Skip Navigation LinksHome > What Is a Co-op?

What is a Co-op?

A cooperative is a business that is owned and controlled by its members. The cooperative is operated to benefit its members, not to maximize profits for outside investors.

People who use the cooperative own their cooperative because they finance it in a variety of ways. They share in both the business risks and the business profits. Each cooperative determines what level of financial participation is required to establish membership status in the co-op.

Members democratically control their cooperative by exercising the voting rights that come with membership. In Wisconsin, each member is entitled to one vote.

Members benefit for the cooperative because they have access to the products and services that they need. Net earnings are distributed on the basis of proportional use, or patronage, rather than on investment.

Cooperative Network has developed an animated short "Co-ops Are Everywhere"

Cooperative Principles

Cooperatives also differ from other business structures because they often operate on principles that encompass broader social or community, as well as business, concerns. These seven cooperative principles have been developed and modified over time, and are generally accepted by cooperatives worldwide.

1. Voluntary and Open Membership
- Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
2. Democratic Member Control - Cooperatives are democratic organizations controlled by their members - those who buy the goods or use the services of the cooperative - who actively participate in setting policies and making decisions.
3. Member Economic Participation - Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested.
4. Autonomy and Independence - Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreement with other organizations or raises capital from external sources, it is done so based on terms the ensure democratic control by the members and maintains the cooperative's autonomy.
5. Education, Training and Information - Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Member also inform the general public about the nature and benefits of cooperatives.
6. Cooperation among Cooperatives - Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
7. Concern for Community - While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.

More recently, in response to changing market conditions, some cooperatives in the United States have experimented with modifying these principles. For example, some cooperatives have used closed membership to maximize efficiency, profitability and the return on member equity investments. New cooperative laws in some states have granted voting rights to non-user investors.

Types of Co-ops

Business Structure Comparison

Impact on U.S. Economy


Co-op Links