How Cooperatives Serve Local Communities

Local communities face unique challenges, especially in rural areas. They tend to be underserved and have limited access to critical services such as health care, internet and schooling. They often lack quality employment opportunities when large enterprises exit their communities.

Cooperatives help these communities overcome these challenges, as members form them to serve the areas in which they operate. Owned and run by local community members, cooperatives help uplift these locations economically and socially.

What Is a Co-Op?

A cooperative is an association where people unite to meet the community’s social, economic and cultural needs. The people create a jointly owned and democratically run enterprise to meet these needs.

The enterprise can have hundreds to even thousands of individuals as owners. People first identify a need in their community and work together to form an organization to meet it. Together, they organize their enterprise to meet a common goal.

From the outside looking in, cooperatives look similar to mainstream businesses, but when you look deeper, you can often see this is not the case. The people who own the cooperative most likely work in it, too. Some cooperatives also restrict who can purchase from the enterprise, limiting it to its members. Others are open to the public but provide special incentives and privileges to their members.

Cooperatives also have specific principles and guiding values that enable them to meet their goal.

What Economic Challenges Do Local Communities Face?

Local communities, especially in economically challenged areas, face unique obstacles urban areas may not. These issues are often the driving force behind why individuals organize cooperatives. Compared to urban areas, smaller and rural communities have fewer job opportunities, limited access to health care, fewer educational institutions and little economic growth.

As technology advances, internet access becomes increasingly important, yet local communities still experience limited broadband access. In rural areas, there are 37% more residents without broadband access compared to urban residents. Broadband access is necessary for services such as telehealth.

The limited broadband access also further drives poor access to education. Rural locations often have limited resources, even though 53% of the school districts in the United States are in rural areas. With limited resources, these schools struggle to provide quality education, resulting in lower educational attainment for children in these regions.

Local communities also tend to have poor health care services. Essential health care services such as mental and behavioral health support, long-term elderly care and emergency medical services may be limited in rural communities.

How Can Cooperatives Alleviate Local Community Challenges?

Community members form cooperatives to meet the needs of their community. Being locals, people within these communities understand the unique challenges and can start enterprises that function to meet specific goals. Co-ops help alleviate community challenges in the following ways:

Create jobs: Local cooperatives help create jobs unique to the community. These jobs are culturally specific to the area and best serve the needs of the people. Instead of being centered around profits, cooperatives form upon values such as fairness and inclusion. The result is longer-term, sustainable jobs that help the community prosper.
Stimulate local economy: Cooperatives help stimulate economic growth by bringing much-needed services to the community. When communities have essential services, they can operate efficiently and thrive.
Grow into something bigger: Cooperatives built on policies conducive to expansion can scale and become larger organizations.

How Co-Ops Benefit Communities

As local communities face unique economic and social challenges, these benefits of local co-ops help them overcome obstacles.

Economic Benefits

Cooperatives offer unique economic benefits to local communities. They help community members develop thriving enterprises and stable, long-term goals. Cooperatives can aid economic growth in local communities in the following ways:

Circulate money within the community: Keeping money within local communities is vital for economic growth. When larger corporations operate in local communities, money often leaves. Cooperatives focus on growing their local area. They often use their profits to pay out dividends to their members. Some also use part of their profits to invest back into the region by supporting local initiatives such as sports teams and non-profits.
Create employment: Cooperatives often form to fill the unemployment gap when larger organizations close down. Locals can create jobs tailored to community members’ social and cultural needs.
Promote bottom-up development: People usually form cooperatives when they see a gap in their community that needs filling. The enterprise serves the community, making the area less vulnerable to takeovers and profit decision-making from larger organizations. Cooperatives inspire a sense of community and support in locals.
Provide a flexible business model: The cooperative business model is flexible and can apply to any organization. From supplying broadband services to grocery stores and educational facilities, community members form cooperatives to solve various community needs.

Social Benefits

Cooperatives offer several social benefits for their communities, some of which include:

Community empowerment: Cooperatives help strengthen the community as a whole. They encourage individuals to be proactive about being involved community members and empower them to make decisions about shaping the economic future of their community.
Skill development: Cooperatives help teach members essential professional and leadership skills they can use in all areas of their lives. Whether members work in the enterprise or serve on the cooperative boards, they have the opportunity to develop and practice their leadership skills and gain organizational knowledge.
Social inclusion: Cooperatives strengthen the fabric of a community. One goal of these enterprises is often to create social inclusion. Through this inclusion, cooperatives create opportunities for marginalized groups, promote gender equality, and empower youth and disadvantaged groups.

Cooperatives also have specific benefits for the stakeholders, local communities and the wider community:

1. Benefits for Members

By definition, co-ops benefit their members. The benefits differ depending on whether the members are suppliers, workers or consumers. Generally, a cooperative exists to provide good services, quality and prices. Because cooperatives operate to benefit members, they can make decisions that best suit them.

Besides the economic benefits, members also reap social benefits. Members can form organizations built on the values they believe in. They can choose how to run the cooperative and democratically vote on decisions that impact their lives.

2. Benefits for Stakeholders

The stakeholders in cooperatives include consumers, workers and suppliers. How well a co-op benefits its stakeholders often depends on how well members run it and their decision-making. For example, if stakeholders want to provide the lowest prices to consumers, they may shop around for suppliers. Cooperatives benefit their communities for the long term, so it’s unlikely that they will make decisions that undermine the longevity of the enterprise.

3. Benefits for Local Communities

Members can vote on what to do with their profits instead of money going to external owners they don’t know. They are also less likely to indulge in harmful practices because they exist to benefit the community. Established cooperatives often support other organizations within the area and form more enterprises.

4. Benefits for the Wider Community

Cooperatives are more likely to establish practices that benefit the wider community. For example, food cooperatives can lead the drive for unprocessed foods and fair trade practices in the food industry.

Become a Member of NCBA CLUSA

Cooperatives play a pivotal role in growing local communities. They help develop their economies by keeping money within the community and creating jobs. The social reward is that communities have enterprises with their best interests at heart. Cooperatives give underserved communities access to the basic needs they need to thrive.

Co-ops are essential to the success of local communities and the greater community, which is why we are passionate about supporting these enterprises. When you become a member of NCBA CLUSA, you join an organization that actively promotes, supports and defends cooperatives. Sign up and become a member today!

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