During the early 1800s in England, organizations were created almost entirely to provide benefits to a membership restricted to a certain class, gender, Masonic order or religion. The members of Rochdale Equitable Pioneers wanted to eliminate that discrimination. Membership was voluntary and open to all who wanted to participate — and the cost to join would be the same for all persons, regardless of when they joined the co-op.
This principle doesn't mean that co-ops are prohibited from defining requirements for membership. Frontier, for example, requires businesses to provide a Tax Identification Number (TIN) or, in the case of buying clubs, that there are a minimum of five households. But membership cannot be denied for reasons such as religious affiliation or the gender of its owner.
Frontier serves over 33,000 members across the United States. Our membership is as unique and varied as our population, and we’re proud to adhere to Rochdale’s founding cooperative principles.
Members of a cooperative participate equally in governing the cooperative. They're responsible for policy making and in directing the growth and direction of the cooperative. The original principle designated "one member, one vote." Newer interpretations of the principle allow for new voting structures and voting procedures that may better afford equal representation among members. Men and women serve as elected representatives who are accountable to the membership. Annual and other membership meetings are held to keep members informed and involved.
Frontier began as a co-op in 1976, and we remain committed to cooperative principles, including member democratic control. In addition to providing capital for Frontier to operate, our member/owners elect a Board of Directors comprised of six members to oversee Frontier. These directors — who provide a wide range of expertise — interact with members and consumers and provide valuable insight for Frontier's future direction. They insist on ethical business practices and help us provide the quality products that our members want.
We also hold an annual membership meeting in September to update members directly on financial performance, recent activities and plans for the upcoming year. Members may attend in person or online.
All co-ops rely on active participation from their members. Historically, members usually assisted with operating the co-op in order to reduce expenses. Members would volunteer their time in exchange for the benefits the co-op offered. Even today many co-ops still rely — at least in part — on member labor. However, co-ops can soon outgrow their own labor pool, so it's often not feasible to run the organization exclusively with member labor. Today’s co-ops, especially large co-ops such as natural food retailers serving big cities or rural electric cooperatives serving a wide geographical area, typically require non-member labor resources. In fact, co-ops provide over 100 million jobs around the world, 20% more than multinational enterprises. In the United States, our nearly 30,000 cooperatives account for more than $3 trillion in assets, over $500 billion total revenue, $25 billion in wages and benefits, and nearly one million jobs. More on the impact of cooperatives on the U.S. economy.
Economic participation is not only linked to labor and operations, it’s also the principle that supports our share account and patronage system at Frontier. At the end of our fiscal year, we share our net profit with members in two ways. First, we add money to your member share account, which is established upon membership with Frontier. Funds are added to that share account until it reaches a level equal to 2.25 times your average monthly purchases. Second, we also share profits by issuing patronage checks. Throughout its history, Frontier has returned over $20 million in patronage refunds. Some of this money is paid out immediately as cash, and some is retained (called deferred patronage) in your share account. The money retained by Frontier is used for things like new manufacturing equipment, facility renovations, distribution expansions and our recently purchased warehouse and then returned at a later date.
Because we have tens of thousands of members throughout North America, the funds retained from our individual members, taken together, create a strong and stable financial base. While we may not be putting you on the schedule to help pack boxes, we rely on your economic participation to fund our ability to serve our members with the highest quality natural and organic products.
Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
Frontier, for example, is democratically governed by its members. An example of an agreement that the co-op might enter into is with a bank. Frontier does borrow money from banks, with the approval of its board of directors (who are elected by the members). And while the bank dictates terms and limitations, it has no control over the co-op (as long as we live up to the terms and limitations), no vote in elections, no input on decision-making via the board of directors, etc. This control is reserved for the members of Frontier.
Even though cooperatives have been in existence since 1844, the public’s knowledge of this business model doesn't do justice to its rich history. When cooperatives first began in England, during a time of limited opportunities for lower-class individuals, education was viewed as a critical tool for working one’s way out of the lower class. According to co-op historian David Thompson, “education was then a passport to prosperity and economic freedom.”
Cooperatives embraced education as one of their operating principles, adding it formally to the Rochdale Principles in 1854. A primary goal of cooperatives became to educate their members, officers, employees and the general public about the operating principles of cooperatives. At Frontier, this education takes place through videos, electronic newsletters, printed materials, trade shows, websites and employee training. We've recently added a video about the cooperative business model from Frontier's perspective to our YouTube channel.
Frontier employees also pass their knowledge on to our members and communities, both locally and globally, through personal dialogue and interaction. As ambassadors of the cooperative business model, we believe that education is empowering. Through our various education initiatives and daily dialogue, we hope to increase the level of public knowledge about cooperatives and their ability to empower communities economically and socially.
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
Co-ops support one another; they're allies. Frontier is a cooperative, and we work with and support cooperatives at every turn. Many of our member/owners are cooperatives. In addition, many of our products are sourced via our Well Earth Sustainable Sourcing Program from cooperatives around the world (such as the small-scale farmers in India and Madagascar who grow our vanilla and the farmer cooperative of 86 native farmers in South Africa who grow our rooibos tea). And we often contribute to the well being of our cooperative growers by helping to develop and improve organic agricultural practices and by providing additional resources for their communities. In June of 2011, for example, Frontier provided a $25,000 donation to an organic training center for the Small Organic Farmers Association in Sri Lanka. And early this year, we made a grant of $40,000 to build 49 wells in 38 villages in Madagascar, where we source our vanilla.
We support larger cooperatives, too, such as The National Cooperative Business Association (NCBA) and Co-op America. The NCBA helps develop cooperatives and works to advance their status through education and legislation. Co-op America provides information and technical assistance to help cooperative companies succeed. Learn more about which Organizations We Support.
While focusing on member needs, cooperatives work for the sustainable development of communities through policies and programs accepted by the members.
We make purchases, decisions, and contributions that are respectful and supportive of the people in our local communities as well as in the communities impacted by our business.
Here in Norway, Iowa, our community giving team supports local charities, events, and causes close to home. They organize an annual Especially for You Race Against Breast Cancer and a Big Brothers Big Sisters annual Bowl for Kids' Sake fundraiser. And we encourage employee volunteer time by paying our employees to volunteer for local causes.
In 2011, the Frontier Foundation made over $50,800 in grants, including $15,000 to Kids Against Hunger for Haiti disaster food relief and $15,000 to the Global Service Community Fund for education in a Well Earth-partner community in Vietnam. We also made over $140,500 in grants through our Simply Organic 1% fund to causes that benefit organic farmers. Earlier this year, we gave $40,000 to build 49 wells in Madagascar, to help remote villagers who were walking several miles to obtain river water. And our Aura Cacia fund granted over $14,000 early in 2012 to build a preschool for rural Madagascar children of ylang ylang oil farmers.
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