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  • Confidence in institutions at record lows

    Co-op satisfaction higher than with government, banks, media, schools…

    IMG_0665The last several years have seen ­erosion in the confidence Americans have in many of our ­institutions. According to Gallup’s annual “Confidence in Institutions” survey released in June, Americans are giving increasingly low marks to ­institutions such as public schools, big business, the media, banks and ­government. Out of 16 institutions tested only the military, small ­business and the police registered higher than 50 percent confidence levels. This year’s poll found record-low con­fidence in banks, television news and public schools, with scores ­ranging from 21 percent for banks to 29 percent for public schools. Congress ranked dead last, at a confidence level of just 13 percent.

    Gallup has been polling Americans about their confidence in ­institutions since 1973, and over the past five years more than half of the ­institutions Gallup measures have registered record-low confidence ratings ­indicating that declining confidence seems to be part of a broad pattern, rather than a product of isolated issues facing individual institutions.

    What’s going on with the public psyche? Surely the banking ­crisis and weak economy have had a huge impact. But I think there’s more to it. There’s an increasing disconnect between the expectations of Americans and what they’re ­getting from their institutions. That’s because, in many cases, the interests of ­institutions and those they serve are no longer aligned. When that ­happens, satisfaction levels drop, and you get an erosion of trust.

    Cooperatives on the other hand, including electric co-ops, according to Touchstone Energy surveys conducted in recent years, still enjoy high levels of satisfaction among members by embracing a business model that aligns corporate interests with those of member-owners. Co-ops are not-for-profit businesses that focus on providing quality service at the ­lowest possible cost. Co-ops allocate margins to members when revenue exceeds costs. Co-ops embrace ­democratic ­governance. Co-ops focus on ­operating in the best interests of members.

    In essence, the cooperative ­business model is designed to align co-op ­interests with those of our member-owners. That’s something very rare in today’s society, and I think it’s a key reason why satisfaction with co-ops has stayed high, while satisfaction with other institutions has been declining.

    I believe a key to sustaining member satisfaction is to encourage member engagement. And the key to member engagement is member iden­tification as a co-op owner. Co-op owners ­appreciate the member/co-op ­relationship. They understand it’s a two-way relationship, and they recog­nize that with ownership comes responsibility. Engaged co-op ­owners know that their actions impact the co-op and, by extension, the benefits they derive from the co-op. Owners have greater trust in the co-op, and a stronger belief that the co-op is ­looking out for their interests.

    Sheldon C. Petersen is CEO of the National Rural Utilities Cooperative Finance Corporation (CFC), a nonprofit finance cooperative created and owned by America’s electric cooperative network.

    Sheldon C. Petersen is CEO of the National Rural Utilities Cooperative Finance Corporation (CFC), a nonprofit finance cooperative created and owned by America’s electric cooperative network.

    Benjamin Graham, the father of value investing, was fond of ­saying: “Price is what you pay. Value is what you get.” A co-op’s relationship with its member-owners is based on a belief in the considerable value jointly ­created during the course of the long ­relationship — 75 or more years old in many cases — between a ­cooperative and its owners. The value a ­cooperative delivers is derived from a shared ­history, aligned interests and mutual trust. That’s where confidence comes from.

    I urge all co-op owners to attend their co-op’s annual membership meeting this year. Stay informed. Stay engaged and as an owner expect the same from your cooperative. 

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