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Financial pressures in higher education are mounting. At least 20 colleges closed in 2024 and more than 40 since 2020. Rising costs are straining many families, and the forecasted “enrollment cliff” is almost here. After 2025, the number of high school graduates is predicted to drop significantly—by as much as 15% over the next five to 10 years—due to declining birth rates.
As higher education institutions seek innovative ways to stretch their budgets against this backdrop and the rising costs of goods and services, cooperative buying in education offers an ideal way to reduce costs and improve procurement efficiency.
A buying cooperative is an organized group of institutions that combine their purchasing power to negotiate better pricing and terms on goods and services. By partnering with an education buying cooperative, members can leverage volume-based discounts and better terms than they could likely get on their own.
Buying cooperatives can cover a wide range of services, from office supplies, furniture, and technology to larger capital expenditures, such as campus construction materials or facilities management services. These cooperatives are typically structured with shared governance, where members have a say in the cooperative’s operations.
The organization sources solicits, and negotiates contracts on behalf of its members. This includes pricing, service levels, and terms that benefit the group as a whole. For example, an education buying cooperative might negotiate multi-year contracts to secure long-term price stability with fewer cost adjustments.
While cooperatives may have slightly different processes, here is how most buying cooperatives typically work. Let’s break it down step-by-step.
The best cooperative organizations will have an active membership, helping provide a deep understanding of member institutions’ needs.
Cooperatives take this input and analyze purchasing patterns across their membership to identify common categories where collective buying power can yield the greatest benefit. By aggregating demand data across institutions, cooperatives establish clear priorities that guide their strategic sourcing efforts. This systematic approach ensures resources are focused on the categories that will deliver the most significant value to members.
Education buying cooperatives conduct comprehensive market analysis to identify potential suppliers capable of meeting member needs. This research goes beyond simple pricing comparisons to evaluate suppliers’ operational capabilities, financial stability, and long-term viability.
The goal is to identify partners who can offer competitive pricing and maintain reliable service levels to meet the quality requirements of academic institutions.
The solicitation process creates standardized specifications that serve diverse needs. A collaborative approach ensures that the resulting contracts will work for institutions of varying sizes and requirements.
Procurement experts in the cooperative standardize these specifications to maintain clarity while incorporating compliance requirements. This standardization makes it easier for suppliers to respond effectively while ensuring all legal and regulatory requirements are met.
Armed with member requirements and market intelligence, cooperatives enter negotiations focused on securing optimal value.
Volume-based pricing tiers form the foundation of these negotiations, allowing members of all sizes to benefit from the cooperative’s collective purchasing power. Detailed service level agreements establish clear performance expectations, while careful attention to contract duration and renewal terms provides both flexibility and stability.
With an education buying cooperative like E&I Cooperative Services, cooperative contracts are negotiated with schools in mind, typically producing terms and conditions that are favorable to higher education institutions.
This might include establishing:
The cooperative’s work continues well after contracts are signed. When issues arise between members and suppliers, the cooperative serves as an advocate for resolution, leveraging its relationship with the supplier to address problems quickly.
As contracts approach expiration, the cooperative evaluates renewal options based on supplier performance and changing member needs, ensuring continuous value for participating institutions.
One of the primary motivations for higher education institutions to join a buying cooperative is cost savings.
By pooling resources, institutions can secure volume discounts, which are typically reserved for high-volume buyers. For example, a university purchasing classroom technology individually may pay premium prices. Through an education buying cooperative, they can access lower costs due to collective buying power.
Procurement in higher education is typically time-consuming and complex, requiring negotiations, compliance checks, and extensive supplier evaluations. With many schools facing staff cutbacks and budget constraints, these administrative processes can feel overwhelming given the amount of work that needs to be done. It’s especially challenging at small schools that may not have a dedicated procurement team.
Buying cooperatives simplify this process by handling negotiations and due diligence on behalf of their members. Cooperatives provide pre-negotiated contracts with vetted suppliers, allowing procurement teams to focus more of their time on strategic planning rather than administrative tasks.
Buying cooperatives work with reliable suppliers, ensuring access to quality products and services. Since cooperatives are accountable to their member institutions, they focus on supplier quality, contract reliability, and service consistency.
In many cases, schools get access to suppliers that otherwise might not bid on individual RFPs, providing broader access to high-quality suppliers. This can be especially beneficial for institutions that are trying to access more diverse suppliers.
E&I Cooperative Services works with a growing number of Tier-1 diverse suppliers that are classified as:
In some cases, cooperative agreements with Tier-1 suppliers can also be constructed to include participation for certified diverse Tier-2 or Tier-3 suppliers.
