USA

The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for the U.S.A.

The United States of America is organized on a multi-layered system. With few exceptions, the federal government does not charter corporations or businesses. Each state enacts its own statutes authorizing creation of business entities. For many non-cooperative business entities, such as investment corporations, there is uniformity in much of state law as regards business and commerce due to a concerted effort by the private sector Uniform Commission on Laws. In contrast, cooperative corporation law has no uniformity among the states. Where the dominant corporate law evolved to meet the needs of financial capitalism nationally, cooperative statutes arose in different places at different times in response to different sorts of needs. State statutory law for co-ops varies widely from state to state.

Cooperative Friendliness

As a general matter, relative to other types of businesses, co-ops are difficult to establish. With no uniform law, relatively little understanding by regulatory entities, and very sparse investment in technical assistance, people find it difficult to navigate the legal and regulatory landscape.

Key recommendations for improvement

• Adopt general cooperative incorporation statutes at the state level to make it easier for people to establish cooperatives.
• Ensure that agencies with the mission of supporting and regulating businesses treat cooperatives fairly and appropriately. 
• Increase support for cooperative development by providing greater resources for technical assistance at in both rural and urban places. 
• Increase direct and guaranteed loan programs for cooperatives in all sectors. 

Conclusions

Cooperative policy in the U.S. is varied. In some sectors, there exists a robust set of national and state policies that enable the development and growth of cooperatives. While in other sectors, sparse and erratic policy face those who seek to use cooperatives in their economic and social endeavors. Thus, there is significant opportunity for federal, state and local policy makers to improve the policy environment with greater support for public awareness, technical assistance, and financing of the cooperative business model.

_{The legal frameworks analysis is a tool developed under the ICA-EU Partnership #coops4dev. It is an overview of the national legal frameworks at the time of writing. The views expressed within are not necessarily those of the ICA, nor does a reference to any specific content constitute an explicit endorsement or recommendation by the ICA.}