Historical Perspective of Co-opsAlthough the term co-op may be relatively new in the business world, the fact is that cooperation, which is the foundation on which a management co-op is built, has been in existence since the beginning of civilization. In ancient times, it was not unusual for people to exchange services for goods they needed to survive. In fact, when the first settlers arrived in the United States, they worked together to clear fields, as well as planting and harvesting crops. After the harvest, settlers shared the gains with each other.
First Co-OpThe first official co-op in the United States was the Philadelphia Contributionship for the Insurance Houses from Loss by Fire. Founded by Benjamin Franklin in 1752, the company formed as a mutual insurance company where the policyholders shared risks related to fire. Fire prevention was important in early Philadelphia, and the city was planned with that in mind with wider streets as well as more brick and stone buildings than wooden. However, fire posed a significant risk, so Franklin and fellow firefighters developed an insurance plan that allowed members to pay a small fee in order to protect their homes or businesses from fire. The company is still in operation today.
The use of cooperatives grew as industry increased over the next century. In 1844, the Rochdale Equitable Pioneers’ Society was founded in England. The society’s goal was to sell goods such as food and clothing to consumers who were displeased with merchants in the community. In the United States, farmers began creating cooperatives in order to process milk into cheese. Co-ops were also used to deal with economic conditions brought on by England’s poor relationship with Napoleon. It was the Rochdale Society, however, that developed an outreach program with a written list of practices that have become the principles of cooperatives today. These include:
- Open membership
- One member, one vote
- Cash trading
- Education of Members
- No political or religious affiliation
- Risk assumption equal among members
- Share ownership limits
- Stock interest limits
The Grange became a major influence on cooperatives in the agriculture industry after it was founded in 1867. The organization sold groceries and clothing along with other agricultural supplies to serve members in rural areas. The success of the Grange encouraged other agricultural cooperatives to form and some even formed their own financial institutions designed to assist farmers and other agricultural industries.
Today’s CooperativeToday, cooperatives provide a variety of different services to members, depending on the type of co-op they are. There are co-ops for electrical service as well as for supplying goods or services to various businesses. Some co-ops focus on homeowner association management designed to allow owners to focus on making their community better rather than on day-to-day business matters. However, today’s cooperatives still follow many of the principles created by the Rochdale Society more than a century ago.
Cooperatives are one of the best ways for a company to seize opportunities and improve profitability. Sites like InnoviaCMC.com provide invaluable information for anyone who is interested in learning more about cooperatives and their history.