It all starts with a vote.
When you become a cooperative member, you receive the right to vote for the fellow members you want to serve as stewards of the cooperative.
Those elected directors hire the general manager (or CEO) to lead the organization and make sure the cooperative is delivering the service the membership wants.
“When you move into our area, you become an owner of the cooperative. You have a vote in our elections. You are entitled to receive cash back through capital credits. You have a share of the organization,” said Tim Sullivan, president and chief executive officer of Wright-Hennepin Cooperative Electric Association, based in Rockford, Minnesota.
While other types of businesses must produce returns for investors and other stakeholders, cooperatives focus only on their customers or “members.”
“The members are at the top of the organizational chart,” said Great River Energy Director of Culture, Communications, Marketing and Member Services David Ranallo. “We answer to the 28 cooperatives that own Great River Energy. They exist to serve the 1.7 million people they collectively serve.”
Over time, the membership evolves and directors change, but the structure of cooperatives ensures that the values of the membership guide the company.
Local businesses, national impact
When a member pays a bill, they are investing in their local electric system, which is operated and maintained by their friends and neighbors. And, as not-for-profit businesses, cooperatives share their margins with their membership through the return of capital credits.
“Electric cooperatives are powerful engines of economic development in their local communities,” said Jim Matheson, chief executive officer of the National Rural Electric Cooperative Association. “Because electric cooperatives were built by, belong to and are rooted in the communities that they serve, they play a vibrant role as economic cornerstones for millions of American families, businesses and workers.”
A 2019 study of the economic impact of electric cooperatives showed that these member-owned businesses are responsible for 612,000 American jobs and contribute $88 billion annually to the nation’s gross domestic product.
Rooted in rural communities
Cooperatives exist to meet a need that was previously unmet in the community, and they are ever striving to anticipate and plan for the future needs of their consumer-members.
“We were created to bring an essential service to rural Americans and provide opportunity for a better quality of life. That motivation still drives us today,” said Tim Thompson, chief executive officer of the Pelican Rapids-based Lake Region Electric Cooperative. “Co-ops are often among the largest employers in our counties, critical supporters of nonprofits and civic groups, and the trusted experts on energy matters.”
Independent and self-governed
Cooperatives are locally governed by directors who are elected to look out for the long-term needs of their consumer-members.
The structure is so effective that cooperatives are largely left alone by the governmental bodies that oversee electric providers. Instead of being regulated by state or county governments, cooperatives are effectively managed by independent boards of directors.
Connected in a crisis
When any membership, anywhere, is in crisis, all cooperatives feel the responsibility to help.
When April ice storms caused widespread outages in southern Minnesota, co-op line crews drove hundreds of miles to assist with the restoration effort. This is a common occurrence following any extreme weather event.
Guided by seven principles
The seven cooperative principles guide cooperatives in all industries by outlining the right way to serve their member-owners: voluntary and open membership; democratic member control, members’ economic participation; autonomy and independence; education, training and information; cooperation among cooperatives; and concern for community.