Legal Definitions - co-operative (co-op)

A co-operative, or co-op, is a type of business organization that is typically governed by state law. However, some federal laws may also apply to certain co-ops. Unlike corporations and other business entities, co-ops are essentially democratic in nature and focus on meeting the common needs of their members rather than fulfilling the fiduciary needs of shareholders.

Co-operatives can be found in various sectors of the economy, including:

• Consumer co-ops: These co-ops operate businesses such as food stores, bookstores, and hardware stores that are owned and controlled by their members.
• Rural utility co-ops: These co-ops provide utility services such as electricity, water, and telecommunications to rural areas.
• Credit unions: These co-ops offer financial services such as savings accounts, loans, and other banking services to their members.
• Housing co-ops: These co-ops provide affordable housing to their members, who collectively own and manage the properties.
• Agricultural co-ops: These co-ops are involved in the supply, marketing, and manufacture of agricultural products, and are owned and controlled by farmers.
• Worker co-ops: These co-ops are owned and controlled by their employees, who share in the profits and decision-making of the business.

For example, a consumer co-op like a food store is owned and controlled by its members, who have a say in the store's operations and share in its profits. Similarly, a housing co-op allows its members to collectively own and manage their housing, providing affordable housing options. These examples illustrate how co-operatives prioritize the needs of their members over the interests of shareholders.