The History of Cooperatives
In the 1800s, a group from England felt that suppliers were charging unfair prices for food, so they began to buy and distribute food amongst themselves to keep costs lower, creating the first cooperative.
What is a Cooperative?
A cooperative is defined as an enterprise owned by and operated for the benefit of those using its services. Essentially, any organization that is owned by its members or customers is a co-op.
Cooperatives are people-centered and give members greater control of their economic future. Most co-ops are purely democratic when it comes to decision making, meaning one member gets one vote.
Co-ops spread across several fields including:
- Food distribution
- Power production and distribution
- Banks and credit unions
According to the International Co-operative Alliance, over 3 million cooperatives worldwide serve about 12% of the world's population.
What is an Electric Cooperative?
Energy production and distribution co-ops, also known as electric or utility co-ops, are prevalent in rural America and provide at-cost electricity to their members. These cooperatives keep the lights on for over 20 million members in the U.S. One of the best parts of being a member of an electric co-op is they keep their members in mind whenever they make operational and financial decisions.
The Advantages of Electric Cooperatives
Capital Credits Mean You Get Money Back
One financial benefit of a cooperative is capital credits. Electric cooperatives don't have to distribute profits back to shareholders as investor-owned utilities do. Instead, excess revenues, called margins, are returned to all members of the co-op in the form of capital credits.
What Are Capital Credits?
Your cooperative tracks how much electricity you buy and how much you pay for it throughout the year. At the end of the year, your co-op completes financials and determines if there is excess revenue, called margins. Any margins are allocated (assigned) to members as capital credits based on their use of electricity during the year.
When the co-op’s financial condition allows, the board of directors authorizes to retire (pay) the capital credits to members.
Each cooperative handles capital credits differently, so check with your local electric cooperative for specifics on how they allocate and pay capital credits.
Learn more about capital credits.
The value of your co-op membership goes beyond capital credits and at-cost electricity. Cooperatives also enrich and support their communities.
Electric Cooperatives Invest in their Local Communities
Electric cooperatives consist of community members who invest in the community's growth and success. Commitment to community is one guiding principle of cooperatives, and they are dedicated to helping their local communities thrive.
All cooperatives conduct annual member meetings, which are one of the largest community outreach programs for many co-ops. These meetings allow members to vote on specific issues or to elect board members. Annual meetings serve as an excellent way for members to talk with their cooperative leadership and connect in a meaningful way.
Cooperatives are also involved in other community outreach that includes, but isn't limited to:
- Food drives
- Scholarships and grants for continuing education
- Community recreation
- Natural disaster relief
One co-op used resources to bolster its community with a pop-up park. The cooperative opened the park to create a social space in a part of their town that needed revitalization.
Another cooperative used resources to develop an educational plan so teachers could learn about power production and consumer electricity use. This academic program now gives many teachers from Missouri, Oklahoma and Iowa continuing education credit and hours needed for professional development through an annual classroom curriculum. Teachers can use this material to give students real-world knowledge about power production.
These examples of outreach are only a fraction of the value cooperatives add to their communities.
Do you want to learn more about capital credits or your cooperative’s activity in the community? Listen to our podcast on the cooperative difference, or visit our about us page to find your local cooperative.