A cooperative (or co-op) is a unique business model where individuals or organizations come together to meet their mutual needs and share benefits and responsibilities. Unlike traditional businesses, cooperatives are owned and democratically controlled by their members. Cooperatives emphasize mutual benefit and collective decision-making, focusing on people over profits.
In its simplest form, a cooperative is a group of people who work together to accomplish what they couldn’t achieve individually—whether it’s reducing costs, increasing bargaining power, or accessing goods and services.
Why are cooperatives organized?
Cooperatives have been part of the American way since pioneer times. The idea is simple and proven – work together to achieve more.
Businesses with mutual needs form cooperatives to generate collective knowledge and experience which with long-term member commitment leads to:
- Provide bargaining power
- Reduce costs
- Gain access to products or services that might otherwise not be available
- Gain new market opportunities
- Improve product or service quality
- Increase income
Today there are more than 40,000 cooperatives in the United States.
What are the principles of a cooperative?
Cooperatives follow a set of guiding principles that ensure they operate in a way that benefits all members and fosters a strong sense of community. Those principles are:
Voluntary Membership
Joining a cooperative is completely voluntary and open to anyone who can use their services, accept responsibilities, and meet the requirements of membership.
Democratic Control
Cooperatives are run by their members, who participate in decision-making. Each member has one vote, regardless of the amount of capital they’ve invested. This ensures an equal say in the cooperative’s operations.
Equitable Economic Benefit
Members contribute to the cooperative’s capital through their purchases or investments and share in the cooperative’s benefits. Profits are typically reinvested into the business or distributed back to members in proportion to their use of the cooperative.
Independent Operation
Cooperatives are autonomous. They operate independently from external entities or profit-driven interests, although they may work with other organizations to meet their goals.
Knowledge Sharing
Cooperatives provide education and training and share information with their members, managers, employees, and the public to ensure everyone understands how the cooperative operates and how to contribute to its success.
Community Concern
Cooperatives are committed to the sustainable development of their communities, whether local or global. They make decisions that prioritize long-term social, environmental, and economic well-being.
What industries and sectors are cooperatives most common in?
Cooperatives can be found in a wide variety of industries, each serving the specific needs of their members. Some of the most common sectors where cooperatives thrive include:
Agriculture
Agricultural cooperatives are among the oldest and most common types of cooperatives. Farmers join forces to purchase supplies, share equipment, and market their products more efficiently. By pooling resources, farmers can access bulk pricing, reduce costs, and gain access to larger markets. Examples include dairy cooperatives, grain elevators, and agricultural marketing cooperatives.
Education
Education cooperatives can look different depending on their purpose or who has formed them. They might be a program that combines classroom learning with work experience, a group of families that homeschool their children together, or a group of people working together on academics, athletics, or intramural clubs. Educational cooperatives can provide access to resources and learning opportunities that might otherwise be too expensive or difficult to organize individually.
Financial Services
Credit unions are the most well-known type of financial cooperative. These member-owned institutions provide savings accounts, loans, and other financial services to their members, often at better terms than commercial banks. Here’s a little did-you-know factoid – the Credit Union National Association, the premier national trade association, is based in Washington, D.C., and Madison, Wisconsin! (I love Wisconsin!!)
Grocery
Owned by the people who shop there, a grocery store cooperative focuses on the community. These cooperatives often focus on providing high-quality, locally sourced food and products while promoting sustainable practices. They operate with a focus on the community and typically offer members discounts or a share of profits.
Healthcare
Healthcare cooperatives provide medical services, insurance, or health-related support to their members. These cooperatives are often formed to provide affordable, high-quality care to underserved communities or to offer better options for individuals who might not have access to traditional insurance plans.
Housing
Housing cooperatives are common in urban areas where affordable housing is a concern. Members of a housing cooperative jointly own their residence, making it a more affordable and stable living situation. These cooperatives often focus on providing safe, well-maintained housing while giving members a say in how the community is run.
Insurance
In 1752 Benjamin Franklin founded the first US-based cooperative – a mutual insurance company. These are insurance companies that are owned by their policyholders. They work to provide affordable insurance options for members, often with lower premiums or better coverage than traditional for-profit insurance companies.
Purchasing
Businesses form purchasing cooperatives to combine their collective buying power to buy in bulk allowing them to cut costs and increase efficiencies. (Psst…this is where Valley fits in)
Utility Services
Delivering public services such as electricity, water, and telecommunications to its members, this type of cooperative is commonly found in rural areas and was created out of the New Deal.
Worker
Commonly seen in the retail and service sector, in a worker cooperative the workers own the business and have representation on their boards while adhering to the principle of one worker, one vote.
How to join a cooperative
Joining a cooperative is straightforward, but it’s important to understand the specific requirements of the cooperative in which you are interested. Here’s how to get started:
- Identify Your Needs: Determine which type of cooperative best fits your personal or business needs. Consider whether you’re looking for better access to goods, services, or lower prices.
- Research Cooperatives: Once you’ve identified the type of cooperative that best fits your personal needs, look for cooperatives in your area. Most cooperatives will have a membership process that outlines the benefits, responsibilities, and costs of joining.
- Understand the Principles: Ensure that the cooperative adheres to the principles of democratic control, equitable economic benefit, independent operation, and community concern.
- Commit to Participation: Membership in a cooperative often requires active participation. This could include attending meetings, voting on key decisions, or even contributing to the cooperative’s operations.
- Join and Enjoy the Benefits: Once you’ve identified a cooperative that fits your needs, it is time to commit and join. After becoming a member, you’ll gain access to the cooperative’s services, participate in its decision-making, and share in the benefits.
Valley’s History as a Cooperative
Valley Cooperative Association‘s humble beginnings started when after serving in World War II, Frances E. Quigley became a bakery supply salesman in Neenah, Wisconsin. The end of price controls led to dramatic price rises for ingredients and supplies. The small bakers Fran served were reluctant to pass those increases on to customers. They needed a way to lower their costs. Quigley suggested they combine their purchasing power in a cooperative. This would also allow them to reduce the time and expense spent on ordering, storing, and delivery. To Fran’s small bakery customers, the idea made sense.
With Fran leading the way, Valley Cooperative Association was born. The idea took off and the co-op began a steady climb. Valley has been offering a cost-effective method for members to buy supplies and stay competitive ever since.
Today Valley remains a member-owned cooperative and is led by a board of directors and team of executives.
Takeaway
In conclusion, cooperatives offer a unique business model that empowers individuals and organizations to work together toward shared goals. Whether you’re looking for better prices, improved services, or a stronger sense of community, joining a cooperative can be a fulfilling and beneficial decision.
Interested in becoming a member of our cooperative? Click here to learn more!
