What are Cooperatives?

Cooperatives are businesses owned by “member-owners”. Co-ops are democratically controlled by their member-owners, and unlike a traditional business each member gets a voice in how the business is run. Services or goods provided by the co-op benefit and serve the member owners. Contrary to popular belief coops are not non-profits, and do aim earn profits. Earnings generated by the cooperative benefit the member-owners.

The way co-ops operate is much closer to a traditional business than a non-profit. However, the ways in which co-ops differ from traditional businesses can be seen in the 7 Cooperative Principles. These principles are:

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Member's Economic Participation
  4. Autonomy and Independence
  5. Education, Training, and Information
  6. Cooperation Among Cooperatives
  7. Concern for Community

Co-ops 101: An Introduction to Cooperatives by USDA Rural Development 

 

Cooperatives VS. Non-Profits 

There is often a lot of confusion about the differences between cooperatives and non-profits. These articles aim to help illustrate the similarities and differences between the two entities. 

Cooperatives and Non Profit Associations - Are Co-op’s Non- Profits? 
Alaska Cooperative Development Center 

"Many groups ask about “non-profit” co-ops and the relationship between cooperatives and non -profits. It is easy to get mixed up in this topic. It can be interesting to think about what is profit? And what characteristics define an organization as a non profit? But in most cases what groups want to know is how are cooperatives different from 501(c)3 organizations, the type of organization most of us think of when we say “Non Profit.”"

Should a Co-op be Organized as a Nonprofit? 

Margaret Lund 

"There are a number of significant differences between organizing on a for-profit vs. nonprofit basis. For a cooperative, amongst the most important questions for a co-op board to consider is “what is the purpose of our cooperative?” and “who is our organization set up to benefit?”"

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