What are Cooperatives?

Cooperatives are businesses owned by “member-owners”. Co-ops are democratically controlled
by their member-owners, and unlike a traditional business each member gets a voice
in how the business is run. Services or goods provided by the co-op benefit and serve
the member owners. Contrary to popular belief coops are not non-profits, and do aim earn profits. Earnings
generated by the cooperative benefit the member-owners.

The way co-ops operate is much closer to a traditional business than a non-profit.
However, the ways in which co-ops differ from traditional businesses can be seen in
the 7 Cooperative Principles. These principles are:

Voluntary and Open Membership
Democratic Member Control
Member’s Economic Participation
Autonomy and Independence
Education, Training, and Information
Cooperation Among Cooperatives
Concern for Community

Co-ops 101: An Introduction to Cooperatives by USDA Rural Development

Cooperatives VS. Non-Profits

There is often a lot of confusion about the differences between cooperatives and non-profits.
These articles aim to help illustrate the similarities and differences between the
two entities.

Cooperatives and Non Profit Associations – Are Co-op’s Non- Profits?
Alaska Cooperative Development Center

“Many groups ask about “non-profit” co-ops and the relationship between cooperatives
and non -profits. It is easy to get mixed up in this topic. It can be interesting
to think about what is profit? And what characteristics define an organization as
a non profit? But in most cases what groups want to know is how are cooperatives different
from 501(c)3 organizations, the type of organization most of us think of when we say
“Non Profit.””

Should a Co-op be Organized as a Nonprofit?

Margaret Lund

“There are a number of significant differences between organizing on a for-profit
vs. nonprofit basis. For a cooperative, amongst the most important questions for a
co-op board to consider is “what is the purpose of our cooperative?” and “who is our
organization set up to benefit?””