Open Harvest is a medium-sized food co-op in an older mixed neighborhood in Lincoln, Neb. They have strong support for the co-op in their area, and have 2,800 members. Yet one of the things holding them back is that the discounts they currently offer members are draining their coffers. Despite good sales, the co-op struggles to make a profit.
The board and general manager at Open Harvest decided to investigate new benefit structure options with the feedback of their members that would address this issue. The board formed a membership structure committee in 2013 to address the discount matter as well as consider their member equity requirement. Their first order of business is tackling their 5% monthly discount benefit. Discounts siphon profits and as it turns out, is not such an attractive benefit to members as had once been presumed. The committee’s plan is to work closely with members throughout the decision-making process.
While the board has the authority to make needed changes, they wanted to involve their members in the conversation. They believe that with member participation, they will not only make a better decision, but also enable participating members support the change and advocate for it among the overall membership. So far they’ve held two meetings with different groups of members, to talk with them about what’s important to them regarding the co-op and to get their feedback on any proposed changes. They are also planning two more. “We want to be open about what we’re thinking about,” said Barbara DiBernard, a board member on the committee, to both educate and engage the participation of members.
As part of Open Harvest’s other efforts toward democracy and transparency, they’ve also created an educational handout about changes the co-op will have to make to remain strong, profitable and viable. Every newsletter article written by the board is focused on the co-op principles and what it means to be a co-op owner. They also discuss the challenges facing the co-op. The committee has also reviewed the best-practices of other food co-ops. One of them was from the board of the Lexington Food Co-op in Buffalo, New York to pass a resolution that they will support the general manager to implement a more sustainable member benefits program. Open Harvest did this in January of this year.
Ultimately, DiBernard said, the board is acting on the behalf of the co-op and its members, with their input. “Our goal is to move toward being able to offer our members a patronage dividend instead of discounts. We see this as more sustainable and equitable.” She also believes that by doing that, they’ll increase membership and have more flexibility in terms of offering an exciting range of benefits that can change and evolve. Her belief is supported by the fact that other co-ops that have made this kind of change do experience an uptick in member support—and more equity in the co-op as well as profits—in part because of their member engagement and greater awareness of the issue. “We’re excited because there are lots of creative ways to look at member benefits,” she said.
For more information about discounts and patronage dividends check out these articles:
- Membership is Ownership: The Cooperative Advantage by Marilyn Scholl
- Create a Cooperative Legacy in Your Community by Patricia Cumbie
- Case Study: Patronage Rebate System Initiates 50 Ways to Love Your Co-op by Patricia Cumbie
4PCG Focus—Democracy: successfully practicing, protecting, promoting, and perpetuating our healthy democracies. Each issue of Connections will focus on one pillar of the Four Pillars of Cooperative Governance. For more information about 4PCG, read the article in the January/February 2014 issue of_ Cooperative Grocer.