A purchasing cooperative is a collection of various businesses and organizations that pool their purchasing demand to receive better prices from suppliers and/or service providers. For example, a group of organizations get together and notice that all of their copier bills are increasingly higher than normal. None of them are happy with their current rate, so they decide to negotiate directly with their supplier for better pricing and terms. What they negotiate collectively provides more benefits than if those organizations procured services on their own.

People ask us all the time about CPA’s cooperative model and how it works. We often begin by telling our founding story, because we think it captures the gist of it pretty well:

On the heels of the financial crisis in 2011, a dozen houses of worship were gathered together in Washington, D.C. to discuss energy efficiency. The group quickly identified a shared concern: they were paying more each month on electricity for their buildings than they could afford to pay their clergy.

The group decided to leverage their collective power and request bids from various energy suppliers. They shopped together on the third party supply market, signed a contract, and after a year saved over $100,000.

After this initial win (and impressed with the potential that group purchasing had) the houses of worship turned to other service areas where they were unhappy with their vendors. Areas where they were paying too much money, stuck in predatory contracts, or where shared wisdom could lead to better procurement decisions.

It was from this collective effort that CPA Co-op was born as a purchasing cooperative.

The National Cooperative Business Cooperation (NCBA CLUSA) officially describes purchasing cooperatives the following way:

“In a purchasing cooperative, groups of businesses in the same industry form a collective unit to buy supplies and services. Individual retailers own the purchasing co-op — not outside investors — so they make decisions based on the co-op’s interests. Member organizations share purchasing contracts to acquire the goods and services needed to run their independent businesses.”

Examples of other purchasing cooperatives:

You probably know of other purchasing cooperatives. Some of the most well-known are ACE Hardware and National Cooperative Grocers (NCG). Several school districts, counties, and government agencies have also developed purchasing cooperatives to serve their needs.

Benefits of purchasing cooperatives:

Better pricing. Using the collective buying power of cooperatives allows participants to leverage their buying power to reduce costs. The money saved allows the organizations to spend more money investing in the people they serve.
Community wisdom. When faced with a tough decision or procurement in an area you don’t know a lot about, it’s always helpful to know that you’ve got a solid group of peers in your corner to share ideas and experiences with.
More accountable vendors. At CPA Co-op, we pride ourselves on providing participants access to vendors we trust. They’ve come to the co-op recommended and vetted.They provide quality services and more often than not, they’re also local minority owned businesses. The pressure of the group also incentivizes vendors to perform well and be responsive on all co-op contracts.
Simplified RFP process. Because cooperatives involve a pool of local organizations, they’re able to submit their RFPs together instead of individually. The co-op can do the legwork of making sure that the contract language is fair and transparent, and that the process is compliant with whatever state/federal/industry regulations are applicable.
Increase everyone’s buying power. Large institutions benefit from increased purchasing power and help with their procurement. But small institutions can benefit tenfold. Through a purchasing cooperative, one small house of worship has the purchasing power of the group – often unlocking better vendors, savings, and service.

Cooperative purchasing for schools:

School districts across the country are now utilizing the benefits of purchasing cooperatives. Through them, they’ve been able to streamline procurement processes and reap the benefits of associated cost savings because of the collective purchasing power of many.

The burden on school staff is also lessened because cooperatives use pre-established contracts that are compliant and likely include better rates and better terms.

Purchasing cooperative v. GPO:

While many think that a purchasing cooperative and a group purchasing organization are synonymous, they’re actually quite different. GPOs are typically privately-owned or publicly-traded and often focus on a specific industry or sector. They are service providers to businesses that help reduce procurement costs.

Purchasing cooperatives (like CPA), and cooperatives in general, are a different kind of company. Typically member, worker, or consumer-owned, purchasing co-ops like ours provide both cost-saving services along with a community of support that brings organizational leaders together to tackle complex challenges and make better purchasing decisions. Our team of industry experts share the insight they gain by reviewing thousands of bills and invoices across more than a dozen industry sectors and from their experience in working with dozens of vendors and suppliers across the country. When organizations purchase with CPA, they get tailored scopes and procurement solutions for their building, not just a standard pre-negotiated service contract.

Who can join a cooperative?

Some cooperatives ask that their members meet certain criteria such as residing in a particular region or state. CPA prioritizes community-serving organizations like non-profits, schools, and houses of worship.

How to find cooperatives in your community:

Complete an internet search - “cooperatives in (your city)”
Check out NCBA CLUSA’s list of cooperative members
Talk with your peers, they could already be part of a cooperative or in touch with one
Utilize the power of social media - searching for “cooperatives” on LinkedIn or even Instagram is sure to turn up a lead or two

What is a Purchasing Cooperative?