According to the International Cooperative Alliance, a cooperative is "an autonomous association of people united voluntarily to meet their economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled business." Electric cooperatives were formed in the early part of the twentieth century to serve rural areas that were not profitable to supply with electricity. The federal government provided support through the Rural Electrififcation Act of 1936 and volunteers formed cooperatives to bring electricity to previous unserved areas.
Cooperatives around the world operate based on a core set of principles that trace their roots back to Rochdale, England in 1844. The seven cooperative principles are as follows.
#1 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.
#2 Democratic Member Control
Cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. The elected representatives are 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.
#3 Members' Economic Participation
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership.
Members allocate surpluses for any or all of the following purposes: developing the cooperative; possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
#4 Autonomy and Independence
Cooperatives are autonomous, self-help organizations 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.
#5 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 cooperative. They inform the general public, particularly young people and opinion leaders, about the nature and benefits of cooperation.
#6 Cooperation among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.
#7 Concern for Community
While focusing on member needs, cooperatives work for the sustainable development of their communities through policies supported by their members.