How To Use it

Cooperatives operate according to a common set of principles, adopted by the International Cooperative Alliance in 1995. They include: voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training, and information; cooperation among cooperatives; and concern for community.

The proponents of the co-op must have a sound business concept, conduct market analysis, develop a detailed business plan, and secure financing. In addition, they must determine the co-op's membership, board, and capital structure. This entails making decisions on how members will vote; whether they will be grouped in classes; elections, whether board members will be paid, and how often they will meet. They must also decide how shares will earn dividends and what the share redemption procedure will be.
According to the National Cooperative Association, co-ops are more likely to be successful if they:

• provide only the goods and services members use;*
• maintain low administrative and overhead costs;
• maintain an open line of communication with members;
• select and develop a quality management team; and
• develop and implement a systematic method of cooperative education for members, employees, directors, and paid management.

For more keys to success as well as pitfalls to avoid, see http://www.ncba.coop.

Level of Use

Cooperatives are organized at both the local and regional level. Operating regionally can offer co-ops several advantages. Local co-ops benefit from associating and networking with other local co-ops. Some consumer cooperatives maximize their economies of scale by pooling the purchasing power of members across a region. Regional collaboration creates links of economic exchange between individual co-op models and maximizes assistance from regional support organizations.