There are over 29,000 cooperative businesses in the USA, and food co-ops represent about 1 percent of that total. What are the other 99 percent doing?
Providing electricity, telephone service, gas, water, and picking up trash/recycling; offering reasonably priced financial services (via credit unions) and insurance products; ensuring farmers can grow their crop (both organically and conventionally) and sell it at a fair price; allowing small businesses to stay in business by coming together and achieving economies of scale usually reserved for the big box stores; and creating truly democratic workplaces that give all the employees a say and the responsibility for the business.
Cooperatives in their modern form were established in 1844 by The Rochdale Society of Equitable Pioneers. A group of 28 weavers and other artisans in Rochdale, England, set up the society to open their own store, selling food items they could not otherwise afford, and established the “Rochdale Principles” of cooperation. Within 10 years, over 1,000 cooperatives were formed in the United Kingdom, and the modern era of cooperative business had begun. These seven principles have evolved over time, just like the U.S. Constitution, but they remain at the core of every cooperative.
Cooperatives tend to form when the “market” refuses to offer a good or service or does so at such a high price as to be unaffordable to most people. The lack of readily available organic food in the 1970s or the lack of electricity in rural areas in the 1930s are good examples.
Co-op categories occasionally can be confusing. One of the ways to tell the difference is to ask the question: Who owns the co-op and what is the main purpose?
There are four main types of co-ops:
Consumer: These are co-ops that are owned by the end user, the people that utilize the service such as food co-ops, credit unions, electric co-ops, and housing co-ops. The purpose of consumer co-ops is to make available a good or a service that is unavailable or costs too much for the average consumer.
Producer: These are primarily agriculture coops that are owned by the farmers. Well-known examples include Organic Valley, Cabot Cheese, Sunkist, and Welch’s, among many others. Sometimes also referred to as marketing co-ops, they are designed to help farmers bring their goods to market through economies of scale at a fair price (for the farmer).
Purchasing: These co-ops are comprised of mainly small, locally owned businesses that pool their resources to increase their purchasing power and allow them to compete with big box stores. Examples include Ace Hardware, Carpet One, and True Value. Many franchise owners such as Kentucky Fried Chicken and Dunkin’ Donuts use their purchasing co-op to ensure they get a fair deal from their franchisor.
Worker: These are co-ops that are owned by the workers, promoting a more democratic workplace. It is the smallest but the fastest growing sector in the U.S. Examples include Equal Exchange, the fair trade supplier; Union Cab in Madison, Wis.; and WAGES in San Francisco, comprised mostly of Latina women who provide housecleaning and earn over 25 percent more than their non-co-op counterparts.
There is a fifth type of co-op sometimes, referred to as a hybrid, which combines two of the above. There are also variations that take different elements of the four main types. For example, I am a member of CDS Consulting Co-op, a shared services co-op that brings together individual business people for marketing, accounting, and other services.
Blueprint for a Cooperative Decade
These co-op categories occasionally can be confusing. One of the ways to tell the difference is to ask the question: Who owns the co-op and what is the main purpose?
When the United Nations declared 2012 as the International Year of Cooperatives, Secretary General Ban Ki Moon said, “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.” The International Cooperative Alliance (ICA), www.ica.coop. coop, is an organization with members in over 90 countries dedicated to promoting cooperatives worldwide. Many nations have their own domestic cooperative organizations— here in the U.S. it is the National Cooperative Business Association www.ncba.coop.
The ICA realized that a year for cooperatives was not enough. After great study, ICA released the “Blueprint for a Cooperative Decade” (http://ica.coop/en/publications/blueprint-co-operative-decade). It identifies five key areas for cooperatives to focus on to ensure that our role grows and we can create a more cooperative economy. The areas are:
Cooperatives give the members the opportunity to participate through a direct connected ownership of the business that they utilize. This contrasts starkly with the investor-owned model where you can be an owner and have no connection to the business. The challenge for many coops is to have their members engage with their co-op. At CDS Consulting, we promote getting members to feel like owners by using the co-op that will lead to getting members to serve and feel like they belong. In short: Own > Use > Serve > Belong.
This encompasses both the environmental meaning and how co-ops work to make our local communities sustainable through our social impact.
To ensure all cooperatives live by and promote the seven co-op principles and accompanying values. (For the complete statement of cooperative identity, values, and principles, see http://ica.coop/en/whats-co-op/ co-operative-identity-values-principles.)
Ensure that co-ops in all jurisdictions around the world are allowed to operate. In the U.S. this often means that Congress, state, or local governing bodies promote cooperative development and, just as importantly, do not do anything that could impede cooperative progress. Capital
Cooperatives need access to capital in a manner that does not relinquish control. This is often the Achilles heel of the business model, but it does not have to remain that way. Utility co-ops, many agricultural co-ops, and purchasing co-ops have met this challenge. As a society, we need to create mechanisms such as a 401(k) fund option that will allow us to invest in our values through co-ops with options such as preferred shares. This will help co-ops meet their capital needs.
The brilliance of the ICA document is how it touches on issues all co-ops face, no matter in what sector they operate or where they serve. Cooperative businesses are incredibly diverse, flourishing in most rural areas (75 percent of the U.S. land mass is served by an electric co-op), while also serving equally well in urban areas (over one-third of the apartments in Manhattan are co-ops). Cooperatives draw members from all political ideologies because the co-op serves human needs. It is imperative that co-op members from all backgrounds find common ground that will allow us to use the ideas of the “Blueprint” to grow the cooperative economy.
In 2010, John Restakis, former executive director of the British Columbia Cooperative Association wrote a book, Humanizing the Economy: Cooperatives in the Age of Capital, where he presents a powerful case for how our worldwide movement is making the world a better place. In my work in all the different sectors of cooperatives, I find great commonality in our overall goals but far too little connection in the day-to-day relationships that can make a very real impact. I encourage every co-op to reach out to other co-ops in its area, with no assumptions or agenda other than growing the cooperative economy. It starts with a cup of coffee (hopefully fair trade and sourced from a co-op). It is easy to demonize people we don’t know and assume their motives or politics are “wrong.”
If each of us does our part of engaging with our co-op and the other co-ops in our community, there is every reason to believe we can have an even greater impact.