The Next Economy - NCBA CLUSA · Jonathan White. Director of Private Sector Partnerships &...

N a t i o n a l C o o p e r a t i v e B u s i n e s s A s s o c i a t i o n C L U S A I n t e r n a t i o n a l | F a l l 2 0 1 9

The Next Economy

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October 10–11, 2020

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C O N T E N T S3 Perspectives

Doug O’Brien

18 The Path to Shared Prosperity Insights from ESOPs reveal the potential of employee ownership Janet Boguslaw and Lisa Schur

4 Building the Next Economy Education. Advocacy. Policy. Doug O’Brien with Greg Irving

28 Power in Purpose Cooperatives and the Sustainable Development Goals Karen Miner and Sonja Novkovic

elevate your identity

NCBA CLUSA - PUBLISHER Doug O’Brien President & CEO

Valeria Roach Chief Financial Officer

EDITOR IN CHIEF John Torres Vice President of Communication & Public Relations , NCBA CLUSA

MANAGING EDITOR Elizabeth LechleitnerSenior Manager, Communication & Public Relations, NCBA CLUSA

SOCIAL MEDIA EDITORIsabelle Shinsato Communication & Public Relations Associate, NCBA CLUSA

DESIGN Slice®Worksslice-works.com

EDITORIAL BOARD Emilia IstrateVice President of Resource Development, NCBA CLUSA

Leslie MeadExecutive Director, Cooperative Development Foundation

Rebecca SavoieCooperative Development Consultant

Jonathan WhiteDirector of Private Sector Partnerships & Foundations, NCBA CLUSA

THE COOPERATIVE BUSINESS JOURNALNCBA CLUSA 1775 Eye Street NW, 8th Floor, Washington DC 20006

38 A Solar Revolution Electric co-op technology innovations are reinventing rural America Russell Tucker, Joseph Goodenbery and Michael Leitman

43 Special Feature Elevate your cooperative identity with a .coop domain Lance Wolak

http://www.slice-works.com

2 | THE COOPERATIVE BUSINESS JOURNALwww.ncb.coop

Your Choices Reflect Your Values. Your Bank Should, Too.

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Your Choices Reflect Your Values. Your Bank Should, Too.

4 | THE COOPERATIVE BUSINESS JOURNAL

Power in Purpose: Building the Next Economy

Even while many indicators show a growing economy, more and more people feel excluded and disconnected from their economy and society. They are looking for ways to be locally rooted and engaged. By providing people the ability to own, control and benefit from the businesses they use, cooperatives are a natural vehicle to build an economy that works for everyone. Co-ops generate more broadly shared wealth through self-help and democratic governance. And, as people-centered, purpose-driven businesses, they are more likely to reflect the values of their members, resulting in more equitable and sustainable businesses.

There is power in purpose-driven businesses. Our cooperative moment could not be clearer.

We begin this issue by reflecting on what the next economy could look like, and the steps we need to take to get there—education, advocacy and policy. Next, new research on ESOPs provides insights that can inform worker co-op development and bring stability to an uncertain job market. We also explore how co-ops can embrace the UN Sustainable Development Goals as a tool to demonstrate their power in purpose and learn how electric co-op technology innovations are reinventing the economy in rural America.

As your national association, we believe that there is power in our purpose; all our work is geared toward realizing the economic and societal power of an inclusive economy. We truly believe that cooperatives are the foundation on which the next economy must be built. To achieve this, NCBA CLUSA works to increase public awareness and educate grassroots and thought leaders on the success, diversity and impact of cooperatives. We advocate for co-ops to ensure the policy environment supports people who want to use co-ops to build more inclusive communities. Together we have an opportunity to empower and inspire each other through cooperative solutions.

Perspectives

Doug O’BrienPresident & CEONCBA CLUSA

In Cooperation,

“ There is power in purpose-driven businesses. Our cooperative movement could not be clearer.”

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Together we will reach new heightsOur co-operative IT solution includes everything needed to run a food co-op. Our mission is to help the food co-op movement thrive. We do this by reducing your society’s costs and helping your co-op be as efficient as possible through technology. We are truly co-operative – with lower prices for all food co-ops societies as more co-ops use VME technology.


By Doug O’Brien, with Greg Irving

At critical moments throughout U.S. history, people have looked to cooperatives as a key strategy to solve major challenges—such as when farmers looked to cooperatives in the early 20th

century to access markets and gain market power, when rural people looked to cooperatives a generation later to access electricity, and when

Education. Advocacy. Policy.

