is a Cooperative?
cooperative is 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.
In Georgia, you must be a group of agricultural producers in order
to organize under the Georgia Cooperative Marketing Act (GA 2-10-80).
However, any group may form a business which acts and functions
as a cooperative.
cooperative exists to provide economic services to its members rather
than just to generate a return on investment. A portion of all of
its capital comes from members rather than outside investors. Capital
is obtained by direct contributions through membership fees or sale
of stock, by agreement with members to withhold a portion of net
income based on patronage, or through assessments on some regular
basis such as per unit of product sold or purchased, or per acre,
and so on.
both rural and urban, have been part of the American economy for
more than 100 years. In the United States there are more than 40,000
cooperatives that serve one out of every four citizens. Application
of the cooperative business structure in rural economies is virtually
Cooperatives are Organized
Improve bargaining power
2. Reduce costs
3. Obtain products or services otherwise unavailable
4. Expand new and existing market opportunities
5. Improve product or service quality
6. Increase income
cooperatives are owned by farmers, producers or small businesses.
Agricultural producers or crafts people organize cooperatives to
process and market their goods (dairy co-ops), and to provide themselves
with credit (credit unions and Farm Credit System), equipment and
production supplies (Southern States stores). Similarly, retail
stores or small businesses organize cooperatives to provide supplies
or common services (ACE Hardware).
cooperatives enable consumers to secure a wide array of goods and
services. For example, they may offer health care, utilities, insurance,
and housing. They may buy and sell food, heating fuel, hardware,
and other chemical goods. Or, they may operate credit unions, childcare
facilities and funeral and memorial societies. Almost all consumer
needs can be met with cooperatives. In Georgia we have examples
of many of these types of co-ops.
cooperatives are businesses owned and controlled by their employees.
Worker cooperatives may be found in almost any industry. An examples
may be employee-owned food stores.
cooperative principles are guidelines by which cooperatives put
their values into practice.
principle: Voluntary and Open Membership. Cooperatives are voluntary
organizations, 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.
principle: Democratic Member Control. Cooperatives are democratic
organizations controlled by their members, who actively participate
in setting their policies and making decisions. Men and women serving
as elected representatives are accountable to the membership. In
primary cooperatives, members have equal voting rights (one member,
one vote), and cooperatives at other levels are organized in a democratic
manner. The Georgia Code requires that co-ops practice the one person,
one vote principle.
principle: 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. Members usually receive limited compensation, if
any, on capital subscribed as a condition of membership. In Georgia,
dividends are limited to a maximum of 8 percent. Members allocate
surpluses for any or all of the following purposes: developing their
cooperative, possibly by setting up reserves, part of which at least
would be indivisible; benefiting members in proportion to their
transactions with the cooperative; and supporting other activities
approved by the membership.
principle: Autonomy and Independence. Cooperatives are autonomous,
self-help organizations controlled by their members. If they enter
into agreements with other organizations, including governments,
or raise capital from external sources, they do so on terms that
ensure democratic control by their members and maintain their cooperative
principle: 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 cooperatives. They inform the general public
- particularly young people and opinion leaders - about the nature
and benefits of cooperation.
principle: Cooperation Among Cooperatives. Cooperatives serve
their members most effectively and strengthen the cooperative movement
by working together through local, national, regional, and international
principle: Concern for Community. Cooperatives work for the
sustainable development of their communities through policies approved
by their members.
Important Steps In Organizing A Cooperative
an exploratory meeting with others who have a similar interest
and determine whether you have common needs and desire to address
those needs as a group.
a steering committee to guide the group through the formation
a survey of potential members.
markets for products, supplies, and services.
a business plan.
bylaws and select a board of directors.
investment funds--including member investment needed to carry
out the business plan.
management and employees, and acquire facilities and equipment.
The Georgia Cooperative Development Center can help groups
work through each of these steps.