Cooperative Membership — Rights, Responsibilities, and How to Join

Cooperative membership is a formal relationship between a person and a cooperative that grants rights — including the right to vote, receive patronage refunds, and access services — in exchange for obligations including share capital, participation, and adherence to cooperative rules.

Membership is what separates a cooperative from a regular business. When you buy from Walmart, you are a customer. When you join your local food cooperative and pay the membership fee, you become an owner with governance rights. The distinction matters in law, in tax treatment, and in the long-term relationship between you and the organization.

Membership Rights: What Being a Member Gives You

Right	Description	Example
Vote	One member, one vote on major decisions	Electing the board of directors at REI's annual meeting
Surplus share	Patronage refunds proportional to use	REI members receive a dividend based on annual purchases
Information	Access to financial statements and cooperative records	Annual report, audited accounts
Stand for election	Run for the board of directors	Any REI member can stand for election to the board
Attend meetings	Participate in general and special meetings	Annual General Meeting (AGM) with full voting rights
Redress	Challenge decisions through cooperative dispute procedures	Formal grievance processes for membership disputes

These rights are not bestowed by management — they are protected by cooperative law in most jurisdictions. The open membership principle (ICA Cooperative Principle 1) states that cooperatives are open to all persons able to use services and willing to accept membership responsibilities, without discrimination.

Membership Responsibilities: What Being a Member Requires

Membership is not passive. Cooperatives require members to contribute actively — which is the mechanism through which the cooperative functions.

Capital contribution: Most cooperatives require members to purchase shares or pay a membership fee. Navy Federal Credit Union requires a $5 minimum deposit to open an account. A typical food cooperative charges $100–$200 in one-time membership fees, sometimes payable in installments. An agricultural cooperative may require farmers to purchase shares worth thousands of dollars that represent their production capacity.

Participation obligation: Many cooperatives require active use of the cooperative's services. An agricultural marketing cooperative may require members to deliver a minimum percentage of their production through the cooperative (a delivery obligation). The Park Slope Food Coop in Brooklyn requires members to work 2.75 hours every four weeks as a condition of membership.

Patronage obligation: Members are expected to conduct business through the cooperative, not just hold membership as a financial investment. A credit union member who never deposits or borrows adds nothing to the cooperative's operation.

Compliance: Members must follow cooperative bylaws, standing rules, and policies. Failure to do so can result in suspension or termination of membership.

The Open Membership Principle

The ICA's first cooperative principle — voluntary and open membership — is central to what makes a cooperative a cooperative.

"Cooperatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination."

In practice, this means:

A credit union cannot deny membership based on race, religion, or political views
A consumer cooperative cannot exclude someone because of their income level
An agricultural cooperative cannot exclude a farmer based on farm size, provided they can meet membership obligations

Limitations on open membership: The open membership principle has boundaries. Agricultural cooperatives can require that members be active producers. Electric cooperatives can limit membership to those within the service territory. Housing cooperatives can require board approval of new members (though approval criteria must not be discriminatory). Credit unions define a field of membership — the community of eligible members, defined by employer, geography, or association.

The Philippines Cooperative Code (RA 9520) explicitly prohibits discrimination in cooperative membership. The UK Financial Conduct Authority (FCA) rules for cooperative societies require that membership criteria be stated in the rules and applied consistently.

How to Join Different Types of Cooperatives

The process varies significantly by cooperative type.

Joining an Agricultural Cooperative

Agricultural cooperatives typically require:

Application — Submit a membership application demonstrating you are an active producer of the relevant commodity (dairy, grain, fruit, etc.)
Share purchase — Buy shares representing your production capacity. For grain cooperatives using New Generation Cooperative (NGC) structures, shares often represent delivery rights — the right to deliver a specific quantity of product per year
Delivery obligation agreement — Sign a marketing agreement committing to deliver a percentage of production through the cooperative
Board approval — Applications are reviewed and approved by the board or a membership committee

Example: A new member of Dairy Farmers of America must be an active dairy farmer and purchase common shares. The specific share requirement depends on the member's milk production volume.

Joining a Credit Union

Credit unions define a field of membership — the eligible population. You must qualify before you can join.

