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Cooperative

2007 Schools Wikipedia Selection. Related subjects: Business; Community
organisations

          Part of the series on
              Cooperatives
         Types of Co-operatives

   Housing cooperative
   Building cooperative
   Retailers' cooperative
   Utility cooperative
   Worker cooperative
   Social cooperative
   Consumers' cooperative
   Agricultural cooperative
   Credit union
   Cooperative banking
   Carsharing
   Cooperative federation
   Cooperative union
   Cooperative wholesale society
   Mutual insurance
           Rochdale Principles

   Voluntary and open membership
   Democratic member control
   Member economic participation
   Autonomy and independence
   Education, training, and information
   Cooperation among cooperatives
   Concern for community
     Political and Economic Theories

   Cooperative federalism
   Cooperative individualism
   Owenism
   Third way
   Socialism
   Socially responsible investing
   Social enterprise
              Key Theorists

   Robert Owen
   William King
   The Rochdale Pioneers
   G.D.H. Cole
   Charles Gide
   Beatrice Webb
   Friedrich Raiffeisen
   David Griffiths
              Organizations

   List of cooperatives
   List of cooperative federations
   International Co-operative Alliance
   Co-operative Party
                  ·

   A cooperative (also coöperative or co-operative or co-op) has been
   defined in the International Co-operative Alliance (ICA) Statement on
   the Co-operative Identity as "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." They "are based on the values of
   self-help, self-responsibility, democracy, equality, equity and
   solidarity. In the tradition of their founders, co-operative members
   believe in the ethical values of honesty, openness, social
   responsibility and caring for others." Such enterprises are the focus
   of study in the field of Co-operative economics.

Meaning

Co-operatives as Legal Entity

   A mainstream cooperative comprises a legal entity owned and
   democratically controlled by its members, with no passive shareholders,
   unless they hold non-voting shares. It thus combines the equal control
   characteristic of many partnerships with the legal personality
   conferred on corporations.

   In the United States most cooperatives are organized as limited
   liability companies (LLCs) but other legal entities may also be used.
   Cooperatives may or may not pay dividends. For co-operatives falling in
   the latter category, any surplus may be returned to members by way of a
   rebate or bonus on their activity with the cooperative, or a dividend
   on their shareholding in the cooperative.

   In the United Kingdom the traditional corporate form taken by
   cooperatives is the 'bona fide co-operative' under the Industrial and
   Provident Societies Acts. Since the 1980s, however, many have
   incorporated under the Companies Acts, limited either by shares or by
   guarantee. In a bid for sustainability, many cooperatives adopt the
   principle of ' common ownership', and have a zero or nominal share
   capital, along with a clause stipulating altruistic dissolution. This
   means that the cooperative cannot be wound up and its assets
   distributed for personal profit (see: asset stripping). The facility to
   legally 'lock' a cooperative's assets in this way was brought into
   force in 2004.

   In the European Union, the European Cooperative Statute will come into
   force in October 2006, to provide a corporate form for cooperatives
   with individual or corporate members in at least two of the EU member
   states.

   In the European Union and in large regions of America, cooperatives,
   with associations, foundations and mutual funds, are considered parts
   of the Social economy or Third Sector.

Co-operative Identity

   Such legal entities have a range of unique social characteristics.
   Membership is open, meaning that anyone who satisfies certain
   non-discriminatory conditions may join. Unlike a union, in some
   jurisdictions a cooperative may assign different numbers of votes to
   different members. However most cooperatives are governed on a strict
   "one member, one vote" basis, to avoid the concentration of control in
   an elite. Economic benefits are distributed proportionally according to
   each member's level of economic interest in the cooperative, for
   instance by a dividend on sales or purchases. Cooperatives may be
   generally classified as either consumer or producer cooperatives,
   depending largely on the mutual interest (see mutual organizations)
   that their membership shares. Classification is also often based on
   their function or trade sector.

Popularity and Philosophy

   Worldwide, some 800 million people are members of cooperatives, and it
   is estimated that cooperatives employ some 100 million people.

   Co-operatives have been presented as an ideal organisational form for
   proponents of a number of socio-political philosophies, including
   Co-operative Individualism and Co-operative Federalism; such literature
   often cites the achievement of a Co-operative Commonwealth as an
   ultimate objective. The cooperative movement often has links and
   associations with Green politics or Socialist politics, with socially
   responsible investing, and with the social enterprise movement.

   Alternatively, the term may be used loosely to signify its members'
   ideology (as in 'jazz coop').

Types of cooperatives

Housing cooperative

   A housing cooperative is a legal mechanism for ownership of housing
   where residents either own shares (share capital co-op) reflecting
   their equity in the co-operative's real estate, or have membership and
   occupancy rights in a not-for-profit co-operative (non-share capital
   co-op), and they underwrite their housing through paying subscriptions
   or rent.

