Table of Contents
A cooperative is a business or organization owned by and operated for the benefit of those using its services. Profits and earnings generated by the cooperative are distributed among the members, also known as user-owners.
FORMING A COOPERATIVE
Forming a cooperative is different from forming any other business entity. To start up, a group of potential members must agree on a common need and a strategy on how to meet that need. An organizing committee then conducts exploratory meetings, surveys, and cost and feasibility analyses before every member agrees with the business plan.
Not all cooperatives are incorporated, though many choose to do so.
ADVANTAGES OF COOPERATIVES
ADVANTAGES OF COOPERATIVES – LESS TAXATION.
Members of a cooperative are only taxed once on their income from the cooperative and not on both the individual and the cooperative level.
ADVANTAGES OF COOPERATIVES – FUNDING OPPORTUNITIES.
Depending on the type of cooperative you own or participate in, there are a variety of government-sponsored grant programs to help you start.
ADVANTAGES OF COOPERATIVES – REDUCE COSTS AND IMPROVE PRODUCTS AND SERVICES.
By leveraging their size, cooperatives can more easily obtain discounts on supplies and other materials and services. Suppliers are more likely to give better products and services because they are working with a customer of more substantial size. Consequently, the members of the cooperative can focus on improving products and services.
ADVANTAGES OF COOPERATIVES – PERPETUAL EXISTENCE.
A cooperative structure brings less disruption and more continuity to the business. Unlike other business structures, members in a cooperative can routinely join or leave the business without causing dissolution.
Democracy is a defining element of cooperatives. -The democratic structure of a cooperative ensures that it serves its members’ needs.
The amount of a member’s monetary investment in the cooperative does not affect the weight of each vote, so no member-owner can dominate the decision-making process.
The “one member-one vote” philosophy particularly appeals to smaller investors because they have as much say in the organization as does a larger investor.
SIX BASIC PRINCIPLES OF COOPERATIVES
Basic Principles 1. VOLUNTARY & OPEN MEMBERSHIP
Basic Principles 2. DEMOCRATIC MEMBER CONTROL
Basic Principles 3. MEMBER ECONOMIC PARTICIPATION
Basic Principles 4. AUTONOMY AND INDEPENDENCE
Basic Principles 5. EDUCATION, TRAINING & INFORMATION
Basic Principles 6. COOPERATION
SOME TYPES OF COOPERATIVES
Agricultural cooperatives – Help producers assure markets and supplies, achieve economies of scale, and gain market power through jointly marketing, bargaining, processing, and purchasing supplies and services
Business cooperatives are formed by businesses to purchase supplies or obtain services at a lower cost
Credit Unions –Provide at-cost financial services to a wide cross-section of the population Custodial and cleaning services cooperatives create employment opportunities and provide the benefits of ownership for their worker-members.
Hardware wholesaling cooperatives – like other business cooperatives, allow independent businesses to be competitive by cutting expenses and adding member services through joint purchasing and marketing
Housing cooperatives offer ownership options for Californians from all income groups Insurance cooperatives operate much like retail cooperatives except that they provide insurance services instead of consumer goods.