The term may be used loosely to signify its members' ideology (as in 'jazz coop') but a mainstream cooperative comprises a Legal entity owned and democratically controlled by its members, with no passive shareholders. It thus combines the equal control characteristic of many partnerships with the legal personality conferred on corporations. Membership is open, meaning that anyone who satisfies certain non-discriminatory conditions may join. Unlike a union, in some jurisdictions a cooperative may assign different numbers of votes to different members. However most cooperatives are governed on a strict "one member, one vote" basis, to avoid the concentration of control in an elite. Economic benefits are distributed proportionally according to each member's level of Economic interest in the cooperative, for instance by a dividend on sales or purchases. Cooperatives may be generally classified as either consumer or producer cooperatives, depending largely on their membership. Classification is also often based on their function or trade sector.
In the United States most cooperatives are corporations or limited liability companies (LLCs) but other legal entities may also be used. Cooperatives may be for-profit or non-profit. In for-profit cooperatives any surplus may be returned to members by way of a rebate or bonus on their activity with the cooperative, or a dividend on their shareholding in the cooperative.
In the United Kingdom the traditional corporate form taken by cooperatives is the 'bona fide co-operative' under the Industrial and Provident Societies Acts. Since the 1980s, however, many have incorporated under the Companies Acts, limited either by shares or by guarantee. In a bid for sustainability, many cooperatives adopt the principle of 'Common ownership', and have a zero or nominal share capital, along with a clause stipulating altruistic dissolution. This means that the cooperative cannot be wound up and its assets distributed for personal profit (see: Asset stripping). The facility to legally 'lock' a cooperative's assets in this way was brought into force in 2004.
In the European Union, the European Cooperative Statute will come into force in October 2006, to provide a corporate form for cooperatives with individual or corporate members in at least two of the EU member states.
Worldwide, some 800 million people are members of cooperatives, and it is estimated that cooperatives employ some 100 million people. The cooperative movement often has links and associations with Green politics or Socialist politics, with Socially responsible investing, and with the Social enterprise movement.
The well-known Best Western hotel chain is actually a giant cooperative, although it now prefers to call itself a "nonprofit membership association." It gave up on the "cooperative" label after the courts kept insisting on calling it a franchisor despite its nonprofit status.
Unions are often unnecessary in worker cooperatives because the workers have direct control over the management and ownership of the business - they are negotiating with themselves. Some worker cooperatives still choose to become members of local unions to demonstrate their support for the labor movement and to working conditions that have resulted from years of struggle. Worker cooperatives that join unions often benefit from the trade that comes their way from the community of union members and those who support unions for political reasons.
The United States Federation of Worker Cooperatives is the organization in the US representing worker cooperative interests nationally. There are local networks and federations throughout the US in the San Fransisco Bay area, the Twin Cities, Portland Oregon, and Boston. The 'new wave' of worker cooperatives that took off in Britain in the mid-70s created the Industrial Common Ownership Movement (ICOM) as their federation. The sector peaked at around 2,000 enterprises, and in 2001 ICOM merged with the Co-operative Union (which was the federal body for consumer cooperatives) to create Co-operatives UK, thus reunifying the cooperative sector.
There are examples of "hybrid" co-ops in which workers and consumers both have membership in a co-op, but the types of membership are differentiated, sometimes into districts of the cooperative, often each district having a set amount of decision making power and profit distribution. Hybrid co-ops are also referred to as multi-stakeholder cooperatives.
Social co-operatives are legally defined as follows:
A good estimate of the current size of the social co-operative sector in Italy is given by updating the official ISTAT figures from the end of 2001 by an annual growth rate of 10% (assumed by the Direzione Generale per gli Ente Cooperativi). This gives totals of 7,100 social co-operatives, with 267,000 members, 223,000 paid employees, 31,000 volunteers and 24,000 disadvantaged people undergoing integration. Combined turnover is around 5 billion euro. The co-operatives break into three types: 59% type A (social and health services), 33% type B (work integration) and 8% mixed. The average size is 30 workers.
