What does a donkey and a co-op have in common? Democracy!

Lately I've had a bit of an obsession with cooperatives (aka co-ops).  Mainly this fascination has to do with seamless movement of a group of people moving in step with one another.  So how do co-ops work exactly? Well they’re more than just that place we buy fruits and veggies from.  In fact, they are much more complex then I had initially thought.   

The International Co-operative Alliance defines a co-op as “businesses owned and run by and for their members. Whether the members are the customers, employees or residents they have an equal say in what the business does and a share in the profits.”  What these businesses set out to do is operate based off of a set of shared core values rather than strictly just profit motives.  Any surplus revenues (profits) earned by the co-op are reinvested in the business and/or returned to members based on how much business they conducted with the co-op that year. Many co-ops are obligated to return a portion of their “surplus revenues” to members each year.  Members also share in any losses the organization might incur. 

Co-operatives also create and maintain employment for the communities they serve.  In the United States, 30,000 co-ops provide more than 2 million jobs.  In France, 3.5% of the active working population is employed by a co-op.  Co-operatives also provide large economic benefits to national economies.  For instance, Japan’s agricultural co-operatives produce $90 billion worth of goods and 91% of farmers have membership within those co-ops.  In New Zealand, 3% of GDP is generated by co-ops and co-ops make up 95% of the dairy market. 

As a business based off of a model that emphasizes ethical values and principles and whose goal it is to provide for the needs of its members, co-operatives play a pivotal role in responding to local community needs and objectives.  In fact, the United Nations Conference on Sustainable Development (Rio+20) acknowledged the role of co-operatives in "contributing to social inclusion and poverty reduction, in particular in developing countries.”  Instead of looking at short-term goals of maximizing profits, co-operatives have a long-term objective of maintaining sustainable economic growth, social development and environmental responsibility.

So what other advantages exist with co-operatives?

• Less Taxes!  Cooperatives that are incorporated normally are not taxed on surplus earnings refunded to members.  Instead members of a cooperative are only taxed once on their income from the cooperative and not on both the individual and the cooperative level.

• Funding! There are a variety of government-sponsored grant programs to help cooperatives start. For example, the USDA Rural Development program offers grants to those establishing and operating new and existing rural development cooperatives.

• Economies of scale!  Cooperatives may be able 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 substantial customer base.  This allows members to turn their focus improving products and services.

• Perpetual Existence!   Unlike other business structures, members in a cooperative can routinely join or leave the business without causing it to have to reincorporate.

• Democracy!  The inherit structure of a cooperative ensures that it serves its members' needs.  The "one member-one vote" philosophy is appealing to smaller investors because they have as much say in the organization as does a larger investor.

Co-operatives benefit our society in many ways.  Whether you are part of a co-op or not, I hope you've gained new perspective on this alternative business structure and are eager to take part in new ways.