May I suggest Switzerland? At least quite close to a democracy in my opinion.
But the basic tenet of a functional democracy is that it is functional (duh). I have some doubts if the swiss model will stay both functional and democratic, in the mid-term future.
The referendum about quotas for EU citizens has shown a few disturbing tendencies: It is now possible for a referendum to issue a constitutional crisis where the government does not see a way to implement the referendum without damaging the country.
And if I listen to swiss people, they are completely not in agreement over whom they want to oust. Somehow almost all EU citizens are employed, and they want to oust the unemployed like they could even before the referendum.
But if the government doesn't oust anyone, it can't implement the referendum.
Another danger is that there have been increasingly xenophobic referendums. If this escalation maintains, democratic freedoms will suffer. If anything, referendums do have this tendency of distorting "public opinion" toward the emotional and down right hateful side.
It does occasionally result in (in my views) appalling choices, but that doesn't make it non-democratic.
And then democracy is not democracy without civil and human rights, even for minorities. The reasons are too many to discuss here. For starters someone who is in fear of the state or who fears for his property because the state doesn't protect him, can't vote or be elected freely.
But that also means that the majority can't vote to violate these rights for a minority. That's a point about democracy that is increasingly lost in the European democratic tradition and it will lead to ugly results down the road.
The extremists are capitalizing on this misconception: They want to restrict the rights of minorities by having referendums. And because of ignorance on the side of the voters, this actually "looks" more democratic...