What is a Cooperative?

What makes a cooperative different from an investor-owned company? A cooperative is a professionally managed business dedicated to providing members a quality service at a reasonable cost. It is not dedicated to making profits for a few people, usually outside investors.

Open Membership

Anyone who can use a cooperative’s services and is willing to accept the responsibilities of membership can join, and the cooperative is obliged to provide that person with service.

Members are Owners

Members of a cooperative “own” the business. They contribute equity and elect the board of directors. The directors are accountable to the member-owners and must report to them of a regular basis. The board is responsible for setting policy, and it hires the manager. For a cooperative to be successful, members must take the responsibility of ownership and actively participate in meetings and voting opportunities.

One Member, One Vote

Power is shared equally among all, rather than concentrated in the hands of a few. Members elect the board of directors and, when necessary, they vote on specific issues. Every member has one vote – no more, no less.

Service Versus Profit

The primary purpose of the telephone cooperative is to provide affordable and quality telephone service to the member-owners – not to serve as a means to enable a few people to acquire wealth. Because large profits are not a goal, the rate of return need not be as high as normally expected.

Return of Surplus to Members

Operating Margins above and beyond those needed for operating expenses and investment are allocated to the member in proportion to their patronage. This means that the more business the member does with the cooperative, the greater the amount of his or her patronage allocation. If the coop declares a patronage refund (also called a Capital Credit), the member shall receive a refund based on the member’s usage of the coop’s services.