Cooperatives are associations run for the mutual benefit of their member-owners. They were established in the late 18th and early 19th Centuries in the face of social and economic disruption brought about by the Industrial Revolution, as marginalized members of society—whether workers, farmers, consumers or producers—banded together to protect and promote their mutual interests. For example, most of the nation’s insurance companies started out as cooperatives created by immigrants as a way to protect members of their communities. In the last few decades, most big insurance companies have jettisoned their cooperative status in favor of profit-maximizing corporate structures.

Coops can be worker-owned, consumer-owned, producer-owned or buyer-owned associations—or sometimes a combination. They range from tiny food and energy coops to multimillion or billion dollar enterprises such as the famous Mondragon cooperative in Spain. Many household brands are coops, including Organic Valley, Land O’Lakes, Sunkist and Welches (producer-owned), and True Value, Ace Hardware and the Associated Press (buyer-owned). And most people are familiar with consumer-owned coops, like the many natural food stores, electrical utilities and credit unions across the country, as well as new cooperative brewpubs and diners popping up.

So why include coops in a guide to local investment alternatives? Well, it turns out they can be a very good investment, in more ways than one.

Coops generally provide two types of investment opportunity:

Membership: Members share in the business’s “surplus revenue” (aka profit) through discounted services or rebates distributed to members at the end of each year based upon their purchases.

Loans: When cooperatives need capital to expand, they often tap their members by issuing nonvoting shares that pay a modest but regular dividend, typically from 3% to 8%. The Willy Street Food Coop in Madison, WI, for example, issued zero-coupon “member bonds” that are paid back at their maturity with interest, ranging from 4% to 5.2%. Organic Valley sold shares to the members and the broader public from 2004 to 2010 to raise expansion capital. The money helped triple the dairy and farming cooperative’s sales. Investors received a steady 6% dividend during a period when the stock market delivered steep losses.


  • Although co-op investment terms vary, the generally offer steady bond-like dividends. As democratically run enterprises, co-ops tend to be very transparent about their operations and the uses of funds. These investments are the opposite of speculative. When shares are offered, it is typically at a fixed price, with a fixed dividend. Therefore, there is no depreciation of share value or volatility.
  • In addition to financial gain, your investment in a cop-op pays dividends to the community in terms of local jobs and economic activity. In addition, if you are a member of the co-op, you share in its benefits and prosperity.



  • Investment terms, including share price and repurchase policies, are controlled by the co-op board. As unregistered securities, the shares cannot be traded, although most co-ops will typically repurchase shares upon request. Most shares offered by co-ops have a fixed price and do not appreciate in value.

BOTTOM LINE: Coop loans are a safe, bond-like investment that  offer reward beyond dividends and build local wealth.


The National Cooperative Business Association, a membership organization, provides research and advocacy for the coop sector.

The International Cooperative Alliance represents cooperatives around the world and is a great informational site.

For a directory of cooperatives, try