Part of the reason I appreciate cooperative business models in Ohio is the flexibility they offer. They can be legally structured to meet the needs of an organization or business, which may result in creating a multi-stakeholder cooperative. The term “multi-stake holder cooperative” (also called hybrid or solidarity model cooperatives) refers to cooperatives that are owned by more than one type or “class” of member. These different member classes will have different rights, responsibilities, and interests as will be defined in the coop’s bylaws. These classes could include worker-owners, consumers (either individuals or businesses), producers, and investors.
A great example of multi-stakeholder cooperative is Fifth Season Cooperative. This co-op is a marketing and distribution cooperative that serves the local food system in the 7 Rivers region of western Wisconsin. It has 7 different membership classes. These include local individual growers (producers), agricultural businesses (producer groups), buyer organizations (ie., schools, restaurants, nursing homes, businesses, churches, etc.), processors, distributors, workers (employee-owners), and community supporters. Note that in this model, the “community supporter” has a different class of stock from the other members, which limits voting rights and does not allow for participation in the governance of the coop. This class is used as a vehicle for community investors. Here’s a link to their bylaws if you want to see more about how they structured.
Another, more simple, example of a multi-stakeholder coop is Gem City Coop, a cooperative grocery store in Dayton, Ohio. This grocery coop has three classes of membership. One class of member is the worker-owners, another class of member is for the consumers who shop at the coop. The third class is called “the supporting class”, which is a class that allows for private investors like the previous example.
When Do Private Investors Come into Play in a Co-op?
The reasons that a coop might seek private investment could be for initial investment or it could be to help the business scale or grow. Typical lending institutions (i.e., commercial banks) where the coop is located may not be familiar with cooperative structures, so traditional lending options may not be as readily available. The decision to bring in private investors is always a decision that will be made by the members of the coop to meets the needs of the coop.