microcooperative

A microcooperative is a cooperative enterprise organized on a small scale by a relatively small group of members to meet their mutual economic, social, or cultural needs. It operates on the core cooperative principles of voluntary and open membership, democratic member control, and concern for the community, while prioritizing close member participation and local accountability. Microcooperatives typically have limited capital and a narrow membership compared with larger cooperatives.

Microcooperatives can engage in a variety of activities, including production, processing, distribution, or provision of services among members, or the management of shared resources such as housing, tools, or community services. Common sectors include neighborhood consumer cooperatives, small worker cooperatives, and producer cooperatives formed by individual farmers or artisans.

Structure and governance are anchored in democratic governance: members elect a board, and major policy decisions are made at annual meetings. Surpluses or profits are distributed among members according to patronage or ownership shares, or reinvested in the cooperative to strengthen its activities. They are usually registered under cooperative laws in their jurisdiction, with a legal form that supports shared ownership and democratic control.

Financing for microcooperatives typically comes from member contributions, retained earnings, and often loans from credit unions or microfinance institutions. External investment is usually limited to preserve member control. Their small size often makes them highly responsive to local needs and capable of fostering social cohesion, even as they face challenges such as limited capital, scarce managerial resources, regulatory complexity, and succession planning.

See also: Cooperative, Worker cooperative, Consumer cooperative, Mutual aid.