How Do Cooperatives Function?
Looked at from the outside, there isn’t much difference between a cooperative and a commercial business. The main difference lies in the way a cooperative works. A cooperative business is set up by those whom it serves and is controlled directly by them. The earliest American cooperative businesses, the mutual fire-insurance companies, attempted only to meet costs after a fire occurred. Each member was assessed for his share of actual fire losses. Members of the early mutual irrigation companies shared the cost of irrigation services in the same way—after the bills were in. Service cooperatives still operate largely in this way—for instance, mutual telephone companies, rural electrification associations, health and burial associations, and cold-storage locker service plants. But such cooperatives now, instead of assessing their members at the end of a period, generally estimate costs and make charges in advance. This provides current funds to support the organization and meet expenses
