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Co-ops - a growing option
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October 10, 2000: 11:07 a.m. ET
Cooperatives, widely employed but little recognized, seek a higher profile
By Staff Writer Steve Bills
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NEW YORK (CNNfn) - Pop quiz: What do the following organizations have in common? Ace Hardware, Oglethorpe Power Corp., Land O'Lakes Inc., the Associated Press, the Navy Federal Credit Union.
Answer: Each is organized as a business cooperative, and all are on the "Co-op 100" compiled by the National Cooperative Bank of Washington, D.C.
 From housing cooperatives in the concrete canyons of Manhattan to agricultural cooperatives in the prairies of the Midwest, from neighborhood grocery stores to regional electrical grids, cooperatives touch the lives of millions of Americans every day.
Indeed, with more than 100 million members, America's co-ops can claim more participants than the estimated 78 million who own stock in the nation's corporations, the NCB said last week in announcing its annual list.
"The cooperative community, and the business community in general, should know how successful cooperatives are," said Barry Silver, managing director of the NCB, which has been compiling the list since 1992.
Growing along with general economy
"These leading cooperatives amassed total sales of close to $125 billion for 1999, up over 2 percent from 1998," the bank reported in announcing this year's list. "And, over the past five years, the revenue of the top 100 has climbed 23.2 percent, which, on an annual compounded basis, approximates the growth rate of the general economy."
 Yet in many ways, co-ops function as unrecognized organizations. While the movement of the stock markets captures the attention of investors daily, Americans by the thousands buy lumber at True Value hardware stores, "but they never recognize that TruServ is a co-op," Silver said.
What makes a cooperative different? As mutual organizations, they are owned by their members. Buying cooperatives enables small organizations to pool their purchasing power, while mutual credit unions or insurance companies can focus on offering lower prices or better service to their customer-members, supporters say, because they don't have shareholders to serve. The customer-members are the owners.
In an increasingly market-oriented world, however, cooperatives face certain challenges. Because they lack stock to use as currency for deals, co-ops have a disadvantage in raising funds. As a result, many organizations that once used the member-owner structure -- from thrift associations to mutual insurance companies to stock markets themselves -- have converted to stock ownership, or made plans to, as a way to compete more effectively in fast-paced, highly liquid markets.
Believers in the form acknowledge the difficulties, conceding that credit unions, for instance, have been forced to consolidate, just to maintain their competitive position against consolidating commercial banks.
Opportunities on the Internet
At the same time, however, they point to a surge in the number of buying cooperatives -- of the type represented by Ace Hardware and REI, Recreational Equipment Inc. -- and they see tremendous opportunities for co-ops in that vast new marketplace, the Internet.
"There has been an explosion of small business purchasing co-ops that have been organized in the last 10 years," said Paul Hazen, president of the National Cooperative Business Association, an industry group based in Washington, D.C. He pointed to buying groups such as Carpet One, a cooperative comprising more than 800 local floor-covering retailers that enables independent merchants to pool their purchasing power as a way "to stay vital on Main Street."
In fact, the NCBA believes so much in the potential of the Internet that it has applied to establish "dot.coop" or "dot.co-op" as a new, top-level domain for the World Wide Web, so cooperatives can distinguish themselves from conventional commercial dot.coms.
Hazen said the existing domain extensions -- including dot.net and dot.org, along with the governmental dot.gov and dot.mil -- fail to serve co-ops and their members: "None of those fit cooperatives. We are a separate sector of the economy."
A dot.coop domain "would help people all over the world to find a cooperative when they want a cooperative," Hazen said. "Consumers trust cooperatives more than most other kinds of business."
The new domain also would provide co-ops a degree of recognition that they have long lacked. Hazen said these organizations have a $1 trillion economic impact on the U.S. marketplace, making cooperatives "a very significant part of the economy. I think people should recognize that." 
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