   Housing cooperatives come in three basic equity structures. In
   market-rate housing co-ops, members can sell their shares in the co-op
   whenever they like for whatever price the market will bear, much like
   any other residential property. Market-rate co-ops are very common in
   New York City. Limited Equity co-ops, which are often used by
   affordable housing developers, allow members to own some equity in
   their home, but limit the sale price of their membership share to that
   which they bought in for. Provisions are often made for inflation, or
   improvements made on the building. The purpose of this is to prevent
   co-op members from using their share in the co-op to speculate on
   rising real estate prices, and to keep the price of a membership share
   affordable to future members. In the third structure, called
   zero-equity or "Group Equity" by the North American Students of
   Cooperation (NASCO), one of the proponents of this model, individual
   members do not build up equity in the co-op - the co-op is not owned by
   its members, but by itself.

   Housing cooperatives may occupy various types of physical structure.
   Co-ops can be structured as individual housing units grouped together,
   such as in an apartment building, or they can be groups of people
   living together in one housing unit, as an alternative to the
   traditional family structure.

Building cooperative

   Members of a building cooperative - in Britain known as a self-build
   housing co-operative - pool resources to build housing, normally using
   a high proportion of their own labour. When the building is finished,
   each member is the sole owner of a homestead, and the co-operative may
   be dissolved.

   This collective effort was at the origin of many of Britain's building
   societies, which however developed into "permanent" mutual savings and
   loan organisations, a term which persisted in some of their names (such
   as the former Leeds Permanent). Nowadays such self-building may be
   financed using a step-by-step mortgage which is released in stages as
   the building is completed.

   The term also refers to workers' co-operatives in the building trade.

Retailers' cooperative

   A retailers' cooperative (often known as a secondary or marketing
   co-operative in the UK) is an organization which employs economies of
   scale on behalf of its members to get discounts from manufacturers and
   to pool marketing. It is common for locally-owned grocery stores,
   hardware stores and pharmacies. In this case the members of the
   cooperative are businesses rather than individuals.

   The well-known Best Western hotel chain is actually a giant
   cooperative, although it now prefers to call itself a "nonprofit
   membership association." It gave up on the "cooperative" label after
   the courts kept insisting on calling it a franchisor despite its
   nonprofit status.

Utility cooperative

   A utility cooperative is a public utility that is owned by its
   customers. It is a type of consumer cooperative. In the US, many such
   cooperatives were formed to provide rural electrical and telephone
   service as part of the New Deal. See Rural Utilities Service.

Worker cooperative

   A worker cooperative is a cooperative that is wholly owned and
   democratically controlled by its "worker-owners". There are no outside,
   or consumer owners, in a worker's cooperative - only the workers own
   shares of the business. Membership is not compulsory for employees, and
   only employees can become members.

Social cooperative

   A particularly successful form of multi-stakeholder cooperative is the
   Italian "social cooperative", of which some 7,000 exist. A "type A"
   social cooperative brings together providers and beneficiaries of a
   social service as members. A "type B" social cooperative brings
   together permanent workers and previously unemployed people who wish to
   integrate into the labour market.

   Social co-operatives are legally defined as follows:
     * the objective is the general benefit of the community and the
       social integration of citizens
     * type A co-operatives provide health, social or educational services
     * those of type B integrate disadvantaged people into the labour
       market. The categories of disadvantage they target may include
       physical and mental disability, drug and alcohol addiction,
       developmental disorders and problems with the law. They do not
       include other factors of disadvantage such as race, sexual
       orientation or abuse
     * various categories of stakeholder may become members, including
       paid employees, beneficiaries, volunteers (up to 50% of members),
       financial investors and public institutions. In type B
       co-operatives at least 30% of the members must be from the
       disadvantaged target groups
     * the co-operative has legal personality and limited liability
     * voting is one person one vote
     * no more than 80% of profits may be distributed, interest is limited
       to the bond rate and dissolution is altruistic (assets may not be
       distributed)

   A good estimate of the current size of the social co-operative sector
   in Italy is given by updating the official ISTAT figures from the end
   of 2001 by an annual growth rate of 10% (assumed by the Direzione
   Generale per gli Ente Cooperativi). This gives totals of 7,100 social
   co-operatives, with 267,000 members, 223,000 paid employees, 31,000
   volunteers and 24,000 disadvantaged people undergoing integration.
   Combined turnover is around 5 billion euro. The co-operatives break
   into three types: 59% type A (social and health services), 33% type B
   (work integration) and 8% mixed. The average size is 30 workers.
   A supermarket run by a consumer cooperative in the port of Leith,
   Edinburgh.
   Enlarge
   A supermarket run by a consumer cooperative in the port of Leith,
   Edinburgh.

