A cooperative is an organization that is owned and controlled by its membership, with each member being an equal co-owner.

How Co-ops Work

There are many cooperatives all over the world including consumer co-ops (like PFC), worker co-ops (Edinburgh Bicycle Workers Cooperative) and producer co-ops (Ocean Spray). No matter what their function, all cooperatives exist to serve their member-owners.

Each member makes an investment in their co-op and has a voice in controlling their co-op’s activities. Anyone may become a member. At PFC, for example, any person can join] by making a $60 investment to get the benefits all members receive, including one vote in member decisions. This is different from privately owned businesses, in which there is unequal ownership and control based on the size of one’s investment.

Co-ops operate according to a set of specific business practices designed to benefit their memberships. Although cooperatives serve a wide variety of purposes and use differing organizational structures, they generally direct their activities toward the common good and foster active democratic participation and education.

The International Cooperative Alliance adopted the following principles in 1995:

Voluntary and Open Membership – There are many cooperatives all over the world including consumer co-ops (like PFC), worker co-ops (Edinburgh Bicycle Workers Cooperative) and producer co-ops (Ocean Spray). No matter what their function, all cooperatives exist to serve their member-owners.

Democratic Member Control – Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives, members have equal voting rights – one member, one vote – and cooperatives at other levels are organized in a democratic manner.

Members’ Economic Participation – Members contribute equally to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

Autonomy and Independence - Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

Education, Training and Information - Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of cooperation.

Cooperation among Cooperatives – Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.

Concern for Community – While focusing on member needs, co-operatives work for the sustainable development of their communities through policies accepted by their members.

Types of Co-ops

Any type of business can be organized as a cooperative. Co-ops can provide services for a wide range of social needs. Below are several general variations of cooperative structure.

Consumer Cooperatives – The membership consists of people who consume the goods and services provided by the co-op. These co-ops can provide services such as housing, childcare, food, energy, health care, savings and equipment. Examples include the University of Michigan Credit Union, Triangle Co-op Nursery, Great Oak Co-housing and PFC.

Producer Cooperatives – These co-ops provide goods and services for producers and are owned by the producers. A number of producer co-ops exist to serve the interests of food growers; two examples are Welch’s Grapes and Ocean Spray, which market farm products and are owned by growers.

Worker Cooperatives – The members and owners are the employees of the business. Worker co-ops (like Edinburgh Bicycle Workers Cooperative) are often small businesses and are found in areas as diverse as food processing, taxi services and crafts production.

Cooperative Organizations – These are co-ops with organizations as members rather than individuals. Two examples are the Michigan Alliance of Cooperatives and the National Cooperative Business Association.