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What is a co-op?

     A co-op is a business owned by its customers or its workers. Co-ops started in the 1840's in England as a way for people to save money. People pooled their money and bought food in quantity which got them a volume discount. And the fact that they didn't need to make a profit also helped to keep costs low. Besides saving money, co-ops are attractive to people who like the idea of a business being owned and managed by its members.

      During the Depression college students started housing co-ops to live in while going to school. These were large houses of twenty or so rooms. The students saved money by sharing the cooking and cleaning rather than paying maids and cooks. They also enjoyed the built-in community, and the idea of all working together.

      Co-ops are characterized by the Rochdale Principles, named after the first successful co-op which was started in Rochdale, England in the 1840's. This is a paraphrased version:

  • Open Membership. A co-op does not discriminate. Anyone can join.
  • Democratic Control. The co-op is owned and operated by its members. Each member gets one vote (unlike publicly-traded companies in which those who buy the most shares get the most votes).
  • Limited Return on Capital. A co-op is not intended to be a money-making enterprise for its members. Members may thus be paid only a "limited" amount of interest on any money they invest. (Most co-ops have a very modest investment requirement. My local credit union requires only a $5 lifetime investment.)
  • Surplus Belongs to Members. Since the members are the owners, they receive any profit the co-op makes. In many co-ops the profits are reinvested into the business rather than being returned to the members.
  • Honest Business Practices. Cooperatives deal openly, honestly, and honorably with their members and the general public.
  • Ultimate aim is to advance the Common Good. The ultimate aim of all cooperatives should be to aid in the participatory definition and the advancement of the common good.
  • Education. Co-ops are expected to educate their members, officers, and employees and of the general public in the principles and techniques of cooperation, both economic and democratic.
  • Cooperation among Cooperatives. Co-ops should actively cooperate in every practical way with other cooperatives.