A cooperative is a user-owned and democratically controlled business in which benefits are received in proportion to use.
There are three major kinds of utility corporations, the investor-owned corporation, municipal utilities and the Cooperative. Investor-owned corporations and Cooperatives are state-chartered businesses and are similar in their organization and operation. The Municipal organization operates within city or town limits.
An investor-owned corporation is operated as a profit-making enterprise. It derives its capital funds by issuing shares of stock that are purchased by investors for their profit-making potential. Investor-owned corporations supplement capital they derive from sale of their stock by borrowing from banks or other financial institutions. Any profits made through operation of the corporation are shared with the owners of the stock, based on the quantity of stock each investor owns. Investors may or may not make use of the corporation's product. The investors in an investor-owned corporation have voting privileges according to the quantity of stock they own.
A Cooperative physically resembles an investor-owned corporation in that it provides similar services, employs personnel in similar jobs, and charges similar fees for its service or product. Rather than existing to make a return on investment for shareholders, a cooperative exists to provide economic services to its members. Membership in the cooperative is open to only those who purchase the cooperative's product.
A Cooperative raises capital from its members through member fees and sale of the product to the members. Cooperatives also supplement member contributed capital by borrowing from financial institutions. Any profits made by the cooperative are returned directly to the members based on each member's patronage in the form of Patronage Capital (Capital Credits). A cooperative is a democratic process since it is based on the principal of "one member - one vote".
