A co-op 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. – International Co-operative Association

In short, co-operatives are run by the community for the community.

According to a 2009 study by the University of Wisconsin, there were roughly 30,000 co-ops in the United States, boasting more than $3 trillion in assets, $652 billion in revenue, and employing close to 1 million people.

The purpose of a co-op might be to provide goods and services (think REI, BECU, Central Co-op), market products (think Ocean Spray, Land O Lakes, Organic Valley), or purchase supplies (think Ace Hardware, True Value). Co-op members may be consumers (92% of all co-ops in the US are consumer co-ops), producers, purchasers, or workers.

The benefits to members are many, including:

  • enhanced purchasing power and, therefore, greater affordability
  • member control and share in earnings, typically in the form of patronage refunds for consumer co-ops and salaries in worker co-ops
  • jobs, salaries and taxes generated by and returned to the co-op’s community

Difficult to quantify, but perhaps most important are the benefits that naturally arise from community ownership including sense of shared purpose, belonging, and equality.

While a co-op is a business structure that might be chosen instead of, for example, a corporation or LLC, its very structure provides a built-in financing mechanism – a membership drive. Typically, in a co-op’s early days it seeks community members to pay a set fee for membership. These funds may or may not be sufficient to fully capitalize the business, but they are a natural start! If additional financing is necessary and fundraising extends beyond members (e.g., to private investors, foundations, or others), investors’ control of the company is typically more restricted than with others forms of ownership.

Existing businesses may also convert to a co-op structure, allowing members (often workers or consumers) to take control by purchasing the company from the existing owners.

This tool might be for you if…

  • You want to broadly distribute control and ownership of your company
  • Your business would benefit from community engagement
  • You are energized by the idea of running a membership drive and have the resources to commit to the effort

Featured Case Study

Flying Bike Cooperative Brewery

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