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A cooperative is a collaboration of individuals or businesses that work together to gain a benefit through numbers.

A cooperative is not a charity but it is a nonprofit. It is jointly owned and democratically controlled. Cooperatives can be found in all industries and in all geographic areas. They have one reason to exist: meeting the needs of their members.

All profits (sometimes called margins) are given back to the cooperative's members. These refunds, also called "patronage dividends," are paid to each member annually according to the proportion of business each does with the cooperative for that year.

Cooperatives have been around for centuries but modern cooperatives descended from a group of textile weavers in England called the Rochdale Society of Equitable Pioneers. The three principles of cooperatives as originated in the 19th century are:

  • Subordination of capital.
  • One person equals one vote regardless of that person's percentage of ownership.
  • Dividing profits or margins among the members according to the percentage of business done with the cooperative.

Common cooperatives are consumer; housing and condominium cooperatives, electric, telephone, and utility, health, purchasing cooperatives, workers' cooperatives, and financial cooperatives.

Also Known As: co-op or coop

In most cooperatives, membership is closed or restricted. Should someone want to become a member of a cooperative, they must meet all requirements and submit an application and be approved by the other members.

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