Benefits and Impacts of Cooperatives
- Cooperative enterprises address market failure: provide rural electricity or other utilities in sparsely populated areas; affordable healthy and organic foods; access to credit and banking services; access to affordable housing; access to quality affordable child or elder care; access to markets for culturally sensitive goods & arts.
- Cooperatives overcome the historic barriers to development in the ways they aggregate people, resources, and capital (Ziewacz 1994). Of 162 non-agricultural cooperatives in one study, 44% of the respondents said they could not have opened their business had it not been organized as a cooperative (Bhuyan et al 1998).
- The economic activity of the 30,000 cooperatives in the U.S. contributes an estimated $154 billion to the nation’s total income. The co-ops have helped to create over 2.1 million jobs, with an impact on wages and salaries of almost $75 billion (Deller et al 2009).
- Cooperative businesses have lower failure rates than traditional corporations/small businesses: after the first year (10% failure versus 60-80%) and after 5 years in business (90% still operating versus 3-5% of traditional businesses) (World Council of Credit Unions study in Williams 2007). Evidence also shows that cooperatives both successfully address the effects of crises and survive crises better (Borzaga and Calera 2012).
- Since most cooperatives are owned and controlled by local residents, it is more likely to promote community growth than an investor-oriented firm. Since cooperative business objectives are needs oriented, cooperatives are more likely to stay in the community (Zeuli, Freshwater et al 2003).
- Cooperative businesses stabilize communities because they are community-based business anchors; and distribute, recycle, and multiply local expertise and capital within a community. They enable their owners to generate income, and jobs; accumulate assets; provide affordable, quality goods and services; develop human & social capital (Gordon Nembhard 2002, 2004b, 2008a; Fairbairn et al 1991; Logue and Yates 2005).
- Co-ops and their members pay taxes, and are good citizens by giving donations to their communities, paying their employees fairly, and using sustainable practices (Gordon Nembhard 2013; Iowa Association of Electrical Co-ops. 2011).
- Cooperative start-up costs can be low because: are eligible to apply for loans and grants from a number of federal and state agencies designed to support co-op development; are often provided relatively low cost loans from non-governmental financial institutions like cooperative banks because they are chartered or established to do so (Zeuli, Freshwater et al 2003).
- WAGES in Oakland CA finds that after owning the house cleaning co-op the worker-owners’ median income increased to over $40,000 (before the co-op the Latina owners had a median income of $24,000). Ownership in the co-op has put their income higher than the national average of $38,000 for Latinos/as (http://www.wagescooperatives.org/economic-empowerment).
- Food co-ops spend more revenues locally, buy more products locally, buy more organic produce, recycle more plastic, and create more jobs than conventional grocers. For every $1,000 spent at a food co-op, $1,606 goes to the local economy; for every $1 million in sales, 9.3 jobs are created (Yes! Magazine 2013).
[Prepared by Jessica Gordon Nembhard (John Jay College), with Charlotte Otabor (Howard University) October 2013- revised February 2014. Center on Race and Wealth, Howard University. For a list of works cited, see here.]
[Editor's note: Jessica Gordon Nembhard's book, Collective Courage: A History of African American Cooperative Economic Thought and Practice, is available for purchase online at the PSU Press website. Use the code JGN14 at checkout to receive a 20% discount.]
Go to the Southern Cooperative Movement theme page
Jessica Gordon Nembhard (2014). 10 Facts About Cooperative Enterprise: Benefits and Impacts of Cooperatives. Grassroots Economic Organizing (GEO). https://geo.coop/story/fact-sheet