Group Purchasing Organization, Buying Group or Co-op: Whats the Difference?

Understanding your goals will help determine the cooperative model that aligns with your values and desired impact. Clarify the core mission and long-term objectives of your cooperative. Focused on social goals such as employment or delivery of community services, these cooperatives often blend multiple structures and operate as mission-aligned organizations.

If the main goal is negotiating supplier terms and reducing purchase costs, the co-op is the better match. Small businesses join to get the benefits of scale without becoming a giant company. A consumer cooperative is owned by the people who use the co-op as customers. A purchasing cooperative is a group of members that buys goods or services together to get better pricing, better terms, and better access from suppliers.

Another type of co-op arrangement under NASPO’s definitions is the option for “piggybacking,” the term for contract language that lets another agency share a lead agency’s purchasing contract with the consent of the awarded vendor under the same terms and conditions. Upon arrival, bids must be evaluated based on specifications, criteria in terms and conditions, and state law. When a government entity allows other jurisdictions to use a contract it's already established, it's known as “piggybacking” on the contract's terms and prices. Today, there are more complex requirements due to the increase in technology, so cooperative contracts may include information technology services, consulting, and software. It's full of free, downloadable content to help support your procurement and sourcing needs.

Purchasing cooperatives vs RFPs

Sharing procurement professionals among entities allows for the reallocation of internal resources. When large government agencies combine resources, small governments gain benefits as well. These are the most immediate purchasing resources, particularly for smaller communities. Specific piggyback terms must be included in the contract, and the vendor has to agree.

Members elect a board of directors to manage the business, set policies, and make key decisions, and each member's vote in those elections carries the same weight. NCBA CLUSA offers resources and guides to help aspiring co-op organizers evaluate whether the cooperative model is the right fit, assemble a steering committee, draft bylaws, and formally incorporate. Co-ops are commonly found in agriculture, grocery, healthcare, housing, financial services, utilities, and worker-owned sectors.

How to Add Your Company to the Directory

About 10% of the world’s population, or around 280 million people, are employees at co-ops. Community wealth building is people-centered and aims to redirect wealth back into the community and address inequality. Turning privately-held businesses into worker co-ops not only benefits the employees of those companies, who become the owners of the businesses that employ them, but it also benefits the businesses themselves.

One of the key benefits of cooperative purchasing is the ability to access a wider range of suppliers and products. For procurement teams seeking to optimize resources and achieve better outcomes, cooperative purchasing offers a collaborative path to value and resilience. Contracts established through cooperative purchasing are pre-negotiated, competitively bid, and compliant with procurement regulations, making them especially valuable for public sector organizations. Simply type the desired search term into the field below and you will receive the matching search results live. Monthly contributions, an admission fee or business shares are common. While cost advantages are often the initial reason for joining, the strategic exchange of knowledge often proves to be an equally valuable competitive advantage for each member in the long term.

Investment cooperatives are common in the health care, retail, agriculture, art, and restaurant industries. They are well-suited for community-serving health care, education, or food systems. Multi-stakeholder cooperatives include more than one member class, such as workers, users, and community investors, with shared governance across groups. Capital Impact Partners has supported NASCO Properties, Inc., with lending to help them acquire existing properties. Housing cooperatives are collectively owned and governed by residents who manage shared property to ensure long-term affordability and control. Producer cooperatives are formed by independent producers (e.g., farmers, craftspeople) who come together to market, process, or distribute their goods jointly.

Instead of issuing individual RFPs, cooperative members can simply join the cooperative and obtain access to pre-negotiated contracts. The National Association of State Procurement Officials (NASPO) reported increasing use of cooperative purchasing practices in its 2016 survey of state procurement.

• Cooperative purchasing is the commonly used term amongst education, government and nonprofit institutions.
• This form of cooperation enables companies to achieve better terms through bundled purchasing volumes and reduce procurement costs.
• A CPO focused on municipal services enables local governments to decide on vendor selections and tailored contract terms collectively.
• Find handy resources—including sample forms, checklists, and straightforward advice at /go/franchisemanagementfd

Challenges and Solutions in Cooperative Purchasing

Direct capital contribution to a project without the guarantee of repayment; the return on a direct equity investment will depend on the performance of a project/company over the investment period. An equity investment is money that is invested in a company by Define a purchasing cooperative. purchasing shares of that company. An example of a challenge grant would be money that is given by a bank if the cooperative increases membership by a certain amount. The difference with other types of grants is that they do not require any previous conditions of challenges that need to be achieved. Donations are specially recommendable if the cooperative has a strong aim for social impact and mutual aid, in which case individual or collective donors might be interested in donating.