6 Ways to Fuel Cooperative Takeovers

Cooperatives

Guest article

From now on, the global mantra for filling market gaps is going to be, “There’s a co-op for that.”  But co-ops need customers, money, and training.  How do we shift from business as usual to the work of cooperation? 

by Sven Eberlein

A WAGES-trained co-op.

In the aftermath of the 2008 financial crisis, businesses, products, and services that benefit people, communities, and the planetÑinstead of a few megabanks and billionaires—have been in higher demand.  The International Cooperative Alliance's recently published "Blueprint for a Cooperative Decade" lays out a long-term vision to make cooperatives not only the fastest-growing form of business but the acknowledged leader in environmental, social, and economic sustainability.  From now on, the global mantra for filling market gaps and new demands, according to Eric DeLuca of the National Cooperative Business Association, is going to be, "There's a co-op for that."  But co-ops—like any kind of business—need customers, money, training, political support, and help from their communities.  How do we shift from business as usual to the work of cooperation?  Here are a few strategies.  

1. Find Money

Where do you get the money to finance a new co-op?  Traditional banks are loath to lend to co-ops, often because they are unfamiliar with them or do not trust that a cooperative business model can yield profits.  But there are institutions that can help.  

The National Cooperative Bank (NCB) has become a leading funder for new housing, business, and consumer cooperatives.  Chartered by Congress in 1978 and privatized as a member-owned financial institution in 1982, it has provided more than $4 billion in loans and investments to co-ops all over the country—from a New York City housing co-op to an organic grocery in San Francisco to a solar project at Denver International Airport.  Most recently, NCB has been working with PNC Bank in Pittsburgh to allocate $13 million in loans to local co-ops.  

The nonprofit Heartland Capital Strategies Network—allied with NCB and other credit unions—is another rapidly growing source of funding for cooperatives, especially for the union co-op movement.  The organization has committed billions of investment dollars to profitable projects in green construction, manufacturing, affordable housing, and transportation.  

McKusker's Market photo courtesy of Franklin Community Co-op.

2. Convert to a Co-op

Some cooperatives get their start from traditional sole proprietorships or corporations.  This can happen, for example, when a business owner wants to retire or move on and the employees buy the business. 

Franklin Community Cooperative (FCC) in Greenfield, Mass., acquired McCusker's Market, in nearby Shelburne Falls, when the owner of the longstanding natural foods store was ready to retire.  A third of FCC's members lived near McCusker's.  The purchase allowed FCC to keep its commitment to serve downtown Greenfield while solving its space problem at its popular flagship store.  All of McCusker's Market's staff were rehired and retrained, and sales went up 15 percent during the store's first year as a cooperative.  Since the purchase, the cooperative has attracted many more members all over the region.  

3. Hook Up With Big Partners

Bring co-op business to the mainstays of your community—hospitals, schools, government services—which are already committed to community-scale investment and the public good.  It's a mutually beneficial relationship:  The co-op keeps money circulating in the community; the institution provides stable demand for the co-ops services or products.  

Ohio Cooperative Solar photo courtesy of the Cleveland Foundation.

"If you can get even a small bit of a university's goods and services devoted to your co-op," says Democracy Collaborative co-founder Gar Alperovitz, "you can go to any bank, and they'll be happy to finance you, because you've got a market."  

The Evergreen Cooperative Initiative, a group of local, sustainable, and worker-owned co-ops in Cleveland, is built on a strong partnership between the co-ops and local institutions—such as Cleveland Clinic, University Hospitals, and Case Western Reserve University—which have a combined annual buying power of more than $3 billion.  

Ohio Cooperative Solar, another Evergreen business, is in the process of installing photovoltaics at these three institutions and has also placed nearly 700 solar panels on the city hall and library rooftops in nearby Euclid.  Evergreen Cooperative Laundry (a green cleaning operation) washes bed linens for Judson Retirement and McGregor Homes, two large nursing homes in the area.  

The film Shift Change gives an inspiring look at worker-owned enterprises, from the Mondragón co-ops in Spain to the Arizmendi bakeries in San Francisco to Isthmus Engineering in Madison, Wis.

