34th Annual Ohio Employee Ownership Conference update

Starting a Cooperative Business

There are numerous kinds of cooperatives that focus on providing different services to their members and communities. While cooperatives face similar challenges the ways in which to overcome them depends upon the unique context and goals of the cooperative.

If you are an entrepreneur looking for information on using an employee owned cooperative as a tool to jump start your business or community, then we can help.

The OEOC has the experienced professionals that can assist you in all phases of the exploration and implementation process. Contact us at 330-672-3028 or oeoc@kent.edu for more information. Or, if you’d like to explore the concept a bit more, follow any of the links below.

What are Cooperatives?

According to the International Co-operative Alliance cooperatives are "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise". Cooperatives bring people together in a democratic and equal way. Whether the members are the customers, employees, users or residents, cooperatives are democratically managed by the one member, one vote rule. Members share equal voting rights regardless of the amount of capital they put into the enterprise. Unlike other businesses cooperatives are not owned by shareholders but the members of the cooperative, ensuring that the benefits and profits of the business are returned to the members or reinvested into the cooperative.

There are a number of different kinds of cooperatives that achieve different goals and are owned by different groups of people.

  • Consumer: owned by consumers who buy goods or services from their cooperative. These include credit unions which provide financial services to the members of the cooperative, food or retail outlets that are owned by those who shop at the business, housing cooperatives which are owned by the tenants of the housing complex, or rural electric cooperatives owned by those who pay for electricity.
  • Producer: owned by producers of commodities or crafts who have joined forces to process and market their products. A common example of this type of cooperative are agricultural cooperatives focused on jointly marketing their goods but, it can also include groups that jointly market services such as a news gathering agency.
  • Worker: Here the cooperative unit is at the level of the business itself. Worker cooperatives are owned and democratically governed by employees who become co-op members of the business itself.
  • Purchasing: owned by independent businesses or municipalities to improve their purchasing power. These can include hardware stores that purchase goods together or groups of farmers who purchase inputs together to achieve a lower price.
  • Hybrid or Multi-stakeholder: are cooperatives that represent members of two or more "stakeholder" groups within the same cooperative, including consumers, producers, workers, volunteers or general community supporters.

Cooperative Values

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity as well as the ethical values of honesty, openness, social responsibility, and caring for others.

Cooperative Principles

Cooperative principles are the guidelines by which cooperatives put their values into practice, there are seven principles in total. While its easy to see how some of the principles can be practically applied others may be more difficult. A great resource for thinking this the report issued by the International Co-operative Alliance "Guidance Notes to the Co-operative Principles" which provides concrete examples of how the cooperative principles can be put into practice.

  1. Voluntary and Open Membership: Cooperatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
  2. Democratic Member Control: Cooperatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions.
  3. Member Economic Participation: Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative.
  4. Autonomy and Independence: Cooperatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
  5. Education, Training, and Information: Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives.
  6. Cooperation among Cooperatives: Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
  7. Concern for Community: Cooperatives work for the sustainable development of their communities through policies approved by their members.

The Social and Economic Impact of Cooperatives

Economic Impacts:

There are millions of cooperatives world wide that provide both employment and social needs to there members and community. A study of cooperatives in 145 countries estimates that there are 2.6 million cooperatives worldwide with one billion members, 12.6 million employees. It also found that these cooperatives hold $20 Trillion in assets and generate $3 trillion in annual revenue.

The US has a long history of cooperative development that continues until today. A study carried out by researchers at the University of Wisconsin Center for Cooperatives found that there is an estimated 30,000 cooperatives with 350 million members (many people are members of more than one cooperative) that operate 73,000 places of business. In US cooperatives provide employment for over 2 million people, generate over $600 billion in revenue, pay $75 billion in wages and hold $3 trillion in assets. In addition, the report estimates that US cooperatives also provide an added economic impact of $75 billion through 'patronage', the returning of a portion of profits to cooperative members.

Social Impacts

The impact of cooperatives isn't only measured in economic terms. Many cooperatives provide services that improve the quality of life of members that would otherwise not be available in their communities. Examples include childcare, home health care, housing, financial services and basic utilities. Cooperatives are a way to anchor small businesses in, and provide needed goods and services to, our local communities. They enable greater participation by workers, consumers, producers, and others in our economy, creating networks of individuals connected through the achievement of a common goal.

Additional Information:

Reports and Presentations on Cooperative Development

Organizations Supporting Cooperative Development

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