How do we do co-operative development?

By Ed Mayo on responses to the consultation for a National Co-operative Development Strategy

The debate hots up.

There’s a longstanding body of specialist co-operative development bodies, and workers, which support co-operatives through advice – many of whom have contributed to this blog series.

Drawing together comments from an early draft of the National Co-operative Development Strategy shared by Dave Hollings at the Future Co-ops conference last month, a number of practitioners have submitted a critique and commentary – DNCDS CDBs Forum Response final – on the draft so far, coupled with a series of positive recommendations on how to use the next steps as an opportunity.

The response document, drawn up for the Expert Reference Panel shaping the strategy –Comments by CDBs Forum – some responses – identifies a number of these for action, but also takes up the debate on some of the points of concern.

These are among the first responses to a call for consultation on the outline strategy – as set out in a series of slides released on the Co-operatives UK website. Neither text nor images are final, but it is among the closing stages of work that has taken placed over the last two years, including the Census research of co-ops, a participatory planning event at Congress to identify priorities and a series of discussion papers.

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Debate helps and what emerges is bound to be improved as a result. There are a fair few risks out there for established co-op development bodies, as is the case for the field of business advice more widely, but a national co-op development strategy should allow those involved in co-op development to see their efforts recognised and their potential valued.

As Dave Hollings comments “if we get enough buy in from all sorts of co-ops, big and small…it just brings together the huge but fragmented resources we already have as a movement to everyone’s mutual advantage.”

 

Lets Reimagine Work

Watch a story about an artisan bakery and workers coop

This is an invitation to all cooperators to celebrate and share coop stories to inspire the next wave of coops.

Want to start or grow a coop?
Support is here: www.thehive.coop/reimagine

Lets share coop stories far and wide:

Facebook: [https://www.facebook.com/CooperativesUK/videos/10154232341007617/]
Youtube [https://youtu.be/UyNZ-RpAWMw]
You can download the teaser of the video here: [https://mega.nz/#!V1dUUbqS!3H7J-XZ4liQsrq93C2CXaG8Re8Ge351XTWV5TXUjUn0] and upload on Twitter

Want to share it on your website?
Find embed code here: https://www.youtube.com/watch?v=UyNZ-RpAWMw

featuring @Leeds Bread Co-op
brought to you by @CooperativesUK
In partnership with @The Co-operative Bank
Captured by @Blake House Filmmakers Cooperative

What if… Co-operatives UK had £70m a year?

by Josef Davies-Coates (reposted from Stir to Action)

The first in a four-part series looking at 1) the scale and success of co-ops funding co-ops internationally, 2) existing examples and recent developments in the UK, 3) how platform co-ops empowered by open source tools could rapidly scale these models, and 4) how to spend £70 million a year.

Co-ops in the UK turnover £34 billion a year but rely on £333k a year from the Co-operative Bank to fund co-op development. This needs change if we’re to navigate the perfect storm of climate, energy and economic uncertainty and accelerate the transition to a fair economy that thrives within planetary boundaries. Justice demands it. Our shared future depends on it. How might we do it?

This year The Co-operative Group are “Back to Being Co-op” and Co-op Congress explored three themes:

  • Embracing co-operative excellence
  • Practicing co-operation among co-operatives
  • Being open to innovation

To me, “Back to Being Co-op” starts with rediscovering the practical solidarity and bold ambitions of the Rochdale Pioneers. These 28 weavers, cloggers, shoemakers, joiners and cabinet makers each pooled 2 pence a week (about 50p a week today) and built up enough capital to open a shop. But it was way more than just a shop. Their 1844 rules state:

“That as soon as practicable the Society shall proceed to arrange the powers of production, distribution, education and government”

They also encoded cooperative best practice into a set of principles that evolved to become the internationally recognised guidelines by which co-operatives put their values into practice.

The 5th principle is: Education, Training and Information

“Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of co-operation.”

This is surely where “embracing co-operative excellence” must begin. But how to finance it? Enter principle 6: “co-operation among co-operatives”. This has been a co-op principle since at least 1966, but large networks of co-ops systematically pooling resources are virtually non-existent in the UK. As a result the UK’s 7000 co-ops and 17.5 million members are punching massively below their weight.

