About Cooperatives

What Is A Cooperative?

A cooperative is a group of people who work together for economic benefit. It is a member-owned, member-controlled business incorporated under state law that operates primarily for the benefit of its members to meet their mutual needs.

Cooperative can meet member needs by:

  • Improving bargaining power when dealing with other businesses
  • Reducing costs
  • Obtaining products or services otherwise unavailable
  • Obtaining market access or broadening market opportunities
  • Improving product or service quality
  • Increasing income

The three core functions of a cooperative are:

  • to allow members to gain access to affordable production supplies and goods
  • to provide needed services
  • to assist members to maximize the return they receive for the goods they produce

Philosophy And Principles Of A Cooperative

Co-ops are common in the fact that they share a fundamental respect for all human beings and a belief in people’s capacity to improve themselves economically and socially through mutual help.

The seven principles that serve as guidelines for how cooperatives do business are as follows:

  • Open and voluntary membership (open to all)
  • Member economic participation (members provide basic capital to start and operate)
  • Democratic member control (all have equal voting with 1 vote per member) 
  • Autonomy and independence (limit the influence of outside agencies or business partners) 
  • Education, training and information (education of members and general public on cooperative business and nature and benefits of cooperation)
  • Cooperation among cooperatives (try to help one another)
  • Concern for community (members needs are primary concern but also work for sustainable development of their communities)

Cooperative Governance

Co-ops are managed by an elected board of directors that is responsible for overseeing the affairs of the co-op on behalf of the members. The board must act as a whole; individual directors have no authority outside of board meetings, except as delegated by the board as a whole. The board is held accountable to its members.

The primary responsibilities of the Board are to:

  • Act as trustees on behalf of the members (monitoring of financial status, reporting regularly to members, and making sure the co-op follows its bylaws, policies and any applicable regulations)
  • Ensure sound management of the co-op
  • Set long-range goals and plan for the co-ops future 
  • The board should focus their discussions and decision making on two things:
  • Clearly defining results to be achieved by management or others responsible for a project
  • Setting limits needed to guide management’s performance