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Cooperative Development

Defining Cooperative

Cooperative: A private business organization that is owned and controlled by the people who use its products, supplies or services.

Although cooperatives vary in type and membership size, all were formed to meet the specific objectives of members and are structured to adapt to their changing needs.

Cooperatives are formed by individuals who coordinate among themselves (horizontal coordination) to achieve vertical integration in their business activities. (UC Davis)

Cooperative Principles

The U.S. Department of Agriculture defines three principles that uniquely characterize a cooperative organization:

• The User-Owned Principle: The people who own and finance the cooperative are those who use the cooperative.
• The User-Control Principle: The people who control the cooperative are those who use the cooperative. They democratically elect a board of directors. The board sets the overall operating policies, approves the annual budget, oversees its operation and distributes the benefits derived from use of the cooperative to members. The board also hires professional management to handle the day-to-day operations.
• The User-Benefit Principle: The cooperative’s sole purpose is to provide and distribute benefits to its users on the basis of their use. While the goal of agricultural cooperatives is not to generate a return on investment, they, like all businesses, must cover costs and generate capital to cover expansion and unforeseen emergencies.

Other Principles

• The International Cooperative Alliance is a worldwide association of cooperatives. The Statement of Cooperative Identity which it adopted in 1995 contains seven cooperative principles that are more socially minded:
• Voluntary and Open Membership
• Democratic Member Control
• Member Economic Participation
• Autonomy and Independence
• Education, Training and Information
• Cooperation Among Cooperatives
• Concern for Community

Learn More

• Cooperative 101 from USDA (PDF)
• Cooperative Business Values from the International Co-operative Alliance

New Generation Cooperative

• What is a New Generation Cooperative? (PDF)
• What Motivates a New Generation Cooperative? (PDF)
• LLC’s vs. New Generation Cooperatives (PDF)

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