Which statement best describes ownership and distribution in a typical cooperative?

• A. Profits are distributed equally to all members, regardless of activity
• B. Profits are retained by the cooperative and not distributed
• C. Profits are distributed among members or reinvested, based on member activity
• D. Profits are distributed only to external investors

Answer: (C)

In a typical cooperative, ownership and benefits belong to the members who use the cooperative’s services, and profits are returned to those members in proportion to how much they participate. This means any surplus is distributed based on member activity (patronage)—not simply equally or only to external investors—and any portion not distributed can be kept to reinvest in the cooperative or strengthen reserves. That approach aligns rewards with actual use and ensures the user-owners benefit from the cooperative’s success. The other ideas don’t fit: equal distribution ignores varying levels of use, keeping profits entirely without distribution ignores member ownership, and paying only external investors contradicts the cooperative model.