Co-ops and Corporations – How Are They Different?

Corporation:
A corporation is a group of people authorized by law to act as a legal personality and having its own powers, duties and liabilities. Generally corporations are organized to limit any liability to the owners of the corporation in the case of failure and to reap profits for the owners in the case of success. Most corporations are run from the top down with an eye toward the “bottom line” of profit.

Cooperative:
A cooperative is a group of people that come together to serve the needs of themselves and their communities in an alternative financial model which adheres first and foremost to the Cooperative Principles. Cooperatives are run by democratic control and have a commitment not only to a bottom line of profit but to a triple bottom line. That being: People, planet and profit.

One of the greatest differences between a corporation and a cooperative is the ability of the customer of a cooperative to become an owner. Most corporations are either privately held and closed to outside investment, or they are publicly owned where the people who have the largest percentage of stock have the largest percentage of control and reap the highest percentage of profits.

In a cooperative it is one share, one vote.

Each cooperative owner has the same influence as the next, there is no one person or group of people who make all the decisions and reap all the profits. There is no way for an owner to become a “majority” owner of the cooperative.

When there is a profit in a corporation the profit is shared by the private owners or by the stockholders according to how many shares they own. In a cooperative, the profit is shared by the owners based on their patronage of the business and usually after a substantial amount of capital is put back into the business for its improvement and invested in various ways into education and community enhancement as well. At the co-op it is all about working together in cooperation.

Check out these great graphics to help you put it into perspective!