What is a Cooperative?

What is a Coop?

A cooperative is a business that is owned and controlled by the people who use it–the member-owners.

Regardless of the industry in which they work, co-ops share the common characteristics of democratic ownership and governance members elect the board of directors from their own membership. The Board hires and oversees management. Management is responsible for day-to-day business operations. Management is accountable to the Board, and the Board is accountable to the members.

There are three general types of cooperatives:

Consumer Cooperatives are owned by the member who buy goods or services from the cooperative. Examples include food, childcare, housing, utility cooperatives and credit unions. Purschasing cooperatives are a form of consumer co-op: independent businesses pool their purchasing power and engage in joint marketing to lower their costs, helping them compete and remain as independently owned businesses. Examples include ACE Hardware and Best Western.

Producer Cooperatives (also called marketing cooperatives) pool, process and market the members products. Examples include Land o’Lakes, Blue Diamond, and the Northwest Gallery of Fine Woodworking. New Generation Co-ops are a form of producer co-op member ownership is restricted to the amount of product the co-op is able to sell and each member must provide up front equity capital. American Crystal Sugar, Dakota Pasta Growers, and Mountain View Harvest are New Generation Cooperatives.

Worker Cooperatives are owned by the workers of the business. Worker-owned businesses are in every industry of the country. Rainbow Grocery, The Cheese Board, and Burley Design Cooperative are examples of successful worker-owned businesses.

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