While there are many similarities to traditional businesses, cooperatives operate differently both legally and in practice. According to the International Cooperative Alliance, a cooperative “is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.”
Cooperative businesses are often based on values such as democracy, equity, and solidarity. The combination of the legal structure, chosen values, and organizational governance practices determine how a cooperative works.
The Cooperative's Mission Determines Its Structure
When beginning a cooperative business, determining your business’s mission should happen parallel to how you structure your business. Although the choice of legal entity and tax structure might seem mundane, it can define pay structures, profit sharing possibilities, workplace hierarchies, and funding opportunities. For those who choose to identify with the values of cooperativism – democracy, equity, self-responsibility, solidarity, and equality – aligning the mission with the business structure is core to staying true to cooperative values.
How Money Flows Through a Cooperative
The way money moves from clients to the cooperative, to the worker owners and shareholders is based on the value of community wealth building. Patronage – or the support, membership, and financial aid that an organization or individual bestows to the co-op — benefits every individual involved with a co-op by keeping the flow of money within the cooperative and its members. The usage of the cooperative by patrons can determine how money is allocated within and throughout co-op members.
Related Articles
Teach-in: Subchapter T & How Money Flows Through a Cooperative
Are you a co-op and getting ready to do your taxes? In this teach-in our Director of Economic Democracy, Ricardo Nuñez, and SELC Staff Attorney, Gregory Jackson, provide an introduction to the powerful way that worker cooperatives equitably distribute wealth and why it matters for your cooperative’s taxes! They covered: How does money flow through
Sample Disclosure Document- Green Commonwealth Cooperative Inc.
The document below was graciously provided to Co-opLaw.org by, a Green Commonwealth Cooperative Inc. a worker-owned cooperative based in San Francisco, California. Rainbow Grocery, founded in 1975 and now with over 220 worker-owners, is the largest worker cooperative in the western United States! Thanks, Rainbow Grocery! Please note that SELC does not endorse, nor has
Making Governance Documents Approachable: Coopsicles’ Operating Agreement
Below is an Operating Agreement created by the Sustainable Economies Law Center for a worker‐owned cooperative popsicle company. It was written to conform with California law and with their particular preferences and needs. You can use this as an example for creating your own operating agreement! Related Resources