4. Be Co-op Curious

You can learn more about the business of sharing—how co-ops work, why they're important, how to support them, and how to start and manage one—from organizations across the country working to promote cooperative enterprise.  

The Bay Area group Women's Action to Gain Economic Security (WAGES) was founded in the 1990s to help immigrant women form cooperative housecleaning services.  Now they are creating toolkits for anyone looking to start a green cleaning co-op.  "With all the emphasis on co-ops coming on the heels of the Occupy movement, we're seeing an increased interest right now," says Elena Fairley, who is working with WAGES as an AmeriCorps VISTA member.  

College and university programs are also training the next generation of cooperative entrepreneurs.  The Cooperative Teach-In is a nationwide initiative that has connected colleges, universities, and programs like AmeriCorps VISTA with cooperatives across rural and urban America.  

The Toolbox for Education and Social Action is a worker-owned producer of resources in support of the cooperative movement, including the game Co-opoly.

The Teach-In uses creative tools to help participants learn the importance of cooperative economics.  For example, the "Democracy Rating Warm-up Exercise," an interactive survey, allows participants to "rate the level of democracy in the institutions they interact with on a daily basis," and group discussions explore how the cooperative model differs from typical business models.  And a fun way to gear up for a cooperative future is to play a round of Co-opoly:  The Game of Cooperatives.  

As interest in cooperative business has grown, some young entrepreneurs have taken it upon themselves to learn more.  For example, Co-cycle is a group of 15 undergraduates who crossed the country last year on their bicycles, visiting more than 70 co-op organizations and building a network of like-minded communities.  "A year ago I didn't know what a cooperative was," writes Co-cycle participant Riko Fluchel on the riders' blog.  "Now, after the nine weeks of touring cooperatives across the continental United States, I know first-hand that cooperatives empower people's lives."  

The Co-cycle journey is chronicled by a team of filmmakers from New York University in the forthcoming feature-length film To The Moon, which will introduce viewers to the ideas that guide cooperatives and Co-cycle—like teamwork and dedication to a new shared economy.  

Arizmendi Bakery photo by Tony Nguyen.

5. Shop Co-op

By buying from co-ops or using cooperative services, you can create local jobs, keep wealth in your community, and shop according to your values.  

• The most comprehensive directory of U.S. cooperatives is CooperateUSA.  
• You can also find your local food co-op through the Cooperative Grocer Network. 
• Looking for a co-op starting near you?  The Food Co-op Initiative maintains a map of co-ops still in the organizational stage.  
• The new Data Commons Cooperative is building a "Stone Soup" directory,find.coop, created by members.  

6. Make Co-op Friendly Laws

Cooperatives are often at a financial and technical disadvantage in an economy dominated by quarterly profits and shareholder returns.  The United Nations recently resolved "to encourage governments and regulatory bodies to establish policies, laws, and regulations conducive to cooperative formation and growth."  In 2012, the United Nations celebrated the "International Year of Cooperatives," noting that co-ops "build a better world" and "empower people."  

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At the federal level, supporters of cooperatives are pushing for the National Cooperative Development Act (H.R. 3677) (NCDA), which would create a national development center designed to bring federal resources to cooperative development.  From loans and seed capital for start-ups to funding for technical assistance providers, passage of the NCDA would not only help level the playing field for co-ops but increase economic development and create much-needed jobs in underserved areas of the country.  

A different bill would raise the cap on small business loans from another type of co-op:  credit unions.  Fifteen years ago, the banking industry lobbied for and obtained this cap to throttle its competition.  The Credit Union Small Business Jobs Bill (S. 2231) would more than double the limit to nearly 30 percent of assets.  According to the Credit Union National Association, this would enable credit unions to loan an extra $13 billion of their $300 billion lending capacity to small businesses in the first year alone, helping to create as many as 140,000 jobs.  

This article first appeared here

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Sven Eberlein wrote this article for How Cooperatives Are Driving the New Economy.  Sven is a San Francisco-based freelance writer.  