What could be achieved in the UK if this changed?

In 1991 Italy passed Law 381/91 which created two types of multi-stakeholder “social co-operative”: 1) social, health and educational co-ops, and 2) co-ops who employ disadvantaged people. Today 14,000 social co-ops serve over 5m people, employ more than 400k and turnover €9 billion a year. Social co-ops invest 3% of their annual income in the “Marconi Fund” to finance new co-ops. I’ve not yet found any detailed info about the size and operation of the Marconi Fund, but 3% of €9 billion is €270,000,000.

Spain’s Mondragón Corporación Cooperativa (MCC) is probably the best known cooperative network in the world. Starting life as a small vocational school in 1943 the first Mondragon Co-op made up of five of its students was founded in 1956. It is now complex network of 289 business (of which 110 are co-ops), has a turnover of over €14 billion and provides a livelihood for over 80,000 people (at present just under one third of these are owner-members but this is due to rise to over 75% in the next 3 years). They have their own bank, 15 technology centres and a university. Wages ratios between the highest and lowest paid members are democratically agreed upon and average 5:1 with low paid workers earning on average 13% more than they would elsewhere. Individual co-ops are federated into four sector-wide co-ops: Industry, Knowledge, Finance and Retail. Member co-ops contribute between 15-40% of their profits to these sector co-ops in order to fund joint marketing, branding, and research projects etc. These contributions also help smooth out and share the losses and gains made by individual co-ops – losses made by one co-op can be partially offset (up to 40%) against profits from another. 10% of sector profits are paid to MCC Investments to fund co-operative development. In addition to this, individual co-ops contribute 10% of their profits to the MCC Foundation, 2% into an education fund and 2% into a solidarity fund. About £20 million a year is invested in educational and social projects alone.

Japan’s Seikatsu Club Consumers’ Co-operative Union began in 1965 when a group of housewives organised a collective buying club to purchase quality milk at affordable prices, one of the earliest examples of Community Supported Agriculture. Seikatsu is now an association of 30 consumer co-ops, employs about 1300 people and has over 300,000 members organised into 200 independently managed branches across Japan. Members contribute 1000 yen (about £7.50) a month, and also invest substantial sums in the association. In 2010 the accumulated contributions of the members was roughly £220 million, an average investment of about £750 per member.

The Arizmendi Association of Cooperatives is a Californian cooperative network made up of seven member businesses: six cooperative bakeries and a co-op development and support collective. The first business The Cheese Board opened as a small cheese store in 1967. In 1971, the two original owners sold their business to their employees and created a 100% worker owned business of which they remained a part. In 1995 the Cheese Board funded the Association’s part-time staff who then helped to create 5 more bakeries all named “Arizmendi” after Arizmendiarrieta (the founder of Mondragon). Together they have about 100 worker owners. The co-ops share a common mission, share ongoing accounting, legal, educational and other support services, and support the development of new member cooperatives by the Association by pooling the lower of 4% revenue or 25% of profit. Older more established co-ops pay the equivalent of 1 full time wage per 20 full time equivalent members.

Founded in 2005, The Valley Alliance of Worker Co-operatives (VAWC) is dedicated to building a sustainable local economy by facilitating the growth and development of worker cooperatives in the Connecticut River Valley of Western Massachusetts and Southern Vermont. Their 9 member co-ops include 6 businesses who converted into co-ops, have a combined annual revenue of $7.2 million.  Members pay dues of 1/8 of 1% (i.e. 0.00125%) of their revenue to cover the association’s operating expenses and pool 5% of their profits into a co-operative development fund. If the UK’s 7000 co-ops pooled the same amount of revenue and profit as VAWC members it’d generate about £70 million a year.

Josef Davies-Coates is the Founder of United Diversity, an Associate of the P2P Foundation and Co-founder of The Open Co-op who are organsing a big 2 day conference on Platform Co-ops in London http://conference.open.coop

The potential for co-operative CICs

John Mulkerrin argues that co-operative CICs present a largely  undiscovered opportunity.

