What Is a Cooperative?

How cooperatives differ from ordinary companies, where the idea came from, and the principles that guide member-owned businesses.

A cooperative is a business owned and controlled by its members, who use its services or work in it, rather than by outside investors.

How co-ops differ from companies

Ownership: members, such as customers, farmers or workers, own the co-op.
Control: typically one member, one vote, regardless of how much money each has invested.
Purpose: to serve members’ needs, not maximise returns for outside shareholders.
Surplus: profits are reinvested or returned to members, often in proportion to their use of the co-op.

The Rochdale Pioneers

In 1844, a group of workers in Rochdale, England, opened a cooperative store selling pure, fairly priced food. Their rules became the basis of the cooperative principles, now maintained by the International Cooperative Alliance:

Voluntary and open membership.
Democratic member control.
Member economic participation.
Autonomy and independence.
Education and training.
Cooperation among cooperatives.
Concern for community.

Why cooperatives exist

To give small producers or consumers bargaining power.
To provide services that markets ignore.
To keep profits within communities.

Scale

Cooperatives worldwide have hundreds of millions of members. The UN declared 2025 the International Year of Cooperatives.

The village store

Families in a village pool money to open a store. Each family has one vote in decisions. At year-end, any surplus is shared according to how much each family bought.

Thinking cooperatives are charities

Co-ops are businesses that must cover costs; they're owned by members rather than outside investors.

Key takeaways

Cooperatives are owned and controlled by their members.
They usually follow one member, one vote.
The Rochdale Pioneers (1844) inspired the cooperative principles.
The UN declared 2025 the International Year of Cooperatives.