The most vital part of a cooperative organization is its people – the members of the co-op. The members of a cooperative come together to form the organization for a common purpose, and the members then collectively own and manage the co-op. Thus, it is important that a cooperative effectively design its process for how members are to be admitted to the co-op.

This blog post discusses how members are admitted to a cooperative, and the common features associated with the admission process. Not all cooperatives are the same, so an organization’s experience may differ.

Why Membership Matters

First, it is important to note why membership, and new members, are important topics. Cooperatives are unique because they are owned and governed by the people who use their services. This member-centric approach means each person admitted becomes a vital part of the cooperative’s decision-making process and future direction. Membership is also a legal requirement for cooperative entities.[1]  However, state cooperative laws do not typically provide the process for admitting members. Rather, this is typically determined by the cooperative and incorporated into its internal governing documents and policies.

Member Eligibility

To admit members, cooperatives will often use an application process where prospective members apply to be admitted to the co-op’s membership. To apply successfully, members must often meet core eligibility criteria of the cooperative that need to be designed by the co-op – typically by the board of directors.

Cooperatives may establish eligibility requirements for one to become a member, and these will typically depend on the type of co-op (i.e., whether they are worker co-op, producer co-op, agricultural co-op, consumer co-op). Members may need to be natural persons of a certain age, such as 18 years old, or the member may need to be an entity, including even a cooperative itself. Further, cooperatives may often establish candidacy periods where, to be eligible to be admitted as a member of the co-op, the candidate must spend a certain period of time – often 6, 12, or 18 months – contributing to or using the coop’s goods or services (see our firm’s blog post about onboarding for more information about candidacy periods). Depending on the work of the cooperative, a member’s eligibility may also depend on certain education, training, or licensing that is otherwise needed to complete the work of the co-op. Finally, many cooperatives require their members to live, work, or operate within a certain geographic area.

Member Requirements for Admission

To become a member, in addition to meeting the eligibility criteria, one must also meet (and once admitted, continue to meet) certain requirements of the cooperative that are applicable to all members. Again, these may vary depending on the type of cooperative, but common requirements include the member agreeing to continuously patronize the co-op (typically, pursuant to a membership agreement with the coop); participate in co-op governance functions and responsibilities; abide by the articles of incorporation/organization, bylaws, and other policies and agreements of the co-op; and at all times maintain good standing as a member of the co-op.

In many cases, the cooperative may require members to purchase a share or unit of membership in the co-op, which represents their ownership interest in the co-op. Members may also need to agree to pay annual dues to maintain their membership in the cooperative. In worker cooperatives, members typically agree to provide certain services to the co-op, the amounts of which (for example, on a weekly, monthly, annual, etc. basis) may be specified in the governance documents of the co-op. Members agree to these requirements at the time of admission and must continue to meet these requirements throughout their membership with the cooperative.

Approval by the Cooperative

A prospective member’s admission application is usually reviewed by the cooperative’s board of directors or by a membership committee. This step ensures that new members meet the criteria and membership requirements, and that they understand their responsibilities. Once the application is approved, membership can formally be granted.

Membership Agreement

Cooperatives often use membership agreements to formally admit new members into the co-op. These are agreements between the cooperative and the members where they agree to the patronage and membership responsibilities of the co-op. Membership agreements usually award members their share or unit of membership in return for a membership fee. They also outline any additional member fees and how they must be paid. If they are a worker member, it may also outline their service obligations to the cooperative. Additionally, by signing a membership agreement, a member is explicitly agreeing to the articles of incorporation/organization, bylaws, and other written policies of the cooperative. Finally, membership agreements may also include terms not necessarily included in the bylaws, especially if the cooperative is a multi-stakeholder co-op with various classes.

Being a Member

Once being admitted as a member of the cooperative, the member begins fulfilling their role with the co-op. They begin patronizing the cooperative as a member and are expected to actively participate in the cooperative’s governance, including by attending membership meetings and engaging in decision-making processes. Members may also need to attend trainings and become more familiar with the cooperative structure. Finally, members stay in good standing with the cooperative by adhering to the rules and policies of the cooperative.

Conclusion

Ultimately, a well-designed admission process ensures that each new member strengthens the cooperative’s mission and values. Thus, admitting new members to a cooperative is far more than a simple administrative step. Rather, the specific admission process should be thoughtfully designed and incorporated into the co-op’s internal governance documents so that it can be easily implemented by the co-op’s current members.

A lot goes into admitting new members into a cooperative! Whether you’re just getting started or refining an existing membership process, our team is here to support your cooperative’s growth and long-term success. Please don’t hesitate to contact us with any questions or to schedule a consultation. You can reach us at info@jrwiener.com.

This article is for informational purposes only and is not intended to provide legal advice.

 

[1] See, e.g., C.R.S. Section 7-55-101(d) (“The term “cooperative association”…may be further defined as follows:… its business shall not be carried on for profit but for the mutual benefit of all the members.”); C.R.S. Section 7-56-103(6) (““Cooperative” means any entity formed under or subject to this article by election or otherwise,…and having the following characteristics:…The cooperative’s business is carried on for the mutual benefit of its members.”); C.R.S. Section 7-58-501 (“To begin business, a limited cooperative association must have at least two patron members unless the sole member is a cooperative.”).