Understanding the Benefits of Joining Co-ops
A lot of people are now having an interest of joining food cooperatives because of the reason where there’s a growth of people having interests on local, natural and organic foods and more people now have an increased awareness on economic vulnerability. Another thing is that more and more communities today desire to get stability as well as accountability that a cooperative can provide.
Cooperative ownership is in fact an economic model that is able to give various benefits to the community and to the members (owners). The cooperative models also are powerful tools, especially when we are going to place more focus towards the side of the owner.
Members usually pays a fee or due and in return they will get get something such as a purchase discount. Owners are going to invest and will get benefits if the business prospers. However, cooperatives should create economic linkages with their members through activities which will make the close connection clearer between the success of the business and its members.
For cooperatives, patronage and owner equity refunds are tools that are true and have been tested already which helps in maintaining good relationship for both the owner and the cooperative.
Cooperative businesses would need capital and this will generate capital through a share investment of the members and owners. Earnings and debts are considered to be main sources of capital as well.
The member share programs also have two crucial goals where member shares gives the co-op with adequate capital base and it also creates a sense of ownership. The co-op’s purpose is in fact in meeting the needs of its members and members then needs to understand that having to fulfill such purpose will require capital.
Members tends to own and invest in a cooperative because they trust that they do this on their best interest. The fact that our culture doesn’t have a lot of examples on democratic ownership, a member share programs must provide adequate education in order for owners to understand well on how co-op ownerships really work.
One needs to be aware that all types of capital have its own advantages and disadvantages and member shares have no exception to it. Member shares can be limiting and slow to acquire, especially for the co-ops which have the plans to expand. On some states, their laws will allow co-op investment options which will help in overcoming the disadvantage through capital formation.
To meet a coop’s needs, member shares actually have an advantage to being a low-cost option because the co-op does not usually pay interest on its member shares because as it does with debt capital. Member investments also are more dependable and are also less risky than having to rely on earnings as the main source of their capital.
A member share investment is also advantageous because shares are not taxable income for the co-op.