Cooperatives are mechanisms for economic and community self-determination. When markets don’t provide needed goods or services, cooperatives can be part of a solution. The member ownership and control structure of a cooperative drive its strategic direction and financial decisions, allowing it to have broader, more positive community impacts.
Cooperatives can be used to meet a wide variety of local needs, from connecting small farmers to the growing market demand for local food, to providing childcare options to the workforce of employers in a community.
As a community development model, cooperatives can:
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Demonstrate greater resilience than conventional business structures
New business start-ups are looked to as engines of innovation, job creation, and economic development. The process of starting a new cooperative business is sometimes seen as unwieldy, since it can require time to develop the common vision that unites its member-owners. But related cooperative characteristics may contribute to the higher survival rate of new cooperatives compared to other new entrepreneurial business forms, research from Canada shows.
Keep wealth and jobs in the community
Over the next two decades, an estimated 70% of privately held businesses will change hands, many as a result of retiring baby boomers. Converting existing businesses to employee or consumer ownership is gaining traction as a method for retaining businesses, jobs, and wealth in local communities.
Cooperatives act as business anchors in a community—distributing, recycling, and multiplying local expertise and capital. Most cooperatives are owned and controlled by local residents, and their explicit mission is to keep funding, distribution of benefits, responsibility, and accountability in local members’ hands. As a result, their values and organizational structure allow them to respond more effectively to local social and economic problems, promoting community growth instead of investor profit.
More information on cooperative conversion and employee ownership
Create quality jobs with higher wages
With ownership in the hands of the workers, employees have a meaningful role in the business by contributing and benefiting from the success of the company they own. Jobs at worker cooperatives tend to be longer term, offer extensive skills training, and provide better wages than similar jobs in conventional companies. Furthermore, worker cooperatives offer opportunities for greater participation in management and governance decisions that help the business succeed.
Create change for underserved and/or marginalized populations
Cooperatives can be a solution for unmet needs for underserved populations. For example, a rural community coming together to develop community-owned broadband for internet services, or community members without access to healthy, affordable food joining forces to launch a grocery cooperative.
Worker cooperatives can create jobs for individuals that have been excluded from the traditional business model including formerly incarcerated, low-skilled, veteran and new American populations.
- A Guide to Tribal Community Cooperative Development, The Minnesota Indian Business Alliance (MNIBA)
- Local People, Local Solutions: A Guide to Cooperative Development in Saskatchewan, Saskatchewan First Nations Economic Development Network (SFNEDN) and the Saskatchewan Co-operative Association (SCA), 2015.
Government Support for Cooperative Community and Economic Development
Urban Government Support
Several city governments throughout the United States have invested in employee ownership and worker cooperative development as a business retention and job creation strategy.
Examples of communities and municipalities that are supporting cooperative development:
In 2018, the U.S. passed federal legislation that focuses on worker cooperatives. The Main Street Employee Ownership Act will support small businesses, save jobs, and promote equitable wages.
This legislation, which improves access to capital and technical assistance for employee-owned businesses, greatly helps worker co-ops, with directives for Small Business Administration to:
- Finance the sale of businesses to their employees;
- Work with Small Business Development Centers across the country to provide training and education on employee ownership options; and
- Report on SBA’s lending and outreach to employee-owned businesses.
Rural Cooperative Development Grant
Administered by the United States Department of Agriculture, the Rural Cooperative Development Grant (RCDG) program helps improve the economic condition of rural areas by helping individuals and businesses start, expand or improve rural cooperatives and other mutually-owned businesses through Cooperative Development Centers. Grants are awarded through a national competition. See list of Cooperative Development Centers by state.
Resources for Community and Economic Developers
Co-ops Matter: The ABCs of Co-op Impact. Urban Institute, 2018.
Cooperative Growth Ecosystem: Inclusive Economic Development in Action.
Project Equity/Democracy at Work Institute, 2016.