Some of the most recognizable companies, including Land O’Lakes, REI, the Associated Press, Ace Hardware, and State Farm Insurance, are organized as cooperatives – firms owned by their suppliers, workers, or customers. Yet aside from isolated areas of the economy, cooperatives constitute only a small portion of American enterprise, which is otherwise dominated by investor-owned firms. Conventional wisdom assumes that firms either start as cooperatives or convert to cooperatives when cooperatives offer the highest ongoing benefits to owners, and it explains the lack of cooperatives by suggesting that cooperatives usually do not maximize ongoing benefits.
Surprisingly, however, the topic of the legal identity of cooperatives has not yet received the attention it deserves, even despite frequent warnings by eminent analysts about the “hybridization”, “companization” or “degeneration” of the cooperative model, which is a trend that may alter the natural and undoubted capacity of cooperatives to contribute to a better world, or at least to sustainable economic development.
Euricse’s mission is to promote knowledge development and innovation for the field of cooperatives, social enterprises and other nonprofit organizations engaged in the production of goods and services. The Institute aims to deepen the understanding of these types of organizations and their impact on economic and social development, furthering their growth and assisting them to work more effectively.
A Co‐operative Capital Unit (CCU) is defined within the Co-operatives Act WA (2009) as “[a]n interest issued by a co-operative conferring an interest in the capital, but not the share capital, of the co-operative” (Co-operatives Act 2009 (WA), Division 2, s257(1)). Therefore, a CCU holding does not carry the rights of co‐operative membership.
ILO—It is commonly accepted that the role of government in cooperative affairs be restricted to four functions: legislation, registration, dissolution/liquidation,and monitoring the application of the law by the cooperatives. Therefore these Guidelines take as a premise that the main objective of a cooperative law be to guarantee minimum government involvement, maximum deregulation, maximum democratic participation and minimum government spending by translating the cooperative principles into a legally binding framework for the organization of self-determined self-help. [PDF]
Cooperatives are distinguished from other organizations in that member use, or patronage is linked to control of the enterprise, rather than the degree of monetary investment. Any financial returns to cooperative owners typically come through profit allocation based on their patronage, or transactions with the cooperative. This is very different from an investor-owned firm where it is not necessary to transact any business with the enterprise in order to benefit from it as an owner. In an investor-owned firm, return comes through funds invested, not services used. [PDF]