-ops and cooperatives providing financing to farmers. There are cooperatively
organized employee-owned companies, cooperative purchasing groups for fast-food
franchisees, and, of course, housing co-ops.
Cooperatives Are...
A cooperative is a business. In many ways it's like any other business; but in several important
ways it's unique and different. A cooperative business belongs to the people who use it — people
who have organized to provide themselves with the goods and services they need. A cooperative
operates for the benefit of its members.
These member-owners share equally in the control of their cooperative — they meet at regular
intervals, review detailed reports and elect directors from among themselves. The directors in turn
hire management to manage the day-to-day affairs of the cooperative in a way that serves the
members' interests.
Members invest in shares in the business to provide capital for a strong and efficient operation. All
net savings left after bills are paid and money is set aside for operations and improvements, are
returned to co-op members.
Serving Many Needs...
Cooperatives may be organized to provide just about any good or service such as:
Business services
Child care
Credit and personal financial services
Employment
Equipment, hardware and farm supplies
Utilities and cable T.V. services
Food and food services
Funeral planning
Health care
Housing
Insurance
Legal and professional services
Marketing of agricultural and other products
For Everyone...
Over 100 million people are members of 47,000 U.S. cooperatives. These people have organized
to provide themselves with goods and services in nearly every sector of our economy. Their
cooperatives may be organized in a number of ways and for many purposes.
Producer-owned cooperatives are owned by farmers, producers or small businesses. Agricultural
producers or crafts people organize cooperatives to process and market their goods, and to
provide themselves with credit, equipment and production supplies. Similarly, retail stores or small
businesses organize cooperatives to provide supplies or common services.
Consumer-owned cooperatives enable consumers to secure a wide array of goods and services.
For example, they may offer health care, utilities, insurance or housing. They may buy and sell
food, heating fuel, hardware and other consumer goods. Or, they may operate credit unions, child
care facilities and funeral and memorial societies. Almost all consumer needs can be met by a
cooperative.
Worker-owned cooperatives are businesses owned and controlled by their employees. Worker
cooperatives may be found in almost any industry. Examples include employee-owned food
stores, processing companies, restaurants, taxi cab companies, sewing companies, timber
processors and light and heavy industry.
Seven Cooperative Principles
1. Voluntary and Open Membership
Cooperatives are voluntary organizations, open to all people able to use its services and
willing to accept the responsibilities of membership, without gender, social, racial, political or
religious discrimination.
2. Democratic Member Control
Cooperatives are democratic organizations controlled by their members, one member-one
vote, who actively participate in setting policies and making decisions.
3. Members' Economic Participation
Members contribute equally to, and democratically control, the capital of the cooperative. This
benefits members in proportion to the transactions with the cooperative rather than on the
capital invested.
4. Autonomy and Independence
Cooperatives are autonomous, self-help organizations controlled by their members. If the
co-op enters into agreements with other organizations or raises capital from external
sources, it is done so based on terms that ensure democratic control by the members and
maintains the cooperative autonomy.
5. Education, Training and Information
Cooperatives provide education and training for members, elected representatives, managers
and employees so they can contribute effectively to the development of their cooperative.
Members also inform the general public about the nature and benefits of cooperatives.
6. Cooperation among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative
movement by working together through local, national, regional and international structures.
7. Concern for Community
While focusing on member needs, cooperatives work for the sustainable development of
communities through policies accepted by the members.
Information provided by National Cooperative Bank
Last Revised: August 27, 2001
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