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Reasons to start a cooperative

These are reasons to start a Cooperative as well as reasons to think twice about it. [1]

Reasons Why You Might Want to Start a Co-op

  • Cooperatives exist to meet their members’ needs. Their focus is on service to members, not on bringing a return to investors.
  • Cooperative members are not penalized for working together in a cooperative business under US Tax Code; therefore many cooperatives enjoy tax advantages.
  • Cooperatives are owned and controlled by their members. They help keep resources in the members’ community and are guided by members’ values.
  • Decisions made democratically by the membership provide a strong direction that is supported across the organization.
  • Profits are returned to members so members benefit from the business they do with the cooperative.
  • Cooperatives contribute to the economic stability of their communities.
  • Distribute the benefits of real ownership based on time and use, not just the amount of money someone can invest.

Reasons Why You Might Want to Think Twice Before Starting a Coop

  • Sometimes cooperatives have difficulty gaining access to the capital they need without being able to bring on investors who have a seat on the board.
  • Cooperatives need to invest time and money in supporting their democratic process – educating members about key issues, holding meetings, and responding to member concerns. This can be expensive and time consuming.
  • Sometimes there are legal limits to the scope of operations or membership for a cooperative.
  • Cooperatives are only as good as their members ask them to be. When members stop investing time and energy, cooperatives can reduce the benefits they provide to their members.

See Also

References

  1. "How to Start a Co-op" packet. http://www.cdi.coop/CDIcompletestart-uppkt2010.pdf