Establish eligibility — Confirm you fall within the field of membership (employer, geography, family connection)
Open an account — Deposit the minimum required share balance (typically $5–$25 in the US)
That's it — Most credit unions have no additional application step; meeting eligibility and opening the account makes you a member

Example: Navy Federal Credit Union's field of membership covers US armed forces, DoD civilians, and their family members. Deposit $5 into a savings account and membership is complete.

Joining a Housing Cooperative

Housing cooperatives have the most involved application process because housing allocation involves significant assets.

Submit an application — Name, income verification, references
Board interview — Many housing cooperatives require a personal interview with the membership committee or board
Background and credit check — Standard in most jurisdictions
Approval — Board votes to approve or deny
Share purchase — Pay for a share in the cooperative representing occupancy rights to a specific unit
Occupancy agreement — Sign a proprietary lease or occupancy agreement

Example: Applying for a cooperative apartment in New York City typically involves submitting a board package (financial statements, personal references, tax returns), attending a board interview, and purchasing shares in the cooperative corporation.

Joining a Consumer Cooperative

Consumer cooperatives are the most accessible to join.

Pay the membership fee — One-time fee (typically $20–$200) or purchase of a membership share
Agree to bylaws — Acknowledge the cooperative's rules and policies
Start shopping — Membership is active immediately

Example: REI charges a $30 lifetime membership fee. There is no application, no approval process, and no minimum purchase requirement. Membership is immediate.

Example: The Park Slope Food Coop charges a $25 joining fee plus a $100 refundable deposit. Members must also complete an orientation session and commit to the working member requirement.

Joining a Credit Cooperative (SACCO)

Savings and Credit Cooperative Organisations (SACCOs) are the dominant financial cooperative form in East Africa and parts of Asia. See cooperatives in Kenya for a detailed look at how SACCO membership works.

Identify a SACCO — Employer-based (most common), community-based, or sector-based
Submit application — Including ID, payslip or income evidence
Purchase shares — Minimum share capital, often deducted from salary
Begin regular savings — Monthly contributions are typically mandatory

Example: Joining a Kenyan teachers' SACCO requires a payslip, national ID, passport photo, and purchase of a minimum number of shares (typically 10 shares at KSh 1,000 each = KSh 10,000).

Philippines: CDA Membership Framework

The Philippines has one of the world's most detailed cooperative membership frameworks under Republic Act 9520 (Philippine Cooperative Code of 2008), overseen by the Cooperative Development Authority (CDA).

Under RA 9520:

A cooperative must have a minimum of 15 members to register
Regular members have full voting rights and are entitled to patronage refunds
Associate members use cooperative services but have limited voting rights (cannot vote on amendments to articles or elect board members)
Members must pay the membership fee and share capital as stated in the bylaws
Members can be expelled for conduct prejudicial to the cooperative, after due process
Upon withdrawal, members are entitled to a refund of their paid-up share capital

The CDA requires cooperatives to maintain an updated membership registry and submit annual reports on membership numbers and composition. As of 2022, the Philippines has approximately 26,000 registered cooperatives with over 16 million members.

UK: FCA Membership Rules for Cooperative Societies

In the UK, cooperatives are registered as cooperative societies under the Cooperative and Community Benefit Societies Act 2014, regulated by the Financial Conduct Authority (FCA).

FCA rules require that a cooperative society's registered rules must specify:

The conditions for membership admission
The terms on which members may withdraw
The amount of the entrance fee (if any)
The minimum share holding required

The FCA's key test for cooperative society status is the genuine cooperative test: the society must conduct its business primarily for the benefit of its members, and membership must be open to all persons who wish to participate in that business. Membership cannot be artificially restricted to inflate member surplus.

UK cooperative societies can issue withdrawable shares — a form of investment open to members, which can be withdrawn on notice. This is a distinctive mechanism that allows cooperatives to raise external capital while maintaining cooperative governance.

Membership vs Being a Customer or Shareholder

The three relationships — member, customer, shareholder — are frequently confused.

