A cooperative is owned and democratically controlled by its members for their mutual benefit, whereas a non-governmental organization (NGO) has no private owners and primarily addresses a social or environmental need. In IB Business Management, a cooperative is a for-profit social enterprise, while an NGO is a non-profit social enterprise.
This distinction is part of Subtopic 1.2: Types of business entities and applies to both SL and HL.
How the Two Organizations Work
A cooperative is established by people with a shared economic or social interest, such as employees, consumers, or producers. Members normally have equal voting rights under one member, one vote, so control does not depend on capital invested.
It earns revenue by selling goods or services. A surplus may be reinvested or distributed among members under its rules. For example, farmers may jointly market crops through a cooperative, sharing costs and gaining bargaining power.
An NGO is independent of government control and operates to fulfil a social, humanitarian, or environmental mission. A board or trustees governs it, and any surplus must support the mission rather than be distributed to individuals.
| Factor | Cooperative | NGO |
|---|---|---|
| IB classification | For-profit social enterprise | Non-profit social enterprise |
| Ownership | Owned by members | No private owners |
| Control | Democratic member voting | Board or trustees |
| Main objective | Meet members' shared needs | Address a social or environmental need |
| Finance | Sales revenue, member contributions, loans | Donations, grants, fundraising, and sometimes trading revenue |
| Surplus | Reinvested or potentially shared among members | Reinvested in the mission |
A common misconception is that both are charities. An NGO may depend heavily on charitable funding, but a cooperative normally trades for the economic and social benefit of its members.
Exam Technique
For a compare question, refer to both throughout and explain similarities and differences. State that both pursue social aims, then distinguish ownership, control, objectives, finance, and surplus distribution.