An education buying cooperative may also provide greater access to a range of contracts, tools, and solutions specific to educational procurement, such as:
By standardizing contracts, cooperative purchasing organizations can help ensure sure terms comply with industry practices, institutional policies, and legal requirements. This can reduce the risk of legal problems down the road.
While not all group purchasing organizations operate the same way, if you partner with a non-profit and member-owned organization like E&I Cooperative Services, you get flexibility.
You can view available cooperative contracts and opt in to those you want. For example, you might use a cooperative agreement for office and classroom supplies and technology, but maintain maintenance services with a preferred supplier or local contractor.
Some cooperatives will provide strategic reviews to evaluate spend categories and look for savings. For example, E&I Cooperative Services offers its members a no-cost Strategic Spend Assessment (SSA). This is a comprehensive review of spend data to proactively identify opportunities to reduce costs, bring more spend under contract, and maximize control and efficiency.
Members benefit from:
You can learn more about SSAs by watching our webinar, Strategic Spend Assessment: Drive Your Strategy with Our Analytics Service.
Another area where an education buying cooperative can be of benefit is by providing access to tools to streamline purchasing, such as eProcurement solutions. E&I Cooperative Services offers:
Besides these tools, cooperatives typically employ procurement experts, category specialists, and business partnerships managers who have deep industry knowledge. Colleges and universities can leverage this knowledge to find innovative solutions and put best practices in place.
There are some potential downsides to working with a co-op, so colleges and universities need to be careful about selecting the right co-op.
If you are working with a for-profit cooperative, for example, keep in mind that their primary obligation is to their owners or shareholders. While they may offer valuable services to members, their primary goal is to generate a profit. By comparison, a non-profit organization like E&I Cooperative Services exists exclusively to serve its members.
Some organizations charge membership fees or require minimum purchasing as a condition of becoming a member. This must be weighed carefully against the potential savings. There is no fee required to become a member of E&I Cooperative Services and no minimum purchasing requirements.
Another potential disadvantage is supplier limitations. Depending on the cooperative, they may not have cooperative contracts with the suppliers you need. Some organizations require you to choose certain suppliers, limiting your options. E&I Cooperative Services has hundreds of available contracts and members are free to choose to work with any supplier they want within the Cooperative’s portfolio.
This is a good question to ask any cooperative you consider joining. Your best option is typically a non-profit cooperative where the primary goal is to serve its members rather than generate profits. For example, E&I Cooperative Services uses proceeds to directly benefit its members in several ways.
Surplus funds may be reinvested into the cooperative to improve services, expand vendor partnerships, or lower contract prices. For instance, a cooperative might use surplus funds to upgrade its e-procurement platform, streamline contract management, or add additional vendor options, which ultimately benefits all members by enhancing the cooperative’s service offerings.
E&I Cooperative Services recently launched a Community Engagement and Education Division to address member needs for professional development, leadership training, and increased collaboration. Besides increasing network opportunities and knowledge sharing, this division includes a collaboration with Cornell University to offer an in-depth 9-month leadership program designed for procurement professionals.
Many cooperatives share excess proceeds with their members. These funds may go towards member rebates. For example, E&I Cooperative Services provides patronage refunds annually, typically distributing millions of dollars to member institutions based on contract usage.
How do educational institutions benefit financially from a cooperative?
Educational institutions benefit financially by gaining access to discounted rates on goods and services due to the cooperative’s collective purchasing power, potentially saving substantial amounts over time.
What is the difference between a cooperative and an LLC?
A cooperative is a member-owned organization focused on meeting the needs of its members through collective purchasing power, with any profits typically reinvested or redistributed to members. An LLC, on the other hand, is a legal business structure often used for privately owned companies, where profits are distributed among owners or shareholders rather than reinvested for mutual benefit.
What are the weaknesses of co-op for education institutions?
Co-ops can limit flexibility by restricting purchases to contracted vendors and may require membership fees that may not always be offset by savings. However, not all co-ops require this.
How do cooperatives ensure compliance with higher education procurement policies?
Cooperatives often work closely with legal and regulatory experts to ensure that cooperative buying in education meets institutional and government compliance standards, making it easier for academic institutions to align their purchasing practices with policy.
What support is available if there are issues with a cooperative supplier?
Most cooperatives provide support to address and resolve issues with suppliers, either by mediating with the supplier or finding alternative solutions to meet the institution’s needs. Because cooperatives represent a large number of colleges and universities, they can often get fast resolutions.
E&I Cooperative Service has hundreds of available competitively solicited contracts for you to review. You can reach out to one of our education procurement experts by calling (800) 283-2634 or emailing us at membership@eandi.org.
