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by

Joe Folsom

Executive Summary

Cooperatives as a form of business have been a
part of Minnesota’s economic and cultural history. Its
1,026 cooperatives make it one of the leading states in
the country with this form of business structure. The
ability to collectively create an organizational structure
to meet community needs makes them an effective tool
for economic and community development.

Input-output analysis provides some measure of
quantifying economic and employment impacts of
businesses. With this tool, we can measure the direct
effects attributable to the firm, those resulting from
purchases made by the firm, and the induced effects as
a result of local spending by firms attributable to the
demand change resulting from the firm’s actions. The
study methodology measures the total impact and the
impact of local ownership and a single-level taxation.
Revenue data collected from 311 respondents to a
survey of Minnesota cooperatives was used for
IMPLAN, an input-output economic analysis software
tool. The value-added component within the IMPLAN
model includes employee compensation, proprietary
income, other property income, and indirect taxes.
Treating the "other property income" element as "proprietary
income" determines the impact of local ownership
and single level taxation.

Responding cooperatives represented 44 business
sectors and had 943,450 members, representing an estimated
50 percent of the total co-op membership. The
185 credit unions serve another 1,457,183 members.
The $6.07 billion in revenues generated by the 311
cooperatives and 185 credit unions result in total
direct, indirect, and induced impacts of $10.89 billion in output and total employment of 79,363. Most significant,
however, are the benefits attributable to local
ownership and single level taxation that increases $600
million in output, employment of 7,725, and tax revenues
of $210.5 million.

The benefits of local ownership and single-level
taxation are also attributable to business structures
such as sole proprietorships with these characteristics.
Policy considerations should foster an environment
conducive to development of and investment in locally
owned business enterprises, such as cooperatives.

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