What is a cooperative?
It is an independent association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a group owned and democratically-controlled business. It is a business formed by a group of people who join forces and work together to solve a problem or reach a goal that they all share. I
All cooperatives are owned and governed democratically, applying the principle of “one member, one vote.”
What is group ownership?
Co-op members are not just customers, employees, or users of the business—they are also the business owners. These member-owners are concerned not only about whether the enterprise is making money, but whether the business is meeting the needs of its member-owners. These needs may be economic (making a fair wage), non-economic (contributing to a healthy environment, or setting an example of worker participation in business management), or some combination.
What is democratic control?
Participation in the decision-making process is one of the primary ways business owners exercise their rights as owners. In a cooperative ownership structure, by contrast, control is vested with each member, not each share of stock. This means that each member casts one vote in any business decision that is put before the membership, regardless of the number of shares owned. Cooperatives are operated according to the democratic principle of “one member, one vote.” Co-ops are led by member-elected boards of directors. The co-op’s manager or other top staff report directly to the board. Since the board members are the ones who will be leading the organization and making key decisions on behalf of the membership, the most important vote that any co-op member makes is for the board of directors. In a worker co-op, all members engage in electing their top leadership.
What are benefits of membership?
Cooperatives are operated for the beneﬁt of their members. Like any business, a cooperative must make at least as much money as it spends, but spending decisions are also based on delivering the greatest value to members.
In a cooperative, net income (income over and above expenses) is redistributed back to the members based on some equitable system. This system is called “patronage” and the redistributed proﬁts are called “patronage rebates,” “patronage refunds,” or sometimes “patronage dividends.” Members are “patrons” of the co-ops, and proﬁts are redistributed back to members based on how much business they do with the co-op (that is, how much they “patronize” it).
In a producer co-op, this might be how much grain, milk, or other product the farmer-member markets through the cooperative.
In a consumer co-op, patronage refunds would generally be based on the total annual purchases from the co-op.
In a worker co-op, patronage is measured based on an equitable formula of labor input, either according to hours worked, pay level, seniority, or some combination of all three. Thus, while a conventional investor-owned business provides returns based on capital input, a worker cooperative provides returns based on labor input. Because cooperatives are operated for the beneﬁts of members and not as speculative investment vehicles, they function essentially at cost. http://ow.ly/i/1Ng10 http://ow.ly/jBHZX