What is a Cooperative?

Cooperatives (aka co-ops) are member-owned, member-controlled organizations for the primary benefit of their members.

A fundamental difference between cooperatives and capitalist endeavors is the flipped relationship between capital (money) and labor. In capitalist firms, labor is a tool of capital (in order to create more $ capital returns, or profits, for their shareholders). In a worker cooperative, capital is a tool of labor, allowing workers the potential benefits of ownership. We intend to capture the full value of our labor, and share in our business’ profits, also called surplus.

An easy way to remember the difference between capitalist and co-op businesses is:

  1. Capitalistic model: capital rents labor, vs.

  2. Cooperative model: labor rents capital


  1. Money uses workers for benefits, vs.

  2. Workers using money for benefits

What’s the difference between a co-op and a collective?

Cooperatives, as a legal entity

“Cooperative” may refer to a specific type of corporation, recognized under the law. The legal requirements for forming a cooperative corporation vary from state to state. In California, cooperatives generally form as a corporation under the California Consumer Cooperative Corporation statute. The rules governing this type of corporation are found in the California Corporations Code provisions beginning with section 12200. In California, you cannot legally have the word “cooperative” in your name, unless you have formed under this statute.

Cooperatives, as a legal structure

Many organizations operate like cooperatives, but, for a variety of reasons, chose an entity other than a cooperative corporation. For example, some cooperatives form as Limited Liability Companies (LLCs) or Nonprofit Mutual Benefit Corporations, and incorporate cooperative principles and practices into their Articles of Organization, Articles of Incorporation, Operating Agreement, and/or Bylaws.

What are guiding principles to running a co-op?

1. Voluntary and Open Membership: Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2. Democratic Member Control: Cooperatives are democratic organizations controlled by their members—those who buy the goods or use the services of the cooperative—who actively participate in setting policies and making decisions.

3. Members' Economic Participation: Members contribute equally to, and democratically control, the capital of the cooperative. This benefits members in proportion to the business they conduct with the cooperative rather than on the capital invested.

4. Autonomy and Independence: Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the cooperative’s autonomy.

5. Education, Training and Information: Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives.

6. Cooperation among Cooperatives: Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

7. Concern for Community: While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members

What are the advantages of creating or transitioning my business into a co-op?

Cooperative Advantage

  • Access to non-traditional resources

  • Reduced cost of ownership

  • A network of trust relationships

  • Healthier economic exchanges and activities

Cooperatives Address

  • Market failures

  • Excessive market power

  • Asymmetric information

  • Barriers to job entry and ownership

For more information on how to create your co-op or on how to transition your existing business into a co-op check out these partners:

How did Mandela Grocery Co-op come to be?

Mandela Grocery Cooperative was born out of the desire to improve access to healthy food and business ownership for residents in West Oakland. West Oakland is a 3-mile radius residential neighborhood that did not have access to a grocery store prior to Mandela Grocery Cooperative opening in 2009.  

The history of West Oakland is rich in African American history. In the late 1800s, railroad car workers settled here with their families. Facing on-the-job racism, in the 1920’s they organized together and created the first all African American union called Brotherhood of the Sleeping Car Porters.

In the 1960’s the Black Panther Party organized “urban renewal” projects in its headquarters in West Oakland. During that time, 7th street, the main business strip, flourished with a number of vibrant black-owned businesses.  

Beginning in the 1940s, the introduction of urban renewal projects, community redlining, removal of homes and local businesses under eminent domain and construction of the Cypress Freeway disrupted the local economy and community. This disinvestment led to health and economic challenges for remaining residents. In the late 1990s, residents identified strategies to address the severe lack of healthy foods, thriving local businesses, and underemployment.  One of these strategies led to neighbors coming together in 2004 to incorporate and launch a community worker-cooperative grocery business, Mandela Grocery Cooperative.