What is the added value of co‐operatives in a people‐centred development setting? Applying the human development and capability approach to co‐operatives in a case study in Brazil, this article investigates the impact of co‐operative membership on member agency and well‐being as well as on community development. It uses both participatory and econometric methods to understand the real contribution that co‐operatives, as people‐centred participatory enterprises, can bring to human development and poverty reduction. The article aims to contribute evidence on how co‐operatives work for the poor and identifies the crucial role of policy‐makers in creating the appropriate environment for co‐operative development.