It is still widely unknown that CICs can already be Co-operative and I suggest investment into fully understanding the relevance and potential of a suite of Co-operative CICs worthy of inclusion in that development.

Much like the wider Co-operative movement, CIC harnesses within it a number of different legal structures. The two meet at the little known or understood Co-operative CIC.

My own knowledge of Co-operatives is limited to being a member of four and an increasing understanding picked up along the way conducting my role at the CIC Association CIC, so please forgive my naivete about the finer details and context within which these discussions will take place.

That being said, I feel the ‘future proofing’ elements of what a Co-operative CIC might give the wider movement should be discussed rigorously as I believe it offers much of what is being sought, and would be a new engine of growth for the Co-operative movement.

The first part is easy

There are already over 12000 CICs on the public register, of which (approximately) 9000 are Limited By Guarantee, 1650 Not for Profit Limited by Share (schedule 2) and 1450 For Profit Limited by Share (schedule 3). We don’t have an official figure but it is safe to say that relatively there are only a handful of Co-operative CICs.

We feel that there could and should be more growth within the traditional Co-operative CIC Limited by Guarantee legal structure, such as is described in the Co-operative UK templates already available.

A great example of such an organisation is Barford Village Shop CIC. After losing the village shop in 2006 the community set about bringing it back to life. Over 500 shareholders joined and between them raised £370,000 (debt finance) to make the dream a reality. It also set up a Charity to donate any surplus profit to community projects. It has over 80 volunteers, 1400 people use the shop every week and it has donated £80,000 to community projects so far.

barford

Barford village shop (image from http://www.barfordvillageshop.org.uk/)

Easy, more awareness needed! This is a fantastic case of Co-operative action and very familiar to all as a Co-operative. But this discussion is WhatIf

The Co-operative CIC also has an asset lock, what if it is a useful ingredient in the discussion whether there should be a voluntary asset lock for the IPS?

The Co-operative CIC is also registered with Companies House rather than with the FCA. What if that is the most suitable ‘for profit’ co-operative strategy moving forward?

What if we develop a schedule 3 Co-operative CIC?

(A schedule 2 CIC Limited by Share does not permit any dividend to be paid to shareholders, unless they are asset locked bodies. A schedule 3 CIC Limited by Shares allows for payment of dividend to be paid to all external investors)

No doubt there is a discussion to be had on a Schedule 2 Co-operative CIC model, for example we already have 1650 CIC Share companies that do not issue dividends and it could be that many would already describe themselves as Co-operative.

But we are here to innovate and to an extent that work would happen under a wider umbrella, that which includes defining an acceptable (to Co-ops UK?) form of Schedule 3 Co-operative CIC.

A Co-operative that have can have different classes of share. A simple example is the CIC Association itself. We are strongly considering becoming a Co-operative and have been for a long time, we have grown to over 5000 online network members now and we think it time to progress to the next stage of development. At the moment it’s a few volunteers and some shoestring trying to make an impact and we now want to harness our own ‘crowd’ to help shape our common future.

We want to offer every CIC a single member share which carries the voting/election rights, and to also offer a second class of share without voting/election rights which enables external investment into the Co-operative. This will allow us to seek investment from our community or externally whilst maintaining the dignity of democratic control. It would also allow us to reward those investors who support any initiative with a share of profits. Under CIC legislation, we can pay up to a maximum of 35% of distributable profit.

Would this be regarded as a Co-operative?

WhatIf this helps reduce the domination of private providers?

If it would, then it quickly follows that this has the potential to be a very dynamic structure around which new types of co-operation could organise, and particularly new ways of attracting external investment could be sought. Cultural, social, technical and economic change are altering how individuals gather around a common cause and we must be here to enable it, not to judge it.

What if investors gathered around themes, foodies investing in farmers etc etc. It is perhaps stretching many peoples ideas of what a Co-operative is, but is that so bad?

Would it be so bad if there was an investment fund that allowed you to co-invest with a group of patients who ‘spin out’ their mental health service? You can do it with a private company, why not a Co-operative?

