Cooperative Business Principles

Authors: Greg McKee, North Dakota State University,, and Donald Frederick,
Rural Business-Cooperative Service, USDA

Cooperative Principles

Various writers over the past century have analyzed and observed the application of cooperative principles. Although slight differences in terminology appear on the various lists, three principles emerge as being widely recognized and practiced.

These principles are more than just good practices, policies or common sense. They distinguish a cooperative from other kinds of business. They are also recognized in state and federal statutes and regulations as criteria for a business to qualify as a cooperative.

  • The User-Benefits Principle
  • The User-Owner Principle
  • The User-Control Principle


The above cooperative principles were adapted from Frederickson, Donald, 1997, Cooperative Information Report, USDA,

Related Practices

Certain business practices have developed that implement and facilitate these basic principles. They further differentiate a cooperative from other forms of doing business.

  • Patronage Refund System
  • Limited Return on Equity Capital
  • Cooperation Among Cooperatives