Consumers' cooperative

   The term co-operative also applies to businesses owned by their
   customers: a Consumers' Co-operative. Employees can also generally
   become members. Members vote on major decisions, and elect the board of
   directors from amongst their own number. A well known example in the US
   is the REI (Recreational Equipment Incorporated) co-op.

   The world's largest consumer co-operative is the Co-operative Group in
   the United Kingdom, which has a variety of retail and financial
   services. In reality the Co-operative Group is actually something of a
   hybrid, having both corporate (other cooperative businesses) and
   individual members.

   Japan has a very large and well developed consumer co-operative
   movement with over 14 million members; retail co-ops alone had a
   combined turnover of 2.519 trillion Yen (21.184 billion U.S. Dollars
   [market exchange rates as of 11/15/2005]) in 2003/4. (Japanese
   Consumers' Co-operative Union., 2003). As well as retail co-ops there
   are medical, housing, insurance co-ops alongside institutional
   (workplace based) co-ops, co-ops for school teachers and university
   based co-ops.

   Around 1 in 5 of all Japanese households belongs to a local retail
   co-op and 90% of all co-op members are women. (Takamura, 1995). Nearly
   6 million households belong to one of the 1,788,000 Han groups
   (Japanese Consumers' Co-operative Union., 2003). These consist of a
   group of five to ten members in a neighbourhood who place a combined
   weekly order which is then delivered by truck the following week. A
   particular strength of Japanese consumer co-ops in recent years has
   been the growth of community supported agriculture where fresh produce
   is sent direct to consumers from producers without going through the
   market.
   Farmers' grain Co-op in Crowell, TX.
   Enlarge
   Farmers' grain Co-op in Crowell, TX.

Agricultural cooperative

   Agricultural cooperatives are widespread in rural areas.

   In the United States, there are both marketing and supply cooperatives.
   Agricultural marketing cooperatives, some of which are
   government-sponsored, promote and may actually distribute specific
   commodities. There are also agricultural supply cooperatives, which
   provide inputs into the agricultural process.

   In Europe, there are strong agricultural / agribusiness cooperatives,
   and agricultural cooperative banks. Most emerging countries are
   developing agricultural cooperatives. Where it is legal, medical
   marijuana is generally produced by cooperatives.

Cooperative banking (Credit unions and Cooperative savings banks)

   The Co-operative Bank's head office, 1 Balloon Street, Manchester. The
   statue in front is of Robert Owen, a pioneer in the Co-operative
   movement.
   Enlarge
   The Co-operative Bank's head office, 1 Balloon Street, Manchester. The
   statue in front is of Robert Owen, a pioneer in the Co-operative
   movement.

   Credit Unions provide a form of cooperative banking.

   In North America, the caisse populaire movement started by Alphonse
   Desjardins in Quebec, Canada pioneered credit unions. Desjardins wanted
   to bring desperately needed financial protection to working people. In
   1900, from his home in Lévis, Quebec, he opened North America's first
   credit union, marking the beginning of the Mouvement Desjardins.

   While they have not taken root so deeply as in Ireland or the USA,
   credit unions are also established in the UK. The largest are
   work-based, but many are now offering services in the wider community.
   The Association of British Credit Unions Ltd - ABCUL - represents the
   majority of British Credit Unions. British Building Societies developed
   into general-purpose savings & banking institutions with "one member,
   one vote" ownership and can be seen as a form of financial cooperative
   (although many ' de-mutualised' into conventionally-owned banks in the
   1980s & 1990s). The UK Co-operative Group includes both an insurance
   provider CIS and the Co-operative Bank, both noted for promoting
   ethical investment.

   Other important European banking cooperatives include the Crédit
   Agricole in France, Migros and Coop Bank in Switzerland and the
   Raiffeisen system in many Central and Eastern European countries. The
   Netherlands, Spain, Italy and various European countries also have
   strong cooperative banks. They play an important part in mortgage
   credit and professional (i.e. farming) credit.

   Cooperative banking networks, which were nationalized in Eastern
   Europe, work now as real cooperative institutions. A remarkable
   development has taken place in Poland, where the SKOK (Spółdzielcze
   Kasy Oszczędnościowo-Kredytowe) network has grown to serve over 1
   million members via 13,000 branches, and is larger than the country’s
   largest conventional bank.

   In Scandinavia, there is a clear distinction between mutual savings
   banks (Sparbank) and true credit unions (Andelsbank).

