Cathy-SmallMeet Cathy, the Cooperative Development Institute’s new answerwoman! She can take on any co-op questions you might have, big or small. Today we ask: what is the difference between cooperatives and collectives? See all of Cathy’s answers and ask your own on her home page.

This is a great question, and one that we hear frequently in the world of co-ops. The terms “cooperative” and “collective” are often and incorrectly used interchangeably. In addition, people may call their clubs, activist groups, etc. cooperatives or collectives, sometimes using the terms correctly, sometimes incorrectly — adding to the confusion.

Below, we will discuss the similarities, differences, and definitions of both cooperatives and collectives.

A cooperative is an organization or business that is owned and democratically governed by its members.  Each member has one vote on major decisions, such as leadership and overall direction, as outlined in the organization’s bylaws. Cooperatives generally adhere to the seven principles outlined by the International Cooperative Alliance.

For the sake of this conversation, we will focus on worker cooperatives, as they tend to be the type of cooperative that overlaps with a collective. A worker cooperative is a cooperative in which the business’s workers are the only member-owners. This means that each worker owns one voting share and is able to participate in the governance (and often the management) of the business. (This is an important piece of the puzzle regarding collectives, which we will explain in further depth below!) Since workers are the only people eligible to become member-owners, outside investors or consumers do not participate in the governance of the cooperative. That being said, we tend to see two types of governance in worker co-ops: 1) collective, non-hierarchical management, and 2) a more vertical or even hierarchical management structure. (Note: hierarchical management does not negate equal ownership.)

Generally speaking, a collective is an organization that is managed without hierarchy. This means that every person has equal decision-making power. Some decisions may be delegated to individual members or sub-committees, but no one has the special, authoritative power usually granted to a manager. The legal structure in worker collectives will specify that all Members are automatically Directors and must accept the responsibilities of Directorship, or that the organization is managed by Member meetings.

Now that we understand the traits of collectives and cooperatives, we can explore where the two overlap. A worker collective is a particular kind of worker cooperative that operates using collective management. A worker collective adheres to the same cooperative principles as does a worker cooperative. However, as we explored briefly above, worker collectives also adopt a non-hierarchical (often called a “flat” or “horizontal”) management structure. This means that all workers are equal co-managers: nobody has decision-making power or authority over another worker. Smaller decisions may be made by individuals, department teams, or committees, but all collective members participate in both major management and governance decisions.

Now, to complicate matters further, there are some worker cooperatives that are not collectives that do have a flat management structure at an operational/worker level with no managers, but key decisions are made by the elected Board of Directors. On the other hand, some worker co-ops have elected managers, or managers who are hired by the elected Board of Directors, which are in charge of the management of the cooperative. The worker co-op movement is varied and flexible, and different co-ops use different approaches depending on what best suits their needs.

As you can see, the word “cooperative” refers to a specific ownership structure.  Cooperatives can be owned by workers, community members, or both. Meanwhile, the word “collective” refers to how members participate in the management structure. Collectives can be a management system employed by a variety of different types of organizations including worker-owned cooperatives, non-profits, volunteer activist projects, and many more.

So when we are talking about a democratically owned and governed business, it’s important to keep in mind the following: a worker collective is always a worker cooperative, but a worker cooperative is not always a worker collective. (Similar to the math rule that a square is always a rectangle, but a rectangle is not always a square.)

Worker cooperatives that do not operate as collectives:

Equal Exchange

Union Cab of Madison

Worker cooperatives that do operate as collectives:

Valley Green Feast


Cooperatives owned by consumers, whose staff operates as a collective:

Mariposa Food Co-op

Buffalo Mountain Co-op

This article was modified from an article on Cultivate.Coop.

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