	Customer	Shareholder	Member
Ownership	No	Yes (proportional to shares)	Yes (equal, per member)
Voting	No	Yes (proportional)	Yes (one per member)
Profit share	No	Yes (dividends on shares)	Yes (patronage refund on use)
Legal obligation	Purchase agreement only	Shareholder agreement	Membership agreement
Access to services	Open to anyone	Not required	Required for membership
Continuity	Ends when purchase ends	Continues while shares held	Continues while active

A Walmart customer has no ownership, no vote, and no share of profits. A Walmart shareholder has proportional ownership and voting rights but is not required to shop there. A food cooperative member has ownership, voting rights, and a patronage refund — but is expected to shop there and may be required to participate in operations.

Member Protections

Beyond rights to vote and receive surplus, members are protected by cooperative law in several ways:

Expulsion protection: Members cannot be expelled without cause and due process. Most cooperative laws require a written notice, an opportunity to respond, and a formal hearing before expulsion. RA 9520 (Philippines) specifies that any member facing expulsion must receive at least 30 days' written notice and can appeal to the general assembly.

Withdrawal rights: Members can generally withdraw from a cooperative and reclaim their paid-up share capital, subject to notice periods (typically 30–90 days) and financial conditions of the cooperative. Some cooperatives with long-term capital commitments restrict withdrawal during specific periods.

Information rights: Members are entitled to see the cooperative's financial statements, audit reports, and board meeting minutes (in many jurisdictions). This prevents management from operating the cooperative against member interests without accountability.

Redemption of retained equity: When a cooperative retains patronage as equity rather than paying it in cash, members are entitled to redemption of that equity according to the cooperative's equity redemption plan. This is a binding obligation, not a discretionary payment.

FAQ

Can anyone join a cooperative? Most cooperatives are open to anyone who can use their services and is willing to accept membership obligations — this is the ICA's open membership principle. However, each cooperative defines its own eligibility criteria. Agricultural cooperatives require that members be active producers. Credit unions require that members fall within the defined field of membership. Housing cooperatives may require board approval.

What is the difference between a member and an associate member? Regular members have full rights including the right to vote on all matters and stand for election to the board. Associate members typically have the right to use cooperative services but have limited governance rights. The Philippines Cooperative Code (RA 9520) explicitly distinguishes between these two categories, with associate members excluded from voting on constitutional matters.

Do cooperative members get dividends? Cooperatives distribute surplus as patronage refunds, not dividends in the traditional sense. A patronage refund is calculated on the basis of how much business you did with the cooperative, not how many shares you hold. Some cooperatives also pay interest on share capital — this functions like a dividend. REI calls its patronage refund a "dividend" for marketing simplicity, but it is calculated based on annual purchases, not share holdings.

What happens to my shares if I leave a cooperative? You are entitled to a refund of your paid-up share capital when you withdraw from a cooperative, subject to the cooperative's withdrawal terms. If the cooperative has retained patronage in your account (as book-entry equity rather than cash), the terms for redemption of that retained equity vary — it is typically paid out on a multi-year schedule. If the cooperative is insolvent, share capital redemption follows insolvency law priorities.

Can a business be a cooperative member? Yes. Many agricultural marketing cooperatives have both individual farmer members and corporate farm members. Purchasing cooperatives (Ace Hardware, True Value) are composed entirely of business members. The legal treatment varies by jurisdiction — in the US, corporate members are eligible for patronage refunds in the same way as individual members.

Is cooperative membership the same as being a shareholder? No. Shareholders own proportional stakes in a corporation and vote proportional to shares held. Cooperative members own a membership right — equal to every other member — and vote on a one-member-one-vote basis. The economic return also differs: shareholders receive dividends proportional to shares, while members receive patronage refunds proportional to use.

How large can cooperative membership get? There is no legal upper limit. AMUL has 3.6 million dairy farmer members. Navy Federal Credit Union has 13 million members. The Co-op Group (UK) has 4.6 million members. The challenge is maintaining meaningful democratic participation at scale — large cooperatives develop representative structures (regional assemblies, delegate systems) to keep governance functional.

Can you lose your cooperative membership? Yes. Membership can be terminated voluntarily (withdrawal) or involuntarily (expulsion for cause). Cause typically includes: failure to meet financial obligations (unpaid share capital), failure to meet participation obligations, conduct prejudicial to the cooperative, or criminal conduct. Due process protections apply before expulsion — the member must be given notice and an opportunity to respond.

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