Surely these would be regarded as co-operative aims? Surely we should give social investors the chance to further help transformation and innovation?

The village shop mentioned above could have perhaps raised the £370k in equity instead of loans? Wouldn’t that have been better for the cashflow?

One of the originators of CIC was the late, great Stephen Lloyd, often referred to as the father of CIC and he once said that debt and equity are morally equal. Is that the case with Co-operatives?

The Co-operative movement started after steam engines and before airplanes whereas CIC came into being after google and before twitter so it is perhaps too new a twist for some, but I contend that the investor could be (subject to appropriate controls and measures being put in place) seen as vital part of some Co-operatives. Why not let those who have an empathy for your work support it?

WhatIf we disrupt the system positively?

Many have discussed these ideas before and elsewhere, but with the Co-operative CIC included as an ingredient I contend this idea carries the biggest potential bang for the collective co-operative buck.

In the Co-operative Party publication Taking Care we can see that social care is in permanent crisis, with a massive funding gap that will hit at least £2.8 billion by 2020 . It says part of the solution is to reduce the domination of private providers in the market and encourage smaller social and co-operative providers to deliver the care.

These ideas could help underpin strategies for meeting these key objectives, it is clear whatever we do the future has many challenges in maintaining a fair and decent society for all. That’s politics, and there are plenty better at it than me.

Govt standardising reliefs such as the SITR to Charity, Co-ops and CIC mean that any further development in these areas should be harmonised to deliver solutions for all, we have ourselves gone some way to developing the theory for social investment more widely and would welcome collaborating.

WhatIf the Co-operative CIC could be designed to make a new millennial Co-operative fit for the next 150 years?

Oh WhatIf indeed!

John Mulkerrin is founder and managing director of the CIC Association CIC. 

 

Videos of platform co-ops talks from New York event

There’s a series of videos available from the 13-14 Nov Platform Co-operativism event in New York.

https://livestream.com/internetsociety/platformcoop2016

They don’t seem to be embedding properly (human error this end perhaps) but they’re all on this page here – https://livestream.com/internetsociety/platformcoop2016/videos/141710602

This looks to have been a state of the art exposition of the topic. We’ve seen no direct feedback from the event yet; we need some full perusal and proper analysis of it.

In times of social crises – let’s build movements of solidarity

by Ieva Padagaite

With the wide spread inequality, division, disconnect and anti-establishment feelings rising here in UK and globally, we need to come together as a social movement speaking the language of the people wishing for change and articulate a positive vision of the cooperative future.

Let’s stop justifying ourselves as viable businesses, we are so much more.

Let’s change the image and language of the co-op movement to build a solidarity economy together.

***

Contribute to the whatif.coop blog for the development of the cooperative movement

Platform co-ops: what’s really there for the movement?

A forward-thinking strategy about the future of co-ops has to take a position on what co-ops can do in the online economy. Next week in New York there’s a key event on this agenda culminating in an unconference Platform Cooperativism: Building the Cooperative Internet.  

Civic Hall has a preview article with thought leader Trebor Scholz.

Two years ago, I proposed to bring the cooperative business model to bear on the digital economy because the Web had hit rock bottom. And the situation today isn’t any better, frankly: data tracking is pervasive, siren servers hold our data in perpetuity, privacy has become a privilege of the rich, and the online platforms that we depend on most, are owned by a number of people so small that you could fit them into a Google bus.

One thing is clear: today’s network of networks has hardly any resemblance of what the creators of the Internet or Tim Berners-Lee had in mind when designing the Internet and consequently the World Wide Web. It is no longer the “vendor neutral and altruistic contribution to society,” that Berners-Lee had imagined. So, when I look at today’s centralized Internet, this isn’t only about cloud computing and surveillance.

The whole thing is worth a read. The challenge for the UK co-op movement is to take this agenda on board, digest it, and discern what’s really there for us. There’s possibly a huge wave of social tech we can surf sustainably. But remember the e-commerce disasters: as well as the straight dotcom flops like Pets.com or Boo.com there were the elephants that tried to dance such as GEC Marconi. We can’t say we haven’t been warned.