Cooperatives can be formed by individuals, businesses or communities. There are several general types of cooperative businesses: consumer, producer, worker, purchasing/shared services, and multi-stakeholder, which may have members from several of these groups.
Consumer Owned Cooperatives
Consumer cooperatives are owned by the people who buy the goods or use the services of the cooperative. Consumer co-ops include credit unions, child care cooperatives, electric and telecommunications cooperatives, food co-ops, health care co-ops, housing cooperatives such as Mustard Tree Co-op, and many more.
It is the most common form of co-op and is organized by individuals who seek to purchase goods and services. By organizing a cooperative, consumers are able to achieve prices and quality not available from for-profit businesses.
Producer Owned Cooperatives
Producer cooperatives are owned by producers of farm commodities or crafts who band together to process and/or market their products. Purchasing or shared services cooperatives are cooperatives whose members are businesses that join to improve their performance and competitiveness. This form of co-op is most common in agriculture, where farmers often must band together to survive in an industry that is increasingly industrial and centralized. Before cooperatives were organized, farmers were often trapped in a situation in which processors could dictate the prices paid for crops.
Worker Owned Cooperatives
Worker cooperatives are owned and democratically governed by their employees. They operate in numerous industries, including childcare, commercial and residential cleaning, food service, healthcare, technology, consumer retail and services, manufacturing, wholesaling and many others. Some 300 worker co-ops throughout the U.S. provide their employees with both jobs and ownership—allowing them to directly benefit from the financial success of the business. There are democratically controlled ESOPs that operate similarly to worker co-ops, but have been organized as ESOPs to enable additional tax and borrowing benefits. (See: MBC Ventures) Mondragon Cooperative Corporation is the best known group of industrial cooperatives.
Purchasing/Shared Services Cooperatives
Purchasing and Shared Services cooperatives are owned by small, independent businesses, municipalities or other like organizations that band together to enhance their purchasing power. Members of these cooperatives have found that they can adapt quickly to changing economic conditions rather than become victims of them-they can lower their operating costs by pooling purchasing power for goods and services.
Multi Stakeholder Cooperatives
Co-ops are generally made up of people with a common interest, but that hasn’t stopped some innovators from developing multi-stakeholder hybrids, which seek to balance the sometimes conflicting needs—for example, between consumers’ desire for affordable products and producers’ desire for higher prices for their goods. In many cases, this is tied to members’ dual roles as producers and consumers, most often in agricultural co-ops, but not always. For example: the High Five Co-op Brewery in Grand Rapids, MI and Black Star Brewery in Austin, TX are multi-stakeholder consumer and worker co-ops.