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One of the world's largest consumer co-operatives is the Co-operative Group in the United Kingdom, which has a variety of retail and financial services. In reality the Co-operative Group is actually something of a hybrid, having both corporate (other cooperative businesses) and individual members.
Japan has a very large and well developed consumer co-operative movement with over 14 million members; retail co-ops alone had a combined turnover of 2,519 billion yen (24,189 thousand US Dollars) in 2003/4. (Japanese Consumers' Co-operative Union., 2003). As well as retail co-ops there are medical, housing, insurance co-ops alongside institutional (workplace based) co-ops, co-ops for school teachers and university based co-ops.
Around 1 in 5 of all Japanese households belongs to a local retail co-op and 90% of all co-op members are women. (Takamura, 1995). Nearly 6 million households belong to one of the 1,788,000 Han groups (Japanese Consumers' Co-operative Union., 2003). These consist of a group five to ten members in a neighbourhood who place a combined weekly order which is then delivered by truck the following week. A particular stength of Japanese consumer co-ops in recent years has been the growth of community supported agriculture where fresh produce is sent direct to consumers from producers without going through the market.
In California and other states where it is legal, medical marijuana is generally produced by cooperatives.
There are also agricultural supply cooperatives. Examples include:
Most emerging countries are experiencing a significant development of agricultural cooperatives, an economic sector prone to cooperation either for export or for local needs. Ex. Bolivarian Republic of Venezuela.
While they have not taken root so deeply as in Ireland, credit unions are also established in the UK. The largest are work-based, but many are now offering services in the wider community. The Association of British Credit Unions Ltd - ABCUL - represents the majority of British Credit Unions.
Important European banking cooperatives include the Crédit Agricole in France, Migros and Coop Bank in Switzerland and the Raiffeisen system in Austria, Germany, Switzerland, the Netherlands, and Belgium. Spain, Italy and various European countries also have strong cooperative banks. They play an important part in mortgage credit and professional (i.e. farming) credit. Cooperative banking networks, which were nationalized in Eastern Europe, work now as real cooperative institutions. A remarkable development has taken place in Poland, where the SKOK (spóldzielcze kasy oszczednosciowo-kredytowe) network has grown to serve over 1 million members via 13,000 branches, and is larger than the country’s largest conventional bank.
To reduce confusion with ride-sharing, some Britons prefer the term 'car clubs'.
Although Owen inspired the co-operative movement, others – such as Dr William King (1786–1865) – took his ideas and made them more workable and practical. King believed in starting small, and realized that the working classes would need to set up co-operatives for themselves, so he saw his role as one of instruction. He founded a monthly periodical called The Cooperator, the first edition of which appeared on May 1 1828. This gave a mixture of co-operative philosophy and practical advice about running a shop using cooperative principles. King advised people not to cut themselves off from Society, but rather to form a society within a society, and to start with a shop because, "We must go to a shop every day to buy food and necessaries - why then should we not go to our own shop?" He proposed sensible rules, such as having a weekly account audit, having 3 trustees, and not having meetings in pubs (to avoid the temptation of drinking profits). A few poor weavers joined together to form the Rochdale Equitable Pioneers Society at the end of 1843. The Rochdale Pioneers, as they became known, set out the Rochdale Principles in 1844, which form the basis of the cooperative movement today.
Co-operative communities are now widespread, with one of the largest and most successful examples being at Mondragón in the Basque country of Spain (see link below). Co-operatives were also successful in Yugoslavia under Tito where Workers Councils gained a significant role in management.
In many European countries, cooperative institutions have a predominant market share in the retail banking and Insurance businesses.
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In the UK, co-operatives formed the Co-operative Party in the early 20th century to represent members of co-ops in Parliament. The Co-operative Party now has a permanent electoral pact with the Labour Party, and some Labour MPs are Co-operative Party members. UK co-operatives retain a significant market share in food retail, insurance, banking, funeral services, and the travel industry in many parts of the country.
Isao Takamura (1995). " Japan: Consumer Co-op Movement in Japan"