I attended a board meeting recently and was surprised to hear the word “cooperative” used two different ways. Maybe you have also experienced this confusion. An individual is said to be cooperative when working smoothly and without complaints with others. The board of directors was not referring to this informal definition. The underlying principle is the same for business.
My company was investigating the weaknesses and strengths of a purchasing cooperative business model. This is a legal term and an application (1023) must be submitted to the government for approval.
“A co-operative (also known as co-op, cooperative or coop) is an autonomous association of people united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled business. Since 2002 Cooperatives and Credit Unions could be distinguished by use of a .coop domain.” Wikipedia
The google dictionary offers both nouns and adjective definitions.
- “involving mutual assistance in working toward a common goal. “every member has clearly defined tasks in a cooperative enterprise”
- “A farm, business, or other organization which is owned and run jointly by its members, who share the profits or benefits.”
The Legal Dictionary has a broader view on the subject to offer: “An association or corporation established for the purpose of providing services on a nonprofit basis to its shareholders or members who own and control it.”
- non-profit community organizations
- businesses owned and managed by the people who use their services-a consumer cooperative
- organizations managed by the people who work there -worker cooperatives
- organizations managed by the people to whom they provide accommodation- housing cooperatives
- hybrids such as worker cooperatives that are also consumer cooperatives or credit unions
- multi-stakeholder cooperatives such as those that bring together civil society and local actors to deliver community needs
- second-and third-tier cooperatives whose members are other cooperatives
Business services, such as personnel and benefits management, and group purchasing of goods and services
Childcare
Credit and personal financial services
Equipment, hardware and farm supplies
Electricity, telephone, Internet, satellite and cable TV services
Food and grocery services
Funeral and memorial service planning
Health care
Housing
Insurance
Legal and professional services
Marketing of agricultural and other products
Voluntary and open membership
Democratic member control
Member economic participation
Autonomy and independence
Education, training and information-sharing
Cooperation among cooperatives
Concern for community
Family owned businesses experience difficulties when competing with larger companies. One of the issues is purchasing power. Ordering large quantities usually mean lower prices for individual items. A cooperative enables small business to command smaller costs for supplies. There are other advantages for joining a coop as well. When small entities pool link their buying power to acquire inventory and services like insurance, they lower operating costs, better respond to competition, and improve overall performance. Smart entrepreneurs can out think big box stores if given the leverage of a coop.
Cooperatives offer services such as improved marketing channels, public relations, lobbying efforts, educational and training programs, networking opportunities, sharing of ‘best business practices’ and technology support.
I will let you know what Artistic Perspectives decides to do in our wonderful community of Blackfoot, Idaho. In the mean time, give us the benefit of your thinking. There are arts and crafts cooperatives that mostly share marketing expenses and services. Our goal during investigation of this model was to find the best way to strengthen collaboration in our town. The coop is a strong methodology but some of the government requirements for becoming a cooperative, may actually harm the model.
The picture comes from the Idaho Cooperative Center.