The consumer cooperative model spans almost all business sectors, from a credit union to a CSA farm membership.
KEY FACTS ABOUT CONSUMER COOPERATIVES
Millions of Americans are involved in consumer co-ops. Below are a few key facts:
- More than 7000 credit unions serve 100 million customers in the U.S.
- More than 42 million customers receive electricity from The National Electric Cooperative Association
- Over 1 million families have an affordable, pleasant place to live through consumer housing cooperatives
- PCC Natural Markets in Seattle is the largest consumer-owned food co-op at more than 56,000 members
- Examples of consumer cooperatives include REI, PCC Natural Markets, Navy Federal Credit Union and The National Electric Cooperative Association.
CONSUMER CO-OPS: HOW THEY WORK
Consumer co-ops are a vital component of modern global economies.
WHAT IS A CONSUMER CO-OP?
So, what is a consumer cooperative? It’s a business owned by its customers, for the mutual benefit of its customers.
The purpose of consumer cooperatives is to offer goods and services at the lowest cost to the customer-owners — in contrast to companies that serve the interests of stockholders. A consumer co-op retains profits as capital with mutual ownership or invests the funds into the growth of the organization. The member-owners control the business and share a common goal to deliver quality products and services at low prices.
Co-ops operate under the guidance of the seven cooperative principles. The most important principle for a consumer cooperative is democratic member control in which each member has one vote. This structure differs significantly from traditional businesses, which typically operate for profit and focus on achieving value for their investors.
Every member has the power to control the business by voting on leaders and deciding how to run the co-op. An elected board of directors is charged with hiring managers and monitoring the co-op’s progress toward financial and other goals. Each co-op holds regular membership meetings and maintains a set of bylaws or another organizing document.
In a consumer cooperative model, every member is a shareholder, so everyone’s voice is heard. Consumer co-ops focus on serving their customers, not turning a quick profit, and work within a mutually supportive economic model.
A BRIEF HISTORY OF CONSUMER CO-OPS
History often credits Benjamin Franklin for establishing the first consumer cooperative in the United States in 1752. He and a group of like-minded peers voluntarily formed a mutual insurance group called the Philadelphia Contributionship of the Insurance of Houses from Loss by Fire. As its name suggests, the mission was to provide economic relief if a member lost their home to a fire. The company still operates today.
Modern consumer co-ops evolved from the movement’s rise in Europe in the 1800s, especially from the Rochdale Equitable Pioneers Society established in 1844. This 28-member group created the seven cooperative principles that co-ops worldwide adopt and abide by.
THE IMPORTANCE OF CONSUMER CO-OPS
These essential organizations originated from two primary needs. First, as people migrated from rural locations to cities and towns, they could no longer grow their own food. Second, those who remained in rural areas often lacked access to the goods and services they needed from local for-profit businesses. In both cases, community residents turned to collective buying as a solution. The combined buying power and demand let members access better selection, pricing and quality.
Consumer cooperatives are also instrumental in helping individuals maximize their finances. Since organizational control rests with the co-op’s members, each can influence the operations and ensure the group’s focus remains on serving member needs.
Additionally, cooperatives help enhance members’ quality of life in the communities they serve through development and access to higher-quality goods and services. They also positively impact the local economy by creating jobs and promoting market competition.
TYPES OF CONSUMER CO-OPS
Consumer cooperatives were first formed to fill a need for goods and services that were otherwise unavailable. These primarily centered around necessities.
Food co-ops are typically local grocery stores owned by their members. These organizations collaborate with community farmers to offer fresh food and specialty options at lower prices. While nonmembers can purchase goods as well, members receive attractive discounts.
Specially structured food cooperatives also exist, such as preorder buying clubs. Under this arrangement, members place large, collective orders and receive them at a centralized point. Volunteers then sort and package each member’s order for pickup. Members can realize significant savings by eliminating the associated distribution and labor costs.
Housing co-ops are common in crowded metropolitan areas. They first appeared in the late 19th century in places like New York and Chicago to provide affordable housing solutions.
These organizations share the core cooperative values, but property ownership is collective. Members purchase equity shares in the co-op, which then issues a lease or approval of occupancy to the member. All members share in the property expenses and taxes through monthly dues, reducing their individual costs and risks.
ADDITIONAL CONSUMER CO-OP EXAMPLES
The co-op model quickly spread to other goods and services as it flourished. Today, numerous consumer cooperatives exist to serve their members’ needs across economic sectors, including:
ASSOCIATIONS FOR CONSUMER COOPERATIVES
National and international organizations stand with consumer cooperatives in their mission to serve members:
- Credit Union National Association
- National Grocers Association
- National Association of Housing Cooperatives
- International Co-operative Alliance
- Cooperatives for a Better World
NCBA CLUSA SUPPORTS CONSUMER CO-OPS
Did you know that 65,000 cooperative enterprises operate across the U.S.? At NCBA CLUSA, we provide a voice for these co-ops. Through resources and education, we create platforms for cooperatives to participate, lead and partner with others in the global community.
NCBA CLUSA and its members aim to advance development, advocacy, public awareness and thought leadership in the cooperative movement.
If you’re ready to build a better world and a more inclusive economy together, become a member today.