As private sector organizations, their development effectiveness is measured by the same standards as other private organizations. In order for the members to realize the benefits from a cooperative it must first be a viable business enterprise. Cooperatives are able to reach and benefit sectors of the population that would not normally be served by other private sector institutions or direct government programs. The relatively permanent institutions created by cooperative development in the Third World provide an institutional framework through which other resources and programs can be channeled. The high premium placed on member participation in the operations and decision making of the cooperative promotes independence and self-reliance encouraging members to take an active role in their own development.
Cooperatives offer an attractive alternative to public sector programs.
The paternalistic approach of governments and absence of competition provide little incentive to seek efficient methods of product or service delivery. A cooperative, because it is recipient owned, has an automatic incentive to maximize benefits to the members. To judge whether the cooperative will be successful, the local environment must be assessed to determine if it is supportive to the creation of a viable cooperative business enterprise. Institutional support to U. S. cooperatives will be centrally funded. Cooperatives are one type of local organization.