What are Cooperatives ? Meaning & Scope
A cooperative is defined as a group of interested members who get together to work and achieve a common goal helping each other in the process. These members may be individuals or group entities like businesses.
Cooperatives are a common feature in several industries across the globe. Cooperatives are a very distinctive kind of nonprofit organization.
Cooperatives Vs Other non-profits
Unlike a typical nonprofit organization, which does not distribute profits amongst its members, a cooperative exist for the sole purpose of benefiting its members. A cooperative isn’t run for a charitable purpose, but it is still considered a nonprofit organization because all its profits are earned for the benefit of its members.
In cooperatives, the profits generated are distributed amongst the co-op’s members generally in proportion to the extent of business done by the member with the cooperative during the year.
Cooperatives are jointly owned by all it members. Decision making in the organization is democratically controlled. Each member of the cooperative gets only one vote as his say in the affairs of the organization irrespective of his share of business with the cooperative.
IRS code provides tax exemptions to cooperatives, if the income generated by the cooperative furthers the main purpose of the cooperative.