Political Democracy can and will be fortuitous when Economic Democracy is established.   Explore this and other articles covering alternative economics, ethical leadership, economic democracy, and a society without the weal and woe of social and economic vicissitudes HERE   How does PROUT compare or contrast with capitalism or communism?  Explore the answers HERE What are essential ingredients assuring progressive sustainability bereft of the vicissitudes of economic or political predation, privation or disparity?  Learn more HERE   http://gplus.to/ProgressiveSustainability

The Economy: Under New Ownership

Cooperatives

What if we all owned and oversaw the banks, by vote, and had a say in decisions made by retailers where we shop?  What if we ran our workplaces without corporate CEOs?  

How cooperatives are leading the way to empowered workers and healthy communities.  

by Marjorie Kelly

Pushing my grocery cart down the aisle, I spot on the fruit counter a dozen plastic bags of bananas labeled “Organic, Equal Exchange.” My heart leaps a little.  I’d been thrilled, months earlier, when I found my local grocer carrying bananas—a new product from Equal Exchange—because this employee-owned cooperativeme outside Boston is one of my favorite companies.   Its main business remains the fair trade coffee and chocolate the company started with in 1986.  Since then, the company has flourished, and its mission remains supporting small farmer co-ops in developing countries and giving power to employees through ownership.  It’s as close to an ideal company as I’ve found.  And I’m delighted to see their banana business thriving, since I know it was rocky for a time.  (Hence the leaping of my heart.)  

Employees at Equal Exchange, the oldest and largest fair-trade coffee company in the nation.  It is also a worker-owned cooperative.  Photo by Paul Dunn.

I happen to know a bit more than the average shopper about Equal Exchange, because I count myself lucky to be one of its few investors who are not worker-owners.  Over more than 20 years, it has paid investors a steady and impressive average of 5 percent annually (these days, a coveted return).

Maneuvering my cart toward the dairy case, I search out butter made by Cabot Creamery, and pick up some Cabot cheddar cheese.  I choose Cabot because, like Equal Exchange, it’s a cooperative, owned by dairy farmers since 1919.

At the checkout, I hand over my Visa card from Summit Credit Union, a depositor-owned bank in Madison, Wis., where I lived years ago.  Credit unions are another type of cooperative, meaning that members like me are partial owners, so Summit doesn’t charge us the usurious penalty rate of 25 percent or more levied by other banks at the merest breath of a late payment.  They’re loyal to me, and I’m loyal to them.  

On my way home, I pull up to the drive-through at Beverly Cooperative Bank to make a withdrawal.  This bank is yet another kind of cooperative—owned by customers and designed to serve them.  Though it’s small—with only $700 million in assets, and just four branches (all of which I could reach on my bike)—its ATM card is recognized everywhere.  I’ve used it even in Copenhagen and London.

With this series of transactions on one afternoon, I am weaving my way through a profoundly different and virtually invisible world:  the cooperative economy.  It’s an economy that aims to serve customers, rather than extract maximum profits from them.  It operates through various models, which share the goal of treating suppliers, employees, and investors fairly.  The cooperative economy has dwelled alongside the corporate economy for close to two centuries.  But it may be an economy whose time has come.  

Something is dying in our time.  As the nation struggles to recover from unsustainable personal and national debt, stagnant wages, the damages wrought by climate change, and more, a whole way of life is drawing to a close.  It began with railroads and steam engines at the dawn of the Industrial Age, and over two centuries has swelled into a corporation-dominated system marked today by vast wealth inequity and bloated carbon emissions.  That economy is today proving fundamentally unsustainable.  We’re hitting twin limits, ecological and financial.  We’re experiencing both ecological and financial overshoot.  

If ecological limits are something many of us understand, we’re just beginning to find language to talk about financial limits—that point of diminishing return where the hunt for financial gain actually depletes the tax-and-wage base that sustains us all.  

Here’s the problem:  The very aim of maximum financial extraction is built into the foundational social architecture of our capitalist economy—that is, the concept of ownership.  If the root of government is sovereignty (the question of who controls the state), the root construct of every economy is property (the question of who controls the infrastructure of wealth creation).  

Many of the great social struggles in history have come down to the issue of who will control land, water, and the essentials of life.  Ownership has been at the center of the most profound changes in civilization—from ending slavery to patenting the genome of life.  

