In this blog post, we’ll explore how cooperatives can improve economic and social outcomes in communities.
A cooperative is an enterprise that is jointly owned and democratically controlled by its members, who share the benefits of ownership; there are many types of cooperatives to suit different purposes. The “cooperative advantage” refers to the unique features that make such enterprises successful in accomplishing their goals: member investment and involvement; democratic control; concern for community impact (rather than only profit); openness to new ideas and innovations from any source; autonomy over day-to-day business decisions, even those affecting outside parties or conditions (including government regulation); support from peers as well as experts within fields; and union or other forms of association with cooperative enterprises.
The goal of the cooperative is to make a profit, but it does not have owners in the traditional sense. The members are its owner-operators who buy into the business by buying equity stakes in the form of membership certificates or interests in common parlance. Profits are distributed among the members after any operating expenses are paid.
Cooperatives can operate in virtually any sector of the economy; whether consumer-owned (such as credit unions and food coops), producer-owned (numerous agricultural supply cooperatives), worker-owned (worker cooperatives or “co-op businesses”), or housing cooperatives (which provide housing and sometimes related facilities and services to members), the basic principles of cooperation can be adapted to a wide range of purposes.
The cooperative movement has been growing in recent years as increasing numbers of consumers, producers, workers, and associations such as neighborhood groups form cooperatives to ensure that their needs will be served. How does all of this translate into community transformation? Let’s explore some examples.
The most common type of cooperative is a consumer cooperative, whereby members join an organization that provides them with the products and services they need at low prices; according to the International Co-operative Alliance, the worldwide consumer cooperative sector has over $2 trillion of assets and 98 million members.
Many people think about food cooperatives when they hear “consumer co-ops,” but there are many other types as well. Regional organizations can help bring these co-ops together to negotiate with large companies and offer more options to consumers. Some consumer co-ops operate only in local communities, while others have formed national or even international purchasing cooperatives. In such cases, the buying power of many individual co-op stores—and hence the bargaining power with suppliers—is enhanced when each store is part of a larger cooperative enterprise.
Worker-owned cooperatives also have the potential to create a more equitable and sustainable economy. Additionally, there are many other reasons why worker-owned cooperatives are a powerful tool for community development. First, they promote democratic values and decision-making by giving workers a voice in their workplace. Second, they build community wealth by keeping money circulating within the local economy. Third, they provide training and support for new entrepreneurs. And finally, they create jobs and improve social conditions in underserved communities.
Worker-owned cooperatives are democratic organizations that are owned and managed by their workers. Each worker can have an equal vote in electing the board of directors, who are responsible for the long-term sustainability of the business. Worker cooperatives have several advantages over traditional businesses with outside investors. Because members share ownership of the company, they have a greater sense of empowerment, responsibility, and commitment to their work. They are also less likely to downsize or close the company because it would mean reducing their own income.
Because worker-owned cooperatives are rooted in their communities, they bring a much-needed sense of stability to surrounding neighborhoods. If one business fails, other local businesses will likely suffer as well. However, when a worker-owned cooperative is successful, it helps stabilize the local economy and can even provide a model for other businesses. Additionally, because the workers themselves are the ones making business decisions, they have an incentive to keep money circulating within their own community rather than exporting earnings to another location.
In addition to creating jobs, worker-owned cooperatives also provide important training and opportunities to new entrepreneurs. When a business becomes successful, it is often sold for a large sum of money that can dramatically change the owner’s life. This type of success is hard to replicate. Still, with worker ownership, many workers have the opportunity to participate in several business transitions and develop entrepreneurial skills that can be passed on to others.
Worker-owned cooperatives benefit communities in a variety of ways, but some are more profoundly affected by these changes than others. Workers who are members of their own businesses are usually directly impacted by new jobs and improved social conditions. In contrast, residents outside the immediate area may not experience these benefits as intensely. However, in the same way, people who invest in worker-owned businesses are more likely to be invested in their communities. Community members outside of cooperatives are also more likely to support them if they benefit nearby residents.
As you can see, cooperatives can be a fantastic tool for community transformation. This article discussed the positive effects of cooperatives on communities, including job creation, democratic values, and training and support for new entrepreneurs. Worker-owned cooperatives are incredibly beneficial, as they promote community wealth and stability. In later posts, we’ll explore more about hybrid models and how they can overlap with the newer innovations. We’ll also explore the specific models we’re developing & testing in community transformation programs.