About the Cooperative Business Model, Co-ops.
A cooperative is a business owned and democratically controlled by the people/members who use or create its services. Cooperatives are member owned, member controlled complete with member benefits. There are very unique differences between co-ops and other entity structures. Cooperatives in Florida are corporations too, they just differ because co-ops operate at cost (usually not-for-profit).
There are 5 types of co-ops; Consumer, producer, worker, shared services and multi-stake.
Those interested in joining a co-op must pay a membership fee. It is required to pay a membership fee to become a co-op member, a person is required to have an economic stake in the co-op. There must be a waiting period from the time a person is interested in becoming a member, to the time they become a member.
Examples of Consumer Co-ops:
-User of services -Credit unions
-Rural and electric co-ops
-Retail stores, grocery stores
-Housing co-ops -Insurance co-ops
Consumer Co-ops are required to offer low individual equity, making it accessible to most all income levels. If you are an investor or patron of the consumer co-op, it is required of the co-op to offer at least minimal refunds.
Examples of Producer Co-ops:
-Agricultural and Farmer member Co-ops
Each Producer Co-op member owns and operates their own farm business. Producer Co-ops come together for producing, product aggregation, processing, marketing, and distribution. Producer Co-ops have varied characteristics including but not limited to equity requirements and member participation.
Examples of Shared Services Co-op:
-Marketing -Distribution -Training
-Ace Hardware -Carpet One
Shared Services Co-op members may be small or large business owners, nonprofits, government agencies. Each member owns and operates her own business or organization. Shared Services Co-ops come together to form a business for joint purchasing supplies, insurance, back office services and contract negotiations. Shared Services Co-ops have varied characteristics including but not limited to equity requirements and member participation.
Examples of Worker Co-ops:
Each member–worker has ownership in the co-op. There are several key factors indicating worker co-ops based on governance and operations because labor is key, not capital.
Worker co-ops are ideal for knowledge based initiatives and service industries. Worker co-ops tend to have lengthy pre-membership periods, requiring more investment from the person interested in joining and have varied characteristics including but not limited to substantial member equity, shared entrepreneurship, and member participation. An enterprise usually has one person running and calling all the shots, but a worker co-op is a synergy of ideas, which reduces personal risk and has a group of entrepreneurs working together.
Examples of Multi-Stake Co-ops:
-2 or more member classes
-Complex systems with key ongoing relationships
Multi-Stake Co-ops can include producer, worker, consumer and shared services co-ops. Due to the complex nature of multi-stake co-ops there is a need to simulate a variety of viewpoints. There is a larger equity pool, which in-turn demands reciprocity and relational goods.
Characteristics of a Co-op
Cooperatives may have a functional and philosophical foundation, but may not be incorporated as a co-op under state statutes. Cooperatives define themselves through principles, values and allocation of profits.
How Cooperatives Are Identified?
Co-ops develop a set of values, principles, and practices set apart from traditional corporations. Sometimes, one cannot tell if the corporation is a co-op by the name. More importantly, what sets co-ops apart is the legal entity, state filing, legal structure and tax category in which the co-op operates.
International Cooperative Alliance
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
The 7 International Cooperative Values,
Rochdale Principles, 1844
The Rochdale Equitable Pioneers Society was founded in 1844 by mill workers who formed a consumer co-op store, eventually ending the misery and suffering of many consumers due to the industrial revolution in England. Encouraging ongoing education, and learning from their failures, The Rochdale’s wrote these core values to set the bar for cooperatives.
1) Voluntary and Open Membership
Membership in a cooperative is open to all persons who can reasonably use or create its services and stand willing to accept the responsibilities of membership, regardless of race, religion, gender, or economic circumstances.
2) Democratic Member Control
Cooperatives serve their member-owners democratically. Each individual or representative of an entity has the fair and just ability to vote and count as one (1), one member-one vote. Any and all representation is elected by the members. The Board of Directors are voted into office and the cooperative should be transparent in decision making and in good communication with its members.
3) Member Economic Participation
In order to be considered a cooperative, members must contribute equitably to and democratically control the capital.
4) Autonomy & Independence
Cooperatives are autonomous, self-help organizations controlled by 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 as well as their unique identity is protected. Members should avoid using personal signatures on loans.
5) Education, Training, Information
For the purposes of maintaining a higher standard of education, members are encouraged to continue ongoing training and education. Cooperative members are recommended to understand financial systems and cooperative finance and take cooperative accounting classes. The most successful cooperatives have a high level of participation amongst members with democratic control where more than ⅔ of the member body votes on decisions. Developing a successful marketing strategy educates the public about your co-op and ensures others learn about cooperative entrepreneurship.
6) Cooperation Amongst Cooperatives
To strengthen the cooperative movement, co-ops work together to improve services, bolster local economies and deal more effectively with social and community needs. Cooperatives serve their members and others on local, regional, national and international levels. It is good practice to share as much information as possible and to make Bylaws, policies and peer meetings public.
