Meet Cathy, the Cooperative Development Institute’s new answerwoman! She can take on any co-op questions you might have, big or small. Today we ask: how do co-ops benefit their communities? See all of Cathy’s answers and ask your own on her home page.

Plenty of people want to know the answer to this question–community activists, economic developers, and co-op members alike. So let’s take a look at the benefits of co-ops.

Benefits to co-op members

A cooperative is an enterprise owned by its members who benefit from its activities, so by definition a co-op is supposed to bring benefits to its members. Depending on whether the members are the co-op’s suppliers, consumers, or workers, those benefits will vary, but generally the primary benefit of a co-op to its members is economic: good service, good prices, good quality. A co-op is also democratically controlled by its members, which means that those good economic benefits are not transient (just enough to keep you from jumping to a competitor!), but long-term. And because members direct the co-op for their benefit, they can examine its functioning and make sure it is running efficiently, and choose to return surplus operating revenue to members (as “patronage dividends”, essentially a return, not on members’ investment, but on their use of the co-op).

Every year, in its survey of current and recent clients, CDI asks about the benefits of co-ops to members. Among the answers that consistently rank highest are community, ownership, shared values, and democratic participation. So in addition to economic benefits, co-op members enjoy the social reward of coming together to create, nurture, and sustain a valuable enterprise that fulfills their values. The structure of ownership and democratic participation, moreover, besides allowing members to ensure that the co-op is providing them with the benefits in a way they approve of, is itself a benefit: it gives people control and influence over important aspects of their lives, and it provides them a reason and an opportunity to hone their democratic skills.

Benefits to other co-op stakeholders (employees, customers, suppliers)

Whether and how co-ops benefit their non-member stakeholders is more of an open question. It’s up to the members to decide, and this can either work out well or not so well. A consumer co-op, for example, in seeking low prices for consumer members, may try to squeeze suppliers and workers. On the other hand, if the consumer co-op’s mission is to help build a more fair economy generally, they may become leaders in fair labor movements (see for example the consumer co-op members of the Domestic Fair Trade Association, which defends the workers’ rights of agricultural laborers and supermarket employees). On average, consumer grocery co-ops do pay their workers about a dollar more an hour than conventional supermarkets.

Generally, we could guess that because members are interested in the long-term sustainability of an enterprise that they need, they will be less likely to take short-term measures that undermine their viability. Marjorie Kelly calls this the “ethical network” aspect of a “generative” (as opposed to “extractive”, commodity-oriented) enterprise.

Benefits to local community

First, of course, co-ops provide economic benefits that their members — local people — need. Co-ops also, as democratic enterprises owned by a group, generally provide all the benefits associated with “local” ownership, such as more local spending, more rootedness, more accountability, more local resilience, more sensible development, more creativity, more equity, and more participation… only more so. For one thing, being local lasts longer — it is not confined to one or two generations of owners, after which a business may sell to outside owners or close. Simply speaking, co-ops don’t just get up and leave their town, or funnel the money to absentee owners. And as a democratically-controlled enterprise with many owners, a co-op is even less likely to try to extract harmful advantages from a local community, since its owners are also residents. Likewise, because co-op members are learning and practicing democratic skills, often they are able to use those for increased participation in local affairs.

For an overview of the ways in which “GOLD” (group-owned, local, democratic) businesses, i.e. co-ops, can benefit their communities, please read “What are GOLD Businesses?”

Many co-ops are keen to “give back” and establish good community ties through fundraising and sponsorships. And quite a few co-ops use their strengths, once established, to create new services or enterprises to meet the needs of members and the community (see “Growing the Cooperative Economy” on this page). In places with a high density of co-ops, such as the Emilia-Romagna region of Italy, researchers have even found significant health impacts and benefits for the community generally (see this report for more information).

Benefits to wider community

Co-ops, because they are viable economic enterprises that put the needs of members first and their values at the center of their operations, often lead the way in transforming entire industries toward more humane, responsive practices. For example, mutual life insurance companies were the first to provide true accountability to policy-holders, until the government recognized the need and made guarantees generally required for any insurance company. Consumer food cooperatives were the leaders in the movement toward unprocessed foods, as well as fair trade and local foods, which are now becoming widespread in other grocery stores. Cooperative Home Care Associates, the largest worker co-op in the U.S. with around 2,000 employees, has raised the standard for employment of home care workers, by demonstrating that it is possible to pay higher wages and provide better benefits while still operating a profitable company.

More generally, the Seventh Co-op principle is “Concern for Community.” Co-ops are honor-bound to operate with the well-being of the community in mind, and for the most part they do. In fact, the United Nations declared 2012 the International Year of Cooperatives with the theme “Cooperative Enterprises Build a Better World”. Internationally, cooperatives have played a hugely significant role in socio-economic development, particularly poverty reduction, employment generation, and social integration. Now, as Lynn Pitman pointed out in a recent GEO article, co-ops implement the values that their members demand. That may or may not correspond to everyone’s idea of what is good for the wider community. Still, even demonstrating the reality of an enterprise run directly for the benefit of members–instead of one run based on maximizing shareholder value, or quarterly profits, or momentary stock prices, with user and community benefit as a hoped-for side effect–is in itself a community benefit. Or, as U.N. Secretary General Ban Ki-Moon put it, “Cooperatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility”.

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Those are some of the many ways co-ops benefit their communities!

So – what do you think? Share your thoughts about the subject in the comments below, or ask your own question for Cathy!

Ask Co-op Cathy a Question