Chapter 15 - § 15.3 • SELECTED COOPERATIVE TYPES AND EXAMPLES

• Jurisdiction: Colorado

§ 15.3 • SELECTED COOPERATIVE TYPES AND EXAMPLES

Although in the United States cooperatives may be most commonly recognized in agriculture and public utilities (rural electric and telecommunications cooperatives), they exist in many other areas including housing, worker cooperatives, energy, transportation services, goods and services purchasing, insurance, banking, health care, retail sales, and many other industries.

Some commonly known food products bearing the names of Sunkist, Tillamook, Organic Valley, Ocean Spray, and Blue Diamond are produced and distributed by cooperative organizations. Ace Hardware has a purchasing cooperative where the local store owners are the members, purchase wholesale goods and products for the stores, and participate as a common retail brand. Some owners of fast-food franchises are members of purchasing cooperatives through which food items for the franchises are purchased. Mutual insurance companies and credit unions are cooperatives. In 1995, several nonprofit and governmental organizations in Eagle County, Colorado, organized the Eagle Valley Family Center, a cooperative organization that seeks ways to provide mutual support in addressing health and human services needs and programs in the county.²⁰ In recent years, especially in Minnesota, North Dakota, and Wisconsin, numerous cooperative ventures (commonly called "value-added" cooperatives) have been developed by agricultural producers who seek to obtain for themselves a portion of the value normally added by others to agricultural products at various stages of processing in the food-distribution chain.²¹

Although there are other types, cooperatives are generally considered to fall into three categories: (1) a marketing/producer cooperative, in which the members join together to market products produced or created by them; (2) a supply or purchasing cooperative, in which the members join together to acquire various goods and services for themselves or for their individual operations; and (3) a worker-owned cooperative, in which the workers own the business and thereby provide jobs and income for themselves.²²

"The functions performed by cooperatives in the economic life of a community can be practically without limit."²³ Some of the current and potential future uses for the cooperative concept are discussed below.

§ 15.3.1—Health Care

In the health-care field, there are many potential applications of the cooperative concept, and the states that have health-care insurance cooperatives are shown in the footnote below.²⁴ There already exist cooperative medical insurance providers, such as health maintenance organizations (HMOs) and a few insurance companies operating on a cooperative basis. As some insurance carriers withdraw from rural areas, communities and their residents in those areas can explore providing their own health insurance by banding together to create their own mutual health insurance companies or programs. Colorado had its own Article 56 healthcare insurance "Co-op" from 2012 through 2014, based upon the requirements of the federal Affordable Care Act, but state regulatory pressures forced its closure in 2015. While called a "Co-op," this health insurance marketplace was not in fact a cooperative, but operated as a market-based, private sector alternative to a government run insurance program.

In the face of increasing costs of hospitals and medical equipment, some communities also band together to support a single health-care center on a cooperative basis. In addition, with the growing senior population, worker-owned homecare cooperatives are being created around the country for in-home health and companion care for senior citizens, although such organizations have not yet been formed in Colorado.

If multiple hospitals exist, they can utilize the cooperative business structure for purchasing equipment and providing services to themselves. Laundry service has been provided to a group of hospitals through a cooperative for years. At one time, it was proposed in northeastern Colorado that CAT scan equipment be placed on a specially constructed truck to be carried from hospital to hospital pursuant to a cooperative ownership and operational plan. Certainly it must be recognized that individual health-care providers are concerned that their "business" will be undermined if others can have availability to their "special" equipment or services, but the alternative may be the demise of all health-care facilities in various rural regions. For the sake of all, community leaders can encourage cooperative use of facilities among various communities.

§ 15.3.2—Technology Services

Electric and telephone service has been provided in rural areas through cooperatives since the early 1900s. Many rural telephone cooperatives provide fiber and broadband Internet and cell phone service. In one Colorado community, a wealthy family decided to run its own DSL line to its mountain residence. Because it was going to do it anyway, the family explored sharing the line with neighbors through a cooperative organization. One entrepreneur has explored the feasibility of providing hightech connections throughout communities through a cooperative, with the hope that the entrepreneur could sell his services to the community through the connections.

Cooperatives are being formed with technology as their focus. One example of a technology cooperative is a company that members join in order to receive "back-office" online services for their small businesses, such as bookkeeping, sales tracking, payroll services, and Internet and telephone services. The cooperative business organization form is an ideal method for acquiring these services when they are otherwise unavailable or unaffordable through companies seeking a return on their investment.

A new movement is looking to apply and propagate the cooperative business models to online technology platforms.²⁵ This so-called "Platform Cooperativism" movement has its roots in open source software developers, but is now looking at software technology company design as the next frontier in realizing the Internet's promise as a truly democratizing force. These "platform cooperatives" bear the hallmarks of the cooperative model and generally consider either users, developers, or a hybrid combination of two or more stakeholder groups as their members. These multi-class cooperatives are generally formed as limited cooperative associations under state statutes similar to the ULCAA. One such cooperative, Savvy Coop, was organized in 2017 under Colorado's ULCAA.²⁶

§ 15.3.3—Special Products Marketing

There are individuals who conduct small, at-home, or community businesses that manufacture specialized products or crafts, few of whom are likely to have sufficient capital to launch a significant marketing campaign. These businesses may create a cooperative to provide a catalog that can be...