What is a Cooperative?
Explore how cooperatives bring people together through shared ownership, democratic decision-making, and mutual support. Understand the timeless principles that unite cooperative movements across the globe.
A Business Owned by Its Members
A cooperative is a distinct form of enterprise where ownership and control rest with the people who actually use its services—not with outside investors or shareholders. The fundamental difference lies in who benefits: in a cooperative, returns flow back to members based on their participation, not based on how much capital they've invested.
Cooperatives take many shapes—varying widely in their focus areas, the number of people they serve, and the services they provide. What unites them is a shared commitment to addressing members' genuine needs, with organizational structures designed to adapt as those needs evolve over time.
"At the heart of every cooperative are seven foundational principles that shape its governance and guide its choices—principles that ensure fairness, transparency, and meaningful member involvement in all major decisions."
From agricultural producers seeking fair market access to workers desiring a stake in their workplace, cooperatives enable individuals to achieve together what would be impossible alone. This model has proven remarkably versatile, thriving today in sectors as diverse as banking, farming, retail, healthcare, housing, and utilities.
Member-Owned
In a cooperative, the members themselves hold the reins—actively shaping policies, electing leadership, and steering the organization's direction through democratic participation.
The Origins of Cooperation
While mutual aid has always been part of human society, the formal cooperative business structure emerged during the Industrial Revolution. As rapid industrialization transformed economies and left many workers vulnerable, people began organizing to protect their collective interests.
These early cooperatives provided a way for those with less individual power—farmers facing volatile markets, workers enduring difficult conditions, consumers seeking fair prices—to band together and achieve what none could accomplish on their own. By combining resources and sharing both risks and rewards, they built something greater than the sum of its parts.
The Seven Cooperative Principles
Adopted by the International Cooperative Alliance, these universal guidelines define how cooperatives worldwide conduct business and make decisions.
Voluntary and Open Membership
Membership is available to anyone ready to embrace the responsibilities it entails. Cooperatives welcome all people regardless of background, belief system, or social standing—discrimination has no place here.
Democratic Member Control
Members govern their cooperative through active engagement in policy-setting and strategic choices. The principle of "one member, one vote" applies—your voice carries equal weight whether you've contributed a little or a lot.
Member Economic Participation
Members invest fairly in their cooperative's capital and collectively oversee how it's managed. When the cooperative generates surplus, it's distributed to members based on how much they've engaged with the cooperative's services.
Autonomy and Independence
Cooperatives are self-governing organizations run by their members. When partnering with outside entities or seeking external funding, they do so only on terms that preserve their independence and democratic character.
Education, Training, and Information
Cooperatives invest in developing their people—members, leaders, managers, and staff alike receive opportunities to build skills and knowledge that strengthen both individual capabilities and the organization as a whole.
Cooperation Among Cooperatives
Cooperatives multiply their impact by collaborating with one another—forming networks at local, regional, national, and international levels. This principle explains why federations like PFCCO-Visayas exist.
Concern for Community
Cooperatives don't exist in isolation—they're woven into the fabric of their communities. Through member-approved initiatives, they actively contribute to local sustainable development while balancing business success with social responsibility.
Types of Cooperatives
The cooperative model adapts to serve nearly every sector of the economy
Credit Cooperatives
Member-owned financial institutions offering savings accounts, affordable loans, and other banking services.
Agricultural Cooperatives
Enable farmers to collectively market their produce, purchase supplies, and share expensive equipment.
Consumer Cooperatives
Owned by shoppers who join forces to access quality goods and services at competitive prices.
Worker Cooperatives
Enterprises where employees are the owners—sharing in profits, responsibilities, and strategic decisions.
Housing Cooperatives
Residents collectively own and manage their living spaces, making housing more accessible and affordable.
Utility Cooperatives
Bring essential services—electricity, water, internet—to areas that traditional providers might overlook.
Health Cooperatives
Deliver medical care and health coverage to members, often at more accessible price points.
Multi-Purpose Cooperatives
Blend multiple cooperative functions under one roof to address the varied needs of their membership.
What is a Cooperative Federation?
How cooperatives amplify their strength by joining forces
Definition
A cooperative federation (sometimes called a secondary cooperative) is essentially a cooperative whose members are themselves cooperatives. Where primary cooperatives serve individual people, federations serve entire cooperatives—delivering services that would be difficult or inefficient for any single cooperative to provide on its own.
Traditional Forms
Throughout history, federations have typically taken two main shapes: wholesale societies that leverage collective purchasing power to secure better deals for member cooperatives, and cooperative unions that focus on advocacy, education, and shared support services.
Purpose & Function
Federations bring the sixth Cooperative Principle to life. By uniting cooperatives, they provide pooled resources for training, represent collective interests to policymakers, offer technical expertise, and give member cooperatives a stronger voice than any could have alone.
"Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures."
— International Cooperative AllianceCooperative Structure Hierarchy
Benefits of Cooperative Membership
The advantages that draw people to the cooperative model
Democratic Control
Your membership gives you genuine decision-making power. One person, one vote—your stake in the organization isn't tied to how much you've invested.
Shared Prosperity
When the cooperative succeeds, members benefit directly—through patronage refunds, improved services, or lower costs.
Community Focus
Money stays local. Cooperatives channel resources back into the neighborhoods where their members live and work.
Economic Empowerment
Gain access to financial tools, fair pricing, and business opportunities that might otherwise remain out of reach.
Education & Training
Cooperatives are committed to member development—providing programs that build knowledge and strengthen capabilities.
Stability & Security
Member ownership creates resilient institutions that weather economic storms and provide dependable support through difficult times.
Content reference: NAAE - My Local Cooperative: Cooperative Basics
Ready to Be Part of the Movement?
Step into a community built on shared ownership, democratic values, and collective strength. Whether you're looking to join a cooperative as an individual or connect your cooperative with our federation, we're ready to welcome you.