Cooperatives Generally

Cooperatives in North Carolina are governed by the General Statutes of North Carolina, Chapter 54: Cooperative Organizations. Under subchapter IV (Article 16) of Chapter 54, five or more people may organize a cooperative association for any lawful purpose.  Sections 54-113 and 114 require that the founding members prepare, sign, and file with the Secretary of State written articles of organization that contain the name of the association, the names and residences of the founders, a statement of purpose, the cooperative’s principal place of business, the amount of authorized capital stock, the number of shares authorized, and the par value of each share.  Section 54-113 also limits the personal liability of members of the cooperative, but only with respect to the cooperative’s debts.  Section 54-124 requires the creation of a board of not fewer than 5 people.  Section 54-126 addresses the allocation of profit, requiring that “the net earnings or losses [of the business] shall be apportioned among the members in accordance with the ratio which each member’s patronage [i.e. purchases, sales, business, labor, wages, or similar criteria] during the period involved bears to total patronage by all members during the period.”  Section 54-120 establishes restrictions on the ownership rights and transferability of cooperative shares.  It states that no shareholder is entitled to more than one vote or permitted to own shares “of a greater aggregate par value than twenty percent (20%) of the paid-in capital stock.”

Cooperatives can also organize as a regular business corporation or LLC, and specify their intent to operate cooperatively in their by-laws or operating agreement.  Organizing as a “non-cooperative cooperative” may be preferable or necessary in some instances.  For example, Chapter 54 requires that a cooperative be founded by five or more people, thus a small cooperative (a small design or engineering firm, for example) would not be able to organize under this statute.  Additionally, Chapter 54 requires the existence of a board of directors.  Some cooperatives may want to govern their venture directly (without a Board) and thus may prefer to organize as an LCC as it does not require a Board.  Additionally, Chapter 54 provides limited liability to member-owners only for the debts of the business, rather than for all liabilities.  Insurance can be purchased to cover this gap in liability, but some cooperative founders may feel more comfortable with the broader form of limited liability offered by traditional business corporations and LLCs.  It is worth noting, however, that only entities organized under Chapter 54 are permitted to use the word “Mutual” in their name.

Cooperative Case Law  

More information is needed here. If you have information to help us flesh out this section, please email Ricardo[at]theselc.org.

Cooperative Secondary Sources

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Food and Grocery Cooperatives

North Carolina is currently home to seven grocery cooperatives.  The bylaws of Weaver Street Market of Carrboro, NC, can be found here.  Weaver Street Market is incorporated under NCGS Chapter 54 (the cooperative organization statute) and has two classes of owners:  consumers and workers.  Deep Roots Market, Inc. is located in Greensboro.  Its bylaws can be found here.  The French Broad Trading Cooperative is based in Asheville, NC, and its bylaws can be found here.  The bylaws of the Hendersonville Food Cooperative of Hendersonville can be found here.  In addition to these four, North Carolina is home to the Tidal Creek Cooperative Food Market in Wilmington, Chatham Marketplace in Hillsborough, and Company Shops Market in Elon.

Food and grocery cooperatives that are in development at the time of this writing include Bread Uprising (a worker and consumer cooperative operating in North Carolina’s Triangle region), Fertile Ground (a developing grocery cooperative in Raleigh), and Renaissance Community Co-op (a developing grocery cooperative in Greensboro).

Energy Cooperatives

Piedmont Biofuels

Touchstone Energy Cooperatives

Worker Cooperatives

Opportunity Threads, a worker-owned cut-and-sew company and Morganton, NC.

Tangerine Clean, a worker-owned natural home cleaning cooperative operating in Durham and Chapel Hill, NC.

Bountiful Backyards, a worker-owned edible landscaping cooperative based in Durham, NC.

Firestorm Cafe & Books, a worker-owned coffee shop and bookstore in Asheville, NC.

Credit Unions

The formation of credit unions in North Carolina is governed by Article 14A of Chapter 54 of the North Carolina General Statutes.  The supervision and regulation of credit unions is governed by Article 14B, while membership is governed by Article 14D.  The role of the board of directors and officers is governed by Article 14E, savings accounts by Article 14F, loan-making by Article 14G, the selling of insurance by credit unions by Article 14H, credit union investments by Article 14I, and reserve allocation requirements by Article 14J.  The taxation of credit unions is discussed in Article 14L.

See a full listing of North Carolina’s credit unions here, from the North Carolina Credit Union League.

Issues of Note  

Coming soon.

Cooperative Support Organizations

Carolina Common Enterprise

Carolina Common Enterprise is a cooperative development center founded in 2012 that serves individuals, businesses, and local governments in the state of North Carolina and plans to eventually serve others throughout the Southeast.  Carolina Common Enterprise provides technical assistance, organizational consulting, and support to emerging and expanding cooperatives and other community enterprises; develops and disseminates education materials, processes, and curricula to improve the effectiveness and governance of cooperative businesses and advance public understanding of the significance of cooperative enterprise; and develops and organizes sources of financial capital for rural and community-based enterprises.

Center for Participatory Change  

The Center for Participatory Change (CPC) works to strengthen grassroots capacity, build collective power, and create equity in western North Carolina.  The CPC’s worker-owned business project recognizes the need to create living wage jobs for very low-income immigrants and provides intensive technical assistance and training. The Center for Participatory Change (CPC) has supported worker-owned cooperatives in Burke, Buncombe, Yancey and Transylvania counties with over $55,000 through The Community Foundation of Western North Carolina’s Women for Women grant program and Opportunity grant program.

The Fund for Democratic Communities

The Fund for Democratic Communities (F4DC), a Greensboro-based private foundation, supports community-based initiatives and institutions that foster authentic democracy to make communities better places to live. F4DC makes grants to groups that engage in participatory democracy to further their social change objectives; convenes groups and individuals committed to social and economic justice through deepening democratic practice; conducts research; and produces materials to nurture the growth of authentic democracy.  F4DC was founded in 2007 and since then has made over $1 million in grants to support grassroots democratic organizing efforts, including organizing efforts around cooperatives, primarily focused in the Southeast, North Carolina and Greensboro.

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