Earlier sections of this Manual discussed what makes a cooperative distinct from other types of businesses. A review of some of the key operating principles of co-ops will illustrate how these differences are related to cooperative financing.

1. User-owner principle
This principle suggests that the co-op members -- those who use the cooperative -- should provide equity (ownership financing) in proportion to their use of the coop.

2. User-benefit principle
Financial benefits of cooperative membership are distributed to members in proportion to their use of the cooperative - unlike other types of businesses, where benefits are distributed according to the amount of investment.

3. User - control principle
The one member-one vote rule by which cooperatives operate serves to distribute power equally among all the current member owners.

4. Limited return on equity
Investors' return is limited by law to 8%. By limiting the return available on investment, co-ops limit the accumulation of wealth by a few owners.

"The only fear needed in organizational efforts is the fear of missing the opportunity to invest."
Bill Patrie, North Dakota Assn. of Rural Electric Co-ops