Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.

Democracy is a simple concept: the governance or control of an organisation by its members through majority decision-making. In practice, the democratic governance of any human institution is a complex task. Sound democratic governance of co-operatives is no exception. The struggle for democratic rights on a political level is a common theme of the history of the last two centuries, and remains so in many parts of the world today. Democracy can usefully be thought of as a set of rights: rights to participate in the government of a state or organisation. The principle of member democratic control was very radical when the first co-operatives were founded in the mid-19th century, particularly its universal application to all members, including women. It predates the extension of suffrage, having no ties to gender or property ownership.

In co-operatives, 'democracy' includes considerations of rights and the responsibilities, which attend such rights. But it also means fostering the spirit of democracy within co-operatives, a never ending difficult, but socially valuable and essential task. One of the key benefits of co-operatives is that they help plant deep democratic roots within the fertile soil of civil society.

It should be recognised that the democratic process, by itself, does not guarantee competence. A key characteristic of all sustainable democratic systems is that democracy needs the protection of sound democratic laws, governance codes, procedures and processes, such as formalised models of organisation and business management. Democracy is also not just linked to voting in elections and general assemblies. It also requires the separation of democratic and executive powers, with checks and balances under the control of members. These should be established through different bodies in the co-operative responsible for the administration of elections, setting governance strategy and overseeing governance audits and governance reports to members. Since the earliest days of the co-operative movement, this 2nd democratic Principle has been a key characteristic of co-operatives. It is the heart and soul of co-operative governance. Members acting within democratic procedures agreed by them in exercise of their right to voluntary and free association are sovereign. Democratic control by members animates each and every co-operative.

In democratic systems there is a spectrum of democratic engagement: from representative democracy through the election of representatives every few years, through deliberative democracy on major issues, to participatory democracy with continuous engagement of members in day to day decision-making. Co-operatives tend towards the deliberative and participatory end of the democratic spectrum. Members should be engaged in proposing and approving key strategic policy decisions and regularly, in general assembly, holding elected representatives on boards or committees and senior executives to account.

In order to encourage greater levels of participation, some co-operatives use participation incentives. These can be simple, such as the provision of refreshments at meetings, or more complex, such as prize draws or other positive rewards for active members. However, co-operatives should not rely too heavily on incentives. Through the application of the 5th Principle of Education, Training and Information, members should be educated and informed about their rights and responsibilities as members to exercise democratic control of their co-operative. Co-operatives could also use innovative participative mechanisms, for example, electronic participation and voting in general assembly meetings and the development of trainee programmes for young directors to encourage more young people to become involved in their co-operative.

One of the biggest challenges facing co-operatives in implementing the Principle of Democratic Member Control is creating a culture that welcomes and encourages debate, rather than stifles it. Lively challenging debate should be seen as a sign of a healthy democracy that needs to be reflected in the more formal parts of a co-operative's democratic structure, in particular encouraging members to become active members of their co-operative and to put themselves forward as candidates in elections.