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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.


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.


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 ?
The Kagawa Fund is a revolving loan fund that helps student housing cooperatives purchase and repair housing.
Over the past 33 years, he has helped thousands of cooperatives obtain financing to succeed in business.
These traditional cooperatives are considered a high-profile partnership in human community as well as in Iranian society, though it is called differently among different cultures.
William Andrew, president and CEO of Delaware Electric Cooperative, was elected as vice-chairman; and Kent Farmer, president and CEO of Rappahannock Electric Cooperative was elected secretary/treasurer.
However, one normal method for cooperatives to raise capital is a "base capital plan" In such an arrangement, members keep their capital accounts in line with their patronage.
For cooperatives elsewhere in the period, see, for example, Klein, For All These Rights, Chap.
Most of the traditional cooperatives were formed because a party envisioned a more effective collaborative effort and was able to engender sufficient interactivity to initiate the program.
Other large regional co-ops, such as CHS Cooperatives and Land O' Lakes, are likely to fill gaps in the cooperative network, perhaps through expanded participation in the numerous joint ventures they already have with Farmland, Barton adds.
Cooperatives could pay more for teachers with advanced degrees than colleges and universities now pay their adjunct faculty.
In the late 1950s, public libraries began to incorporate into "systems" or cooperatives.
PNGC Power is a Portland-based electric power services cooperative owned by 15 Northwest electric distribution cooperative utilities with service territory in seven western states (Oregon, Washington, Idaho, Montana, Utah, Nevada and Wyoming).
Hoyt was elected to the board of the National Cooperative Bank in 1982 and in 1985 she joined the University of Wisconsin (UW) at Madison's Department of Consumer Science and the UW Center for Cooperatives.

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