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Cooperative Principles
Since the purpose of the electric cooperative was deemed to be different from an investor owned company, a set of operational principles was created to explain the difference and guide the development and management of the cooperative. These principles have stood the cooperative in good stead for decades and are just as important in the 21st Century as new challenges confront America in the production, delivery and use of electricity.
The Seven Principles
- Voluntary and open membership
- Democratic member control
- Non-profit operation & return of capital credits
- Autonomy and Independence
- Consumer education
- Cooperation among cooperatives
- Concern for community
Voluntary and Open Membership
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political, or religious discrimination
Democratic Member Control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The board of directors is elected by and accountable to the membership. In primary cooperatives, members have equal voting rights (one member, one vote) and cooperatives at other levels are organized in a democratic manner.
Non-Profit and Return of Capital Credits
Members contribute equitably to, and democratically control, the capital of their cooperative. They do not issue stock. Surpluses are margins, not profits.
The cooperative allocates margins, in excess of any amounts needed to operate the cooperative, to members’ capital credits accounts. Unlike IOU’s, margins are retained locally - not sent off to distant stockholders as dividend payments.
Autonomy and Independence
Cooperatives are not governmental organizations. They are privately owned, autonomous corporations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
Education, Training, and Information
Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation. CFC has a cooperative education fund to support this.
Cooperation Among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.
Concern for Community
While focusing on member needs, cooperatives work for the sustainable development of their communities through policies accepted by their members.
