What IS a co-op, anyway?
Hand in hand with the big green buzzwords like "organic" and "natural", we often see the terms "co-op" and "credit union". What exactly do these mean? Why are they so closely associated with environmentally friendly concerns?
Although co-ops and credit unions are not by definition environmental organizations, they are frequently linked to them due to the nature of the associations. At their heart, these organizations are community-driven business. They are all owned and democratically managed by their share-owners - the people (or business) who make use of the business, rather than being managed by a group of investors or a single managing owner.
The benefit of these cooperative units are substantial to the members. A business run by the people who purchase it's services does not concern itself primarily with profit. If you noticed that natural food co-ops are frequently expensive, well, that's the nature of the beast. Natural food is more expensive for a number of reasons (which I won't go into in THIS article.)
Similarly, credit unions are financial cooperatives of individuals with common bonds - usually employment, labor union membership, or residence. Like a grocery co-op, membership in a credit union usually entitles you to a vote and a portion of dividend profits.
What are the benefits of cooperative organizations? They usually have a very strong bond to the community that they serve - they will always try to make decisions that best serve their members, rather than kow-towing to a board of directors who may have never even entered the place of business. One of the biggest benefits is the knowledge that you are supporting your own community in a meaningful way.
There are four basic types of cooperative businesses - consumer, producer, worker, and shared purchasing services.
- Consumer Owned Co-ops
When a cooperative is owned by the users of the business, those who purchase the goods sold or the service rendered, it is considered consumer-owned. Credit unions, grocery co-ops, housing co-ops, and many more may fall into this category. - Producer Owned Co-ops
When a band of producers groups together to form a coalition, this unit will be a commonly owned unit by the producers. The farmers or craftsmen will be joined by a common processing or marketing collective. An example of this would be Land O'Lakes, in Arden, Minnesota - an agricultural collective owned by its farmer members. - Worker-owned Co-ops
Worker co-ops are owned and managed by their employees. An example would be the Rosauers Grocery store chain, based out of Spokane, Washington. This chain has been fully owned by it's Employee Shareholders since 1990. - Purchasing Co-ops
When independent business group together to enhance their purchasing power with suppliers, their alliance is considered a purchasing co-op. Ace Hardware is an example, where independent hardware store owners share a national brand and coordinate their purchases.
Sources:
- the Merc,"Types of Co-ops"
- Credit Union National Association
Updated by Joe Dolson on 24 August, 2009
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