cooperative

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Cooperative

An association or corporation established for the purpose of providing services on a nonprofit basis to its shareholders or members who own and control it.

The nature and functions of cooperatives differ considerably—such as purchasing cooperatives, consumer cooperatives, and marketing cooperatives.

In the context of agriculture, a farmers' cooperative refers to an organization of farmers residing in the same locale that is established for their mutual benefit in regard to the cultivation and harvest of their products, the purchase of farm equipment and supplies at the lowest possible cost, and the sale of their products at the maximum possible price.

The term cooperative also signifies the ownership of an apartment building by a nonprofit corporation that holds title to it and the property upon which it is situated. Stock in the corporation is allotted among the apartment units on the basis of their relative value or size. The right of occupancy to a particular apartment is granted to each cooperative member, who purchases the shares assigned to the desired unit. The member subsequently receives a long-term proprietary lease to that unit. The rent payable pursuant to the lease is that member's proportionate share of the expenses the corporation incurs in operating the cooperative—such as insurance, taxes, maintenance, management, and debt service. The cooperative concept evolved in New York City during the early 1900s as a mode of accommodating the public's desire for home ownership; it subsequently expanded to other large urban centers.

In order to finance the purchase or construction of the cooperative building, the cooperative places a blanket mortgage on the property, which is pledged to support the given debt. Lenders usually are hesitant to accept an individual member's stock and proprietary lease as security for a long-term loan. The members' lien (a claim on property to satisfy a debt) on the lease would be subordinate to the blanket mortgage on the property. The purchaser of a cooperative apartment usually must have sufficient cash available to pay for the stock allotted to the unit he or she wishes to obtain. The initial price of the stock generally does not exceed the amount required for a down payment on a single-family residence. As cooperative members accumulate Equity (the value of property exceeding the total debts on it) in their stock, subsequent purchasers must either have a substantial amount of cash available or locate a seller who is willing to recoup the equity in installments over several years.

Cooperative members are also financially dependent on each other. The existence of a single blanket mortgage paid by rent receipts means that if several members default in their rent payments, the corporation might not have sufficient funds to pay a mortgage loan installment. Foreclosure will ensue in regard to the entire membership unless it acts to satisfy the default. Although special reserves and assessments are generally employed to cover such a contingency, the available funds might be inadequate to prevent default.

cooperative

n. an association of individual businesses, farmers, ranchers, or manufacturers with similar interests, intending to cooperate in marketing, shipping and related activities (sometimes under a single brand name) to sell their products efficiently, and then share the profits based on the production, capital or effort of each. "Sunkist" oranges is an example of a large cooperative. Cooperatives include dairy milk producers, cotton gins, and thousands of other enterprises of all sizes. There are also cooperatives in which consumers form retail outlets like grocery stores and share the profits based on the amount of patronage of each member, but they have found it difficult to compete with the giant supermarket chains.

cooperative

noun alliance, association, collective, communal business establishment, communal society, commune, concurrent effort, federation, guild, joint action, joint operation, joint possession, partnership, teamwork, union
See also: ancillary, associated, beneficial, benevolent, coadunate, collective, common, concerted, concurrent, consensual, constructive, favorable, harmonious, joint, mutual, synergetic, united
References in periodicals archive ?
In the West, agrarian-based producer co-ops formed, eventually giving rise to the co-operatively structured grain pools, to have a greater say over the prices and sale of their harvests.
I think that we're trying to work co-operatively to assist all Canadian producers to have better relationships with those from other countries.
3) Community engagement in this context includes community service and other activities through which the University engages co-operatively with a wide range of professional and other communities in the provision of undergraduate courses, professional development programs, research, consultancies and other academic services.
The NVO and CCP Boards agreed unanimously to work closely together and co-operatively to create a Memorandum of Understanding which is to be executed by June 30, 2004.
Partners must demonstrate continuing support for ongoing interoperability based on open standards, and commit to working co-operatively to resolve any customer interoperability issues.
The Roman Catholic Church, while not a member church, works co-operatively with the WCC.
Zed, based in London, is managed co-operatively by its worker directors and has no external shareholders.
Qantas has worked co-operatively with its employees in recent years and we would hope that this contingency training would not be required.
ComSense is interested in working co-operatively and co-developing with system integrators to develop new ways to apply ComDot technology.
It said it had hoped to build up a substantial relationship with 3Com and that there is still a possibility that the two companies will work co-operatively on utilizing the 3Com Host Bus Adapter.
Though class divisions were much stronger then, Judy O'Grady came gently and co-operatively towards new partnership and played a good part in resolving the sex war.
The suite for Sweden's JAS 39 is being developed co-operatively by Ericsson, Bofors and SATech with Ericsson handling the active radar jamming subsystem and the suite control computer; Bofors, the chaff/ flare dispenser; and SATech, the radar warner.