Cooperatives (often referred to as coops) are loosely defined as an independent group of individuals voluntarily collaborating in pursuit of social, cultural and/or economic objectives. A cooperative is owned and operated by all members equally, and control is created democratically (everyone has a voice in organizational decisions). While it is a business model, it can be applied to a wide variety of other circumstances such as consumer cooperatives, housing cooperatives, credit unions, worker cooperatives, and various non-profit formats.
Why Choose A Coop?
At the core of a coop is the concept of equality. There is no real room for hierarchy in a coop, nor is it built to differentiate between different levels of ownership, contribution, or partnership. Coops are intrinsically democratic, and rely heavily on the assumption that everyone involved has equal stake. This balanced organizational model (flat organizations) can come with both challenges and advantages.
For example, cooperatives are quite resistant to external factors. 80% of coops survive their first five years (compared to 41% of businesses with other ownership types). Another benefit is that cooperatives are often invested in solving social issues and providing value in their communities. Coops can be highly ethical and unifying forces in industries and communities, and demonstrate a commitment to valuing everybody involved.
How To Build A Coop
While there are many perspectives on what makes a coop, the seven Rochdale Principles are a useful starting point when it comes to setting the ideological boundaries of your coop:
- Voluntary and open membership
- Democratic member control
- Economic participation by members
- Autonomy and independence
- Education, training, and information
- Cooperation among cooperatives
- Concern for community
From a legal standpoint, coops are quite simple. It is registered under the stipulation that all members are equal democratic contributors, and that joining it is open and non-discriminatory as long as the approved requirements for participation are met. No individual owner can derive profit exceeding the fixed interest, nor gain greater control over the operations of the cooperative.
Conclusion
Coops are a good option depending on what it is an organization is trying to accomplish. Considering the specificity of this model in terms of structure and decision-making, owners must be comfortable being merely one member among many and being generally oriented towards beneficial objectives for the community.