Author Marjorie Kelly:  It’s no accident that the deep redesign of our economy isn’t beginning in Washington, D.C.  It is rooted in relationships:  to the living earth and to one another.  Photo by Cameron Karsten.

Throughout the Industrial Age, the global economy has increasingly come to be dominated by a single form of ownership:  the publicly traded corporation, where shares are bought and sold in stock markets.  The systemic crises we face today are deeply entwined with this design, which forms the foundation of what we might call the extractive economy, intent on maximum physical and financial extraction.  

The concept of extractive ownership traces its lineage to Anglo-Saxon legal tradition.  The 18th century British legal theorist William Blackstone described ownership as the right to “sole and despotic dominion.” This view—the right to control one’s world in order to extract maximum benefit for oneself—is a core legitimating concept for a civilization in which white, property-owning males have claimed dominion over women, other races, laborers, and the earth itself.  

In the 20th century, we were schooled to believe there were essentially two economic systems:  capitalism (private ownership) and socialism/communism (public ownership).  Yet both tended, in practice, to support the concentration of economic power in the hands of the few.

Emerging in our time—in largely disconnected experiments across the globe—are the seeds of a different kind of economy.  It, too, is built on a foundation of ownership, but of a unique type.  The cooperative economy is a large piece of it.  But this economy doesn’t rely on a monoculture of design, the way capitalism does.  It’s as rich in diversity as a rainforest is in its plethora of species—with commons ownership, municipal ownership, employee ownership, and others.  You could even include open-source models like Wikipedia, owned by no one and managed collectively.  

These varieties of alternative ownership have yet to be recognized as a single family, in part because they’ve yet to unite under a common name.  We might call them generative, for their aim is to generate conditions where our common life can flourish.  Generative design isn’t about dominion.  It’s about belonging—a sense of belonging to a common whole.  

We see this sensibility in a variety of alternatives gaining ground today.  New state laws chartering benefit corporations have passed recently in 12 states, and are in the works in 14 more.  Benefit corporations—like Patagonia and Seventh Generation—build into their governing documents a commitment to serve not only stockholders but other stakeholders, including employees, the community, and the environment.  

Also spreading are social enterprises, which serve a social mission while still functioning as businesses (many of them owned by nonprofits).  Employee-owned firms are gaining ground in Spain, Poland, France, Denmark, and Sweden.  Still another model is the mission-controlled corporation, exemplified by foundation-owned companies such as Novo Nordisk and Ikea in northern Europe.  While publicly traded, these companies safeguard their social purpose by keeping board control in mission-oriented hands.  

If there are more kinds of generative ownership than most of us realize, the scale of activity is also larger than we might suppose—particularly in the cooperative economy.  In the United States, more than 130 million people are members of a co-op or credit union.  More Americans hold membership in a co-op than hold shares in the stock market.  Worldwide, cooperatives have close to a billion members.  Among the 300 largest cooperative and mutually owned companies worldwide, total revenues approach $2 trillion.  If these enterprises were a single nation, its economy would be the 9th largest on earth.  

Often, these entities are profit making, but they’re not profit maximizing.  Alongside more traditional nonprofit and government models, they add a category of private ownership for the common good.  Their growth across the globe represents a largely unheralded revolution.  

What unites generative designs are the living purposes at their core, and the beneficial outcomes they tend to generate.  More research remains to be done, but there is evidence that these models create broad benefits and remain resilient in crisis.  We’ve seen this, for example, in the success of the state-owned Bank of North Dakota, which remained strong in the 2008 crisis, even as other banks foundered; this led more than a dozen states to pursue similar models.  We’ve seen it in the behavior of credit unions, which tended not to create toxic mortgages, and required few bailouts.  

We’ve seen it in the fact that workers at firms with employee stock ownership plans enjoy more than double the defined-benefit retirement assets of comparable employees at other firms.  And we’ve seen it in the fact that the Basque region of Spain—home to the massive Mondragon cooperative—has seen substantially lower unemployment than the country as a whole.  

Together, these various models might one day form the foundation for a generative economy, where the intent is to meet human needs and create conditions in which life can thrive.  Generative ownership aims to do what the butcher, the baker, and the candlestick maker have always done:  make a living by serving the community.  The profit-maximizing corporation is the real detour in the evolution of ownership, and it’s a relatively recent detour at that.   

