You wouldn’t think a single document could have so much impact on a co-op’s culture or its bottom line, but the articles and bylaws of the cooperative not only set legal precedence, but direct how business is carried out. Good working knowledge of the content of these documents is important to keeping a co-op in alignment with its business practices throughout the years. But it is easy to forget about them in the day-to-day of co-op operations. Yet if the articles and bylaws are inconsistent with what the business actually does, it could become a problem or stymie growth. Periodic review and revision is an essential governance practice.
Flatbush Food Co-op in Brooklyn, N.Y., recently addressed the issues that stemmed from out-of-date bylaws. In order to move forward with their plans to change from a discount benefit to a patronage rebate system, they needed to change their bylaws. According to Flatbush board president Leslie Dreifus, the process was long overdue but it went well, considering how much updating needed to occur. He credits CDS Consulting Co-op members Michael Healy and Thane Joyal with giving them the advice they needed to create a good process for the change.
After reviewing their old bylaws for inconsistencies, they began a side-by-side comparison of the old and new articles and bylaws created by Joyal. After the board discussed and approved the new version, they spent time educating the members about the change before the vote. The members voted “yes” to the changes at their last annual meeting, and now the co-op is taking steps to implement the patronage refund system. “We had to do it, but it was work that will really pay off for the co-op,” Dreifus said. Now that the bylaws give a better definition about how they operate, the legal changes will help the co-op enhance fairness and stronger profitability.