Co-op Basics

Co-ops are a conscientious business model. Unlike non-profits, they earn money through sales rather than donations.
Unlike for-profit corporations, they are owned collectively by their members.

Since 1844 they’ve been the most equitable, responsible and sustainable business model in existence.

Co-ops operate at cost: all profits are reinvested within the company and/or distributed equally among all members.

Co-ops exist to provide a service to their members, not to maximize profits for shareholders.

Co-ops are governed by democratically elected board members. Members with voting rights determine the direction and extent of growth of the company. Each member receives one—and only one—vote.

Co-ops in Detail

A co-op is an organization that takes the idea of working together and puts it into a business structure. A cooperative is a business voluntarily owned and controlled by the people who use it—its members. Unlike traditional businesses, the goal of a co-op is not to out-perform the competition and maximize profits, but to serve its community. A co-op is operated solely for the benefit of its members, to meet their mutual needs.

At its core, a co-op is a business. It is subject to the same needs and demands as any business and must concern itself with the market and economic forces. But in several important ways, co-ops are also unique and different. Most distinctly, a cooperative business is owned by the people who use its services—the members. Co-ops may resemble other businesses outwardly, but the fact that they are owned by members makes them unique.

In America, most co-ops take the shape of credit unions, grocery stores, and agricultural ventures, though any type of enterprise can be owned by its users, employees and/or producers. Recognizable co-ops in the US include these: R.E.I., Organic Valley, Blue Diamond, Bob’s Red Mill, Land O’Lakes, Ocean Spray, Piggly Wiggly, Sunkist, True Value, Welch’s and Carpet One.

Although definitions of co-ops vary, they all contain the following elements:

Co-ops are owned and controlled by those who use their services (the members)
Co-ops are democratically governed
Co-ops are businesses, not clubs or associations
Co-ops adhere to internationally recognized principles (see below)

Types of Co-ops (hybrids are possible)

1. Producer co-ops—provide goods or services to members who are involved in producing products, such as farmers or artists.

2. Worker co-ops—owned and controlled on a democratic basis by their employees.

3. Consumer co-ops—provide goods or services used primarily for personal consumption. Food co-ops are typically organized as consumer co-ops.

Mayu is both a consumer and worker co-op.

“Co-ops embody a different model of ownership—not about dominion but about belonging.
It’s about a sense of belonging to something larger than oneself, a common whole.”
~ Marjorie Kelly, Owning Our Future

A Look at Consumer Co-ops

In consumer co-ops, members who use the co-op have the option to become owners. There is a mutually beneficial relationship between the cooperative and its owners: members own and invest in their co-op because they trust that doing so is in their best interest.

What Owners Receive:

Existence of the Co-op
The most important benefit for the owner is the existence of the co-op itself. People invest in a co-op because they want to use its services.

Discounts, Privileges & Compensation
Owners receive benefits in the form of discounts (price reductions or wholesale pricing), privileges (member-only services and special events), and financial compensation (year-end dividends).

Involvement
With voting rights, owners have a say in the co-op’s development. One owner/one vote means decisions are always democratic. If owners are inclined, they can run for committee positions and a seat on the Board of Directors.

Sense of Camaraderie
Owners benefit from being part of a like-minded community, by actively supporting the mission of their co-op, and by becoming involved in the larger collective movement.

What the Co-op Receives:

Owner Equity
Co-ops require capital, and they generate capital in part through the investments of owners, typically through ownership shares and annual dues. (Revenue from daily operations is the other primary source of capital.)

Committed Owners
Owners’ shares provide the co-op with an adequate capital base and help create a sense of ownership. When owners understand how their cash flow supports the success of the co-op, they become interested stewards of the business.

Shared Responsibilities
While owners are not financially liable for business losses, it is assumed they will become champions for the co-op. Owner responsibilities can vary from volunteer labor, to assistance with marketing, to agreeing to represent the co-op in a positive light in the community.

“We don’t need to convince large numbers of people to change, instead we need
to connect with kindred spirits who share a common vision.”
~ Meg Wheatley, Berkana Institute

As an Owner of Mayu You Have the Right To:

A well-organized, competently-managed center that puts members’ needs first

Transparency from the Board of Directors in decision-making, financial information, and plans for the future

Compensation for your patronage in the form of dividends (equity and/or refunds)

As an Owner of Mayu You Have the Responsibility To:

Use and support your center

Be an advocate for Mayu and represent Mayu responsibly beyond its doors

Provide feedback, make recommendations for the common good, and communicate honestly and considerately with other members

Co-op Members are never personally responsible for business losses. Article 56, Section 103 of the Colorado Revised Statute states, "Members are not liable for any debt, obligation, or liability of the cooperative."

Understanding Patronage Dividends

• The amount of a dividend varies from year to year, based on how much profit the co-op makes and on any upcoming projects.

• The decision regarding how much to return in cash is made by the Board of Directors.

• A dividend is not guaranteed—the co-op has to make a profit in order to provide a refund.

• The more you use the co-op, the more you get back.

• The percentage held back from distribution stays within the co-op. It belongs to the members as a group, not as individuals, and becomes part of what everyone owns together.

"It's about the recognition that when the people who are making decisions bear the responsibility for the consequences of those decisions, and also share in the rewards that accrue, better decisions will result." ~ John Abrams, Companies We Keep

Values and Principles Common to All Co-ops

Co-ops worldwide share a common creed. All co-ops share a fundamental respect for all human beings and believe that people can improve themselves economically and socially through mutual help. This basic philosophy has been developed into a list of seven principles that serve as guidelines for how cooperatives do business. The principles were originally developed in 1844 by groups struggling to provide quality food at fair prices. The “Statement on the Cooperative Identity” begins with a values statement that describes the beliefs common to all cooperatives:

In addition to their common values, all co-ops share seven basic principles (The Rochdale Principles). These principles outline a democratic structure that can be adapted to businesses providing many different kinds of services and products.

The Seven Co-op Principles

1st Principle: VOLUNTARY & OPEN MEMBERSHIP
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd 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 cooperatives members have equal voting rights (one member, one vote).

3rd 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. Members allocate surpluses for any 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.

4th Principle: AUTONOMY & 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 autonomy.

5th Principle: EDUCATION, TRAINING & 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.

6th Principle: CONCERN FOR COMMUNITY
Cooperatives work for the sustainable development of their communities through policies approved by their members.