Co-Op Types

Cooperatives are categorized in two ways: by type and sector. Cooperative “types” are based on their ownership structure and function. The two main types are consumption and production, and each of these can be organized among individuals or organizations.

Consumer co-ops may be formed by individuals or businesses, and in the latter case they are often referred to as “purchasing” or “shared service” co-ops. On the other hand, producer co-ops include both those formed by businesses – often called “marketing” co-ops – and “worker” co-ops whose members are individuals. Some co-ops are hybrids, combining elements of more than one type of co-op.

Each type of co-op has many subcategories and some co-ops contain elements of both types.  For example, an electric cooperative falls into the consumer type because the consumers in the service area of that electric co-op own it. Of course, many businesses are also members of electric co-ops. However, in some cases electric co-ops and other utilities form purchasing co-ops to generate or purchase the power they distribute to their members. This is sometimes called a second-level co-op, federated co-op or federation.

The chart below shows the ecomonic impact for each type of cooperative.

table2-2_u.s.cooptypetable2-2_u.s.cooptype

Co-op Sectors

Cooperative “sectors” refer to the industry in which the cooperative operates. Co-ops are found throughout the economy, but here is a list of industries in which cooperative models are especially common:

  • Agriculture Co-Op
    An agricultural cooperative, also known as a farmers' co-op, is usually a purchasing or producer co-op, and sometimes a combination of the two. Farmer cooperatives handle process and market almost every type of agricultural commodity, furnish farm supplies, and provide credit and related financial services. Earnings from these activities are returned to their farmer members on a patronage basis, helping improve their income from the marketplace.

  • Child Care and Preschool Co-Ops
    With women entering the American work force in increasing numbers, locating high quality child care has become a serious problem for many families. The pressing need for child care facilities has prompted parents, educators, employers and communities to create new structures and methods for the development of child care programs.

  • Financial Co-Ops
    Beyond credit unions, cooperative banking and cooperative development funds are two categories that fall in the cooperative financial services category.

  • Food Co-Ops
    In communities all across the United States, food cooperatives provide grocery items of the highest quality and best value to their members. Whether it operates a buying club, a small retail store or a large supermarket, a food cooperative is owned and controlled by its customers. And, when it comes to their food cooperative, member-owners place service, quality, education and value at the top of their shopping list!When it comes to healthier food, food cooperatives are the innovators.  Both the organic and local food trends started with retail food cooperatives.

  • Funeral & Memorial Societies
    Funeral and memorial services cooperatives are formed to empower consumers when dealing with one of the most stressful and emotional events in life. Cooperatives of funeral homes help independents to survive in an industry facing rapid consolidation, thereby preserving a local connection for funeral arrangements.After suffering the loss of a loved one, consumers are confronted with the task of negotiating with funeral homes and memorial service companies, often with little information to do so, leaving them vulnerable to unscrupulous practices. Funeral cooperatives allow family members to plan meaningful, dignified and affordable funeral and memorial services.

  • Healthcare  Co-Ops
    Over the last twenty years, healthcare related cooperatives have emerged as a key strategy for:
        keeping healthcare costs and insurance premiums affordable for consumers and small businesses;
        controlling the high cost of prescription drugs;
        helping community-owned, non-profit hospitals remain independent;
        improving the quality of home-based healthcare and assisted living;
        helping small independent pharmacists compete with big box stores, allowing them to offer locally available prescription drugs.

  • Housing Co-Ops
    Cooperative housing is not a new concept. This country's first housing cooperative was organized in New York City in the late 1800s. Today, more than 1 million units of cooperative housing are scattered throughout the United States, with large numbers located in major urban areas like New York, Chicago and Washington, D.C. Personal tax deductions, lower default and turnover rates, lower tax assessments, reduced maintenance costs and resident participation and control are further incentives for choosing the cooperative route to homeownership.

  • Insurance Co-Ops

    Mutual insurance companies are owned by their policyholders, and closely related to cooperatives. Policyholders are entitled to vote for members of the company's board of directors, and may receive special dividends in the form of capital distributions or reductions of policy premiums. Unlike stock companies, mutual companies exist solely to serve the insurance needs of their policyholders, and not to provide investment profits to shareholders. They may not technically be cooperatives, but they work for members’ benefit, and return profits through lower rates and even refund checks.

    Some co-ops provide healthcare insurance coverage. You can read more about these co-ops here.

  • Marketing Co-Ops
    Purchasing and shared service co-ops are often thought of as a way to help small businesses survive, so it may be surprising to learn that some of the biggest name brands are actually marketing co-ops, or have co-ops attached to them. They may look like a big corporate chain at first glance, but rather than a top-down structure that funnels power and profits to absentee investors, the company is owned and democratically controlled by it members, who operate one or more locations

  • Manufacturing Co-Ops
    The U.S. has relatively few co-ops involved in manufacture, which tends to be handled through worker ownership. The key obstacle seems to be balancing democratic structure with the need for economies of scale. Very large co-ops do exist elsewhere – most notably the Mondragon Cooperative Corporation in the Basque Country of Spain – but in this country large-scale employee ownership is usually created through Employee Stock Ownership Plans, or ESOPS.

  • Technology Co-Ops
    Computers have revolutionized our lives in recent decades, and the industry that has sprung up with the rapid growth of technology is home to a number of co-ops. These are often organized as worker co-ops, but sometimes take looser forms in which independent programmers can find support while maintaining their independence.

  • Utility Co-Ops

    A utility cooperative is tasked with the delivery of a public utility such as electricity, water or telecommunications. Many such cooperatives exist in the rural United States, where the nearest investor-owned utility would not provide service. When designing utility distribution, the key factor to consider is that low-density rural systems (in which there are few paying customers per mile of infrastructure) are generally not profitable enough to attract investor-owned utilities.

    For this reason, roughly three quarters of the United States’ landmass is powered by electric co-ops; for-profit power companies believed there would be insufficient revenue to justify the capital expenditures required.

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