Co-Op Types

Cooperatives follow a unique business model. In a typical corporation, each stockholder invests money in exchange for a set amount of stocks. A corporation allows each member who actively uses its services to own a stake in the organization. For example, when you purchase tickets to Disney World, you don’t own a part of The Walt Disney Company. Yet, it would be possible to buy Disney stocks.

A co-op follows the opposite approach. Everyone who purchases products or services from the co-op now has a stake. Most co-ops only allow each person to control one vote, no matter how much they purchase. This policy prevents the abuse of power and monopolies. A co-op’s objective is to create a democracy where everyone has equal sway. Many co-ops also limit participation to screened members rather than allow just anyone to make purchases. For example, a grocery co-op may have a grocery store-like facility but limit access to the co-op members.

Some co-ops have a shared moral purpose or common goal in activist or religious circles. For example, some co-ops focus on helping organic farmers flourish in their communities and leave behind a safer, healthier world.

You may wonder where cooperatives operate. There are both large and small co-ops across many sectors, including:

• Agriculture
• Finance
• Insurance
• Grocery
• Education
• Health care
• Housing
• Utilities

3 Main Types of Cooperatives

There are three primary types of cooperatives that can provide you with an overview of co-op industries.

1. Worker Co-Ops

Worker cooperatives are businesses that allow the workers to own the co-op. All of the members control the business’s operations, sharing in both the work and profits. Worker cooperatives typically distribute profits based on common factors like job title, hours and salary.

2. Consumer Co-Ops

A consumer cooperative allows the members who purchase goods or services to own the co-op — for example, credit unions, grocery co-ops, child care facilities and more use this model. Bulk purchases allow co-ops to provide better availability for products, more economical pricing and more. For example, there are some consumer co-ops that appear like full-service grocery stores but have a full staff of co-op members to keep operating.

3. Farmer and Independent Small Business Co-Ops

Farmer and independent cooperatives follow a specific organizational structure. The members of the co-op who use its services have control over the company, while the business provides the members with various services like purchasing and marketing.