Car sharing

   Carsharing is an arrangement by which individuals and groups share
   vehicles, which are stored in convenient common locations. It may be
   thought of as a very short-term, locally-based car hire, run on a
   members-only basis. It is most prevalent in Switzerland (where the
   Mobility Car-Sharing cooperative has some 50,000 clients), but is also
   common in Germany, Austria, and the Netherlands, and is fast growing in
   popularity in other European countries. Car sharing operations may be
   for-profit or non-profit organizations. Zipcar and Flexcar are
   examples.

   In Britain, where the term 'car sharing' has also been used for
   carpools or ride-sharing, some people prefer the term 'car clubs'.

Federal or Secondary Co-operatives

   In some cases, Co-operative societies find it advantageous to form
   Federal or Secondary Co-operatives in which all members are themselves
   Co-operatives. Historically, these have predominantly come in the form
   of Co-operative Wholesale Societies, and Co-operative Unions.
   Co-operative Federations are a means through which Co-operative
   Societies can fulfil the sixth Rochdale Principle, Co-operation amongst
   Co-operatives, with the ICA noting that "Co-operatives serve their
   members most effectively and strengthen the co-operative movement by
   working together through local, national, regional and international
   structures."

   See Also: List of Co-operative Federations

Co-operative Wholesale Society

   According to Co-operative economist Charles Gide, the aim of a
   Co-operative wholesale society is to arrange “bulk purchases, and, if
   possible, organise production.” The best historical example of this
   were the English CWS and the Scottish CWS, which were the forerunners
   to the modern Co-operative Group.

Co-operative Union

   A second common form of Co-operative Federation is a Co-operative
   Union, whose objective (according to Gide) is “to develop the spirit of
   solidarity among societies and... in a word, to excercise the functions
   of a government whose authority , it is needless to say, is purely
   moral.” Co-operatives UK and the International Co-operative Alliance
   are examples of such arrangements.

Co-operative Party

   In some countries with a strong Co-operative sector, such as the UK,
   Co-operatives may find it advantageous to form a Parliamentary
   Political party to represent their interests. The British Co-operative
   Party is a prime example of such an arrangement.

History of the co-operative movement

   Robert Owen ( 1771– 1858) fathered the cooperative movement. A Welshman
   who made his fortune in the cotton trade, Owen believed in putting his
   workers in a good environment with access to education for themselves
   and their children. These ideas were put into effect successfully in
   the cotton mills of New Lanark, Scotland. It was here that the first
   co-operative store was opened. Spurred on by the success of this, he
   had the idea of forming "villages of co-operation" where workers would
   drag themselves out of poverty by growing their own food, making their
   own clothes and ultimately becoming self-governing. He tried to form
   such communities in Orbiston in Scotland and in New Harmony, Indiana in
   the United States of America, but both communities failed.

   Although Owen inspired the co-operative movement, others – such as Dr
   William King ( 1786– 1865) – took his ideas and made them more workable
   and practical. King believed in starting small, and realized that the
   working classes would need to set up co-operatives for themselves, so
   he saw his role as one of instruction. He founded a monthly periodical
   called The Cooperator, the first edition of which appeared on May 1,
   1828. This gave a mixture of co-operative philosophy and practical
   advice about running a shop using cooperative principles. King advised
   people not to cut themselves off from society, but rather to form a
   society within a society, and to start with a shop because, "We must go
   to a shop every day to buy food and necessaries - why then should we
   not go to our own shop?" He proposed sensible rules, such as having a
   weekly account audit, having 3 trustees, and not having meetings in
   pubs (to avoid the temptation of drinking profits). A few poor weavers
   joined together to form the Rochdale Equitable Pioneers Society at the
   end of 1843. The Rochdale Pioneers, as they became known, set out the
   Rochdale Principles in 1844, which have been highly influential
   throughout the cooperative movement.

   Co-operative communities are now widespread, with one of the largest
   and most successful examples being at Mondragón in the Basque country
   of Spain (see link below). Co-operatives were also successful in
   Yugoslavia under Tito where Workers' Councils gained a significant role
   in management.

   In many European countries, cooperative institutions have a predominant
   market share in the retail banking and insurance businesses.
   An annual general meeting of a retail co-operative in England, 2005.
   Enlarge
   An annual general meeting of a retail co-operative in England, 2005.

   In the UK, co-operatives formed the Co-operative Party in the early
   20th century to represent members of co-ops in Parliament. The
   Co-operative Party now has a permanent electoral pact with the Labour
   Party, and some Labour MPs are Co-operative Party members. UK
   co-operatives retain a significant market share in food retail,
   insurance, banking, funeral services, and the travel industry in many
   parts of the country.

Other meanings

   - In biochemistry, a macromolecule that exhibits cooperative behaviour
   has ligand binding characteristics that depend on the amount of ligand
   bound.
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