The resilience of generative design is a key reason that people have often turned to these models in times of crisis.  When the Industrial Revolution was forcing many skilled workers into poverty in the 1840s, weavers and artisans banded together to form the Rochdale Society of Equitable Pioneers, the first modern, consumer-owned cooperative, selling food to members who couldn’t otherwise afford it.  

During the Great Depression in the United States, the Federal Credit Union Act—ensuring that credit would be available to people of meager means—was intended to help stabilize an imbalanced financial system.  Today, credit union assets total more than $700 billion.  In the recent financial crisis, their loan delinquency rates were half those of traditional banks.  Since the crisis, credit unions have added more than 1.5 million members.  In Argentina in 2001, when a financial meltdown created thousands of bankruptcies and saw many business owners flee, workers—with government support—took over more than 200 firms and ran these empresas recuperadas themselves, and they’re still running them.  

Last year, with financial and ecological crises mounting worldwide, the U.N. named 2012 the Year of the Cooperative, and cooperative activity, is advancing around the globe.  Cooperatives were largely sidelined during the rise of the industrial age.  But current trends indicate that conditions may be ripe for a surge in cooperative enterprises.  As people lose faith in the stock market, feel mounting anger at banks, and distrust high-earning CEOs, there’s growing distaste for the business-as-usual Wall Street model.  Meanwhile, the Internet has enabled the expansion of informal cooperation on an unprecedented scale—with the Creative Commons, for example, now encompassing more than 450,000 works.  As the speculative, mass-production economy hits limits, cooperatives may be uniquely suited to a post-growth world, for they are active in sectors related to fundamental needs (agriculture, insurance, food, finance, and electricity comprise the top five co-op sectors).  

If many of us fail to recognize an emerging ownership shift as a sign of progress, it may be because it arises from an unexpected place—not from government action, or protests in the streets, but from within the structure of our economy itself.  Not from the leadership of a charismatic individual, but from the longing in many hearts, the genius of many minds, the effort of many hands to build what we know, instinctively, that we need.  

This goes much deeper than legal or financial engineering.  It’s about a shift in the cultural values that underpin social institutions.  History has seen such shifts before—in the values that underlay the monarchy, racism, and sexism.  What’s weakening today is a different kind of systemic bias.  It’s capital bias:  capital-ism—the belief system that maximizing capital matters more than anything else.   

The cooperative economy—and the broader family of generative ownership models—is helping to reawaken an ancient wisdom about living together in community, something largely lost in the spread of capitalism.  Economic historian Karl Polanyi describes this in his 1944 work, The Great Transformation, tracing the crises of capitalism to the fact that it “disembedded” economic activity from community.  Throughout history, he noted, economic activity had been part of a larger social order that included religion, government, families, and the natural world.  The Industrial Revolution upended this.  It turned labor and land into commodities to be “bought and sold, used and destroyed, as if they were simply merchandise,” Polanyi wrote.  But these were fictitious commodities.  They were none other than human beings and the earth itself.  

Generative design decommodifies land and labor, putting them again under the control of the community.  

It’s no accident that the deep redesign of our economy isn’t beginning in Washington, D.C.  It is rooted in relationships:  to the living earth and to one another.  The generative economy finds fertile soil for its growth within the human heart.  The ownership revolution is part of the “metaphysical reconstruction” that E.F. Schumacher said would be needed to transform our economy.  When economic relations are designed in a generative way, they’re no longer about sole and despotic dominion.  Economic activity is no longer about squeezing every penny from something we imagine that we own.  It’s about being interwoven with the world around us.  It’s about a shift from dominion to community.   

Political Democracy can and will be fortuitous when Economic Democracy is established.   Explore this and other articles covering alternative economics, ethical leadership, economic democracy, and a society without the weal and woe of social and economic vicissitudes HERE   How does PROUT compare or contrast with capitalism or communism?  Explore the answers HERE What are essential ingredients assuring progressive sustainability bereft of the vicissitudes of economic or political predation, privation or disparity?  Learn more HERE