An Overview on Cooperatives Within the United States

Topics: Cooperative, Worker cooperative, Economic democracy Pages: 22 (7120 words) Published: February 24, 2013
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An Overview on Cooperatives within the United States
Colleen Laverty, Christian Munoz, Shiyao Xie

An Overview on Cooperatives within the United States
Colleen Laverty, Christian Munoz, Shiyao Xie

Table of Contents
What is a Cooperative4
Cooperative Principles4
Incorporation status5
Tax-filing status6
Ownership considerations7
Financial Management7
Startup costs7
How cooperatives are financed?7
The Seven Principles of Cooperatives8
Consumer Cooperative10
Producer cooperative11
Worker cooperative12
Purchasing/Shared Services cooperative13
Hybrid cooperative14
Nonprofit Entities15
Quasi-governmental Entities15
Limited Cooperative Associations15
Partnerships, Associations and Clubs, and Employee Stock Ownership Plans16
Cooperative Governance Stakeholders16
Board of Directors17
Cooperative Governance System Structure17
Centralized Structure18
Federated Structure18
Mixed Structure18
Three Core Cooperative Functions Performed18
Impact on United States Economy19
Commercial Sales & Marketing19
Social & Public Services20
Financial Services20
Works Cited22

What is a Cooperative
Cooperative businesses are unique, diverse and in many ways they are much like other businesses in today’s economy. The definition of “what is a cooperative” is simple. A cooperative organization is one that belongs to the people who use its goods or services. Cooperatives are “autonomous associations of persons who voluntarily cooperate for their mutual social, economic, and cultural benefit.” These organizations can include not for profit businesses and companies that are owned and managed by people who work for the cooperative, use its services, or live in its community. 100 million people are members of 47,000 U.S. cooperatives. These members have organized to provide themselves with goods and services in nearly every sector of our economy.

The origin of cooperatives dates back centuries when considering the ideology of profit sharing. The common thread amongst all cooperatives is the principle that “an enterprise or association should be owned and controlled by the people it serves, and share any surpluses on the basis of each member’s cooperative contribution rather than their capacity to invest financial capital.” Another interesting aspect in terms of the cooperative organization is that their members and owners share equally in the control of their business. In most cases they meet regularly with a board of directors who hire management to handle the everyday affairs of the cooperative. This is to ensure the member’s desires of the cooperative are being met on a regular basis. Cooperative members invest shares into the business in order to provide the needed capital for a durable operation. All profits gained after financial obligations are met will be set aside in order to improve the cooperative and then returned to its members. “Economic benefits are distributed proportionally to each member's level of participation in the cooperative, for instance, by a dividend on sales or purchases, rather than according to capital invested.” Cooperative Principles

There are several different principles that cooperative institutions follow. These general values include: Voluntary and Open Membership, Democratic Member Control, Members’ Economic Participation, Autonomy and Independence, Education, Training and Information, Cooperation among Cooperatives, and lastly Concern for Community. These principles and values enable all cooperatives to have the same framework for a...

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