7) Concern for the community
Cooperatives are rooted in the community and stand for sustainability. Co-ops care for the earth, operate with strict environmental standards and adhere to member interests. Co-ops operate with a triple bottom line ensuring their financial viability for economies and municipalities.
Self-help working to improve oneself or a group to improve circumstances.
Self-responsibility to be accountable.
Democracy exercising power in the individual voice while being governed by all voices.
Equality All people and voices are equal and have equal and the right to opportunity.
Equity Ownership in the economic enterprise.
Solidarity the unified interest of all members.
Cooperative Ethical Values
-Social responsibility -Caring for others
In a member-initiated co-op, a group of people come together to explore their idea for a co-op business. They will work through a prescribed process of start-up, including forming a steering committee, developing a feasibility study and preparing a business plan.
If the idea of a co-op is new and started by someone or a third-party, such as a non-profit and the co-op members are recruited into the organization, this is called a start-up. Throughout the development process the members receive technical assistance and necessary education for the organization incubating the cooperative. Eventually and typically slowly, the incubating organization steps back from operations of the co-op.
A co-op conversion occurs when an existing, privately held business is converted into a co-op. An example would be if the workers of the company purchase the businesses.
Cooperatives Create and Maintain Entrepreneurial Environment
It is imperative that each member understands the responsibility of being an owner. Members must realize there are unpredicted changes in the industry or market. It is the responsibility of each member joining a cooperative to be in it for the long term and assist in governance by electing others or by sitting on the board. Each member should have a role in the operations, customer service and team meetings.
It is the responsibility of the cooperative to work together and maintain a commitment to excellence. Cooperatives serve as a source of opportunity for members and should reward them for their efforts.
Through shared responsibility cooperatives can create an environment of entrepreneurship. All members are encouraged to innovate and express their opinion if there is a better way to do a familiar job.
Although, there are moments that cooperatives can experience unexpected successes or failures, cooperative members should realize that the role of entrepreneur is a right, privilege and responsibility of all members.
Cooperatives are generally started by self-governing groups of people that will first form a steering committee, then often become the first board of directors and management team. Each member understands their individual worth and skills they bring to the table and know how to work well together in groups.
Cooperative Businesses and Professional Organizations
Cooperative businesses and/or professional organizations are developed within a particular business area or profession, specifically for the common good of that business area or profession. In today’s complex society they serve many purposes. They are prevented by law from engaging in price fixing or establishing trade prices. These cooperative businesses and organizations serve many valuable purposes and perform essential activities, not only for the specific cooperative or profession, but also for the generic public.
A major function of cooperatives and professional organizations is the development of standards of conduct and quality. In some professions the codes are exactly stated, while in others they may be broad. In most professions the professional organizations are the major “policing agency” ensuring standards are adhered to by their membership.
Cooperative businesses and professional organizations identify and seek solutions of common problems of local economy. Cooperatives and professional organizations exchange ideas, foster innovation, seek new marketing outlets and expand the activities of the profession.
Today, the greatest function of cooperatives and professional organizations is to become a voice for the profession. This is certainly important at the legislative level. Along with our great growth in population has come a corresponding reduction in the effect an individual person or business can exert in influencing the decisions of government.
A strong voice in the legislative process is the only protection against regulation of a trade or profession by decision makers who do not know the intricacies of these business models. The following are some of the major cooperative businesses and professional organizations which directly relate to the moringa tree industry.
The University of Wisconsin Center for Cooperatives – UWCC – http://www.uwcc.wisc.edu
Cooperatives: A Tool for Community Economic Development
Ohio Employee Ownership Center
Cooperative State Research, Education and Extension Service
Network of Bay Area Worker Cooperatives
Cooperative Fund of New England
US Department of Agriculture
North American Students of Cooperation
National Society of Accountants for Cooperatives
National Rural Electric Cooperative Association Consulting Group
Agriculture Marketing Service
Farm Service Agency
Business & Cooperative Programs
US Federation of Worker Cooperatives
US Federation of Worker Co-ops Education & Resources
Immigrant Worker Owner Cooperative: A user’s Manual
American Worker Cooperative
National Association of Housing Cooperatives
National Center for Employee Ownership
National Cooperative Bank
National Cooperative Bank Development Corporation
National Cooperative Business Association (NCBA CLUSA)
National Cooperative Grocers Association: NCGA
National Council of Farmer Cooperatives
National Credit Union Foundation
National Farmers Union
National Federation of Community Development Credit Unions
Societies and Clubs
Data Commons Project- Connecting te Cooperative Economy
Democracy at Work Institute, Resource Library
Example Business Plan, Clean Power Cooperative Business Plan
Worker C-op Toolbox, on California Center for C-op Development website
Agricultural Marketing Resource Center
CDS Consultants Cooperative Resource Library
Cornell University Cooperative Enterprise Program
Cooperative Grocer’ Information Network: CGIN
Cooperative Grocer Magazine
Grassroots Economic Organizing
Democracy Collaborative, Community Wealth Building Resources
Evergreen Worker C-op, Online Resources
Florida Center for Empowered Economic Development (CEED)
St. Petersburg Greenhouse
SBA Technical Assistance SBDC