How to Organize a Cooperative

Cooperatives are not just for farmers and utilities anymore. Cooperatives are formed to meet a community's need and bring products and services to all of it's members. Remember when gasoline was over $5.00 a gallon and we were all jealous of the cooperative members who were purchasing gasoline for $1.19 a gallon or less. Now we just have to wonder why thousands of gasoline cooperatives were not formed when prices went back down again. But it's not just that either. Cooperatives can be organized for just about any community need. Cooperatives can spark community involvement in the economic process and profit all of it's members.

Activate Community Awareness: Cooperatives are organized with member's investment of not only money but of time also. One individual can spark the idea of a cooperative and test the community's possible participation level by getting the word out. Another cooperative idea that I think has potential in most US communities right now is a worker's cooperative. With unemployment rates as high as they have been and businesses closing everyday you may be able to rally support for a worker's cooperative. What ever your cooperative is organized for you need to discuss it with the other members of your community. Just think of the concept of telling 5 people who tell five people who tell five people. You could even start by posting articles in your local paper and attend chamber of commerce meetings to get current business owner's support.

Verify Cooperative Participation: After you have discussed forming a cooperative in your community it's essential that you quantify actual participation and select leadership and advisors. Remembering that your idea will no longer be just yours, you are going to have the ability to guide but not all of the power and responsibility, you want to have great advisors and strong leadership in place. You're exploratory meetings and member-user surveys will give you even more information that is needed to bring your cooperative to operation. Sample surveys are available for you to customize if you have questions on the information to ask potential members. Basically you are looking for the information to complete your feasibility study so ask questions regarding utilization that can be quantified. It's great to have names addresses and contact information but what you really need to know is how, how often and how much the potential members expect to benefit from the cooperative. You also need to feel out their monetary participation. The USDA uses an example of a tomato farmer that leaves 10 cents a bushel profit from the sale to be used to support the cooperatives direct costs. In a worker's cooperative I picture a percentage of wages earned for continued support of the cooperative by placed workers and a placement fee based on wages paid by the business owner members. Determining what the cooperative can expect to receive by participation and fees benefit all members as they participate in the cooperatives profit.

Formalize Your Cooperative: A cooperative is similar to other businesses in that it needs to follow sound business practices. They are typically incorporated under state laws and as such they require bylaws and other necessary legal papers. The members elect a board of directors and the board set policy and hires a manager but they are unique in that they are user-owned, user-controlled and user-benefited. Each member is an owner. Each member has an typically has an equal say in the operation of the cooperative. Each member benefits from the use of and the monetary gains of the cooperative. Formalizing a cooperative involves a considerable amount of legal and accounting work so be sure to obtain the help that's needed. For further information on this step you may want to refer to the rural development USDA site as they have done considerable research in the steps needed to formalize not only a farmer's cooperative but any other also.