More and more people have the interests in joining food cooperatives due to where there’s a growth on interests for organic, natural and local foods as well as having an increased awareness with economic vulnerability. Also, a lot of communities nowadays wish to get stability and accountability which a cooperative could offer.
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 will typically pay fee or due and will get something like discounts. 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 will require capital and also generates capital through its share investments of the owners and members. Other sources of capital would be earnings and debt.
Member share programs also have two goals where member shares provide the co-op with good capital basis and creates a sense of ownership as well. 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 will actually own and invest on a cooperative because they trust that doing this is on their best interest. Because our culture does not have many examples of democratic ownership, member share programs should consider including adequate education for owners to understand well how co-op ownerships really work.
It’s essential to remember that all types of capital comes with its own advantages and disadvantages and member shares are in fact no exception in such cases. 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 be able to meet the needs of a coop, member shares usually have the advantage of being a low-cost way for building capital because a co-op do not usually pay interest towards its members shares like what it does on 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.
The member share investment also are advantageous because the shares are not taxable income on the co-op.