Building the Next Economy

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millions of people looked to credit unions to gain control of their financial future. These solutions occurred only when policymakers created laws and regulations that supported the model. And these policymakers created this policy only when people in the cooperative community educated and persuaded policymakers on the power of the cooperative business model. >>

Representatives from the U.S. Federation of Worker Co-ops and other worker ownership stakeholders join Sen. Kirsten Gillibrand and Rep. Nydia Velázquez at a Main Street Employee Ownership Act press conference. Photo: Office of Rep. Nydia Velázquez


Today’s environment represents another “cooperative moment.” As policymakers seek answers to today’s greatest challenges, the cooperative business model poses proven solutions. And just as in the past, the most effective way for policymakers to grasp the cooperative potential is for the cooperative community to be active in educating and advocating for better cooperative policy.

Recently NCBA CLUSA wrote an open letter addressed to the 2020 presidential candidates from both major parties, urging them to consider how cooperatives can be a vital component of their policy platforms.1 The letter made the point that as candidates seek solutions to some of today’s most critical challenges, they should look to cooperatives as a strategy with a record of empowering people in their businesses and communities.

A cooperative’s members drive its success and a supportive policy environment accelerates cooperative development and growth. Robust, co-op friendly policies raise the likelihood that co-ops can thrive and enable them to solve problems that we as a nation face today. People in the U.S. are eager for a renewed debate about the issues that matter to them most and for an opportunity to participate in their democracy. We are in a critical moment. While multiple economic indicators are strong and unemployment is low, many Americans are still excluded from the economy as a result of growing inequality, the changing nature of work and the increasing usage of new and disruptive technology.

1 “Co-ops should be on the policy platform of every presidential candidate,” NCBA CLUSA says in open letter.” NCBA CLUSA. June 19, 2019. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/co-ops-should-be-on-the-policy-platform-of-every-presiden-tial-candidate-ncba-clusa-says-in-open-letter/.

2 See, e.g., Gordon Nembhard, Jessica. Benefits and Impacts of Cooperatives. White Paper. February 2014. Accessed on August 21, 2019 at http://geo.coop/sites/default/files/0213-benefits-and-impacts-of-cooperatives.pdf.

Cooperatives must be part of any effective plan or platform that addresses these challenges.

Cooperatives are a proven policy strategy. They deliver results. Co-ops have reduced poverty, improved food security, supplied rural electrification and provided affordable financial services where none existed. Cooperatives are a more stable form of business than their competitors, making their benefits likelier to endure.2 Because they exist to serve members that tend to live locally, they are more likely to lead efforts to create more sustainable local economies. This makes it easier for members of cooperatives and, indirectly, their communities to attain economic security that extends to a greater swath of the population.

These facts demonstrate that co-ops should be an integral component of every policymaker’s platform. One reason co-ops are not as prominent in community economic development policy is a lack of understanding of cooperatives by the broader public. Another is that policymakers do not realize how often cooperatives are successfully employed to solve problems. Co-ops could benefit our communities more if policymakers were better informed about current policy examples involving co-ops. The best method for educating policymakers has always been the advocacy work of the co-op community. We should develop a sharp curiosity for the work of our fellow cooperators, finding inspiration and strategies to advance our own efforts. To that end, this article amplifies some recent examples of policymaking that are creating a better policy environment for cooperatives.

Federal policymaking and cooperatives In recent years, there have been encouraging signs that federal policymakers are taking a keener interest in cooperatives. Particularly, many in Congress have recently recognized the vital importance of cooperatives. Several Democratic and Republican lawmakers, including some 2020 presidential


“ Increasing employee ownership will help support a strong economy and promote job security in communities across the state” – Gov. Jared Polis

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hopefuls, have proposed legislation to promote the increased utilization of cooperatives in areas such as worker co-op conversions, childcare, homecare, internet access, food and housing.3,4 Further, both the House and Senate have maintained funding support for Rural Cooperative Development Grants program (RCDG) even though the Administration’s budget continues to propose the elimination of this vital program. In the Senate, eight senators wrote a letter to the Senate Appropriations Committee urging them to increase RCDG funding to by nearly 30 percent.5 (Continued advocacy on this critical issue will be important as the Senate and the House negotiate final spending levels.)

After stagnant funding for more than five years, increasing RCDG only makes sense. Over the next

3 Dubb, Steve. “Will Worker Ownership Seize Center Stage in US Politics in 2020?.” Nonprofit Quarterly. June 3, 2019. Accessed on August 28, 2019 at https://nonprofitquarterly.org/will-worker-ownership-seize-center-stage-in-us-politics-in-2020/.

4 LaTour, Kate. “Following NCBA CLUSA’s open letter to presidential candidates, Gillibrand rolls out rural platform emphasizing co-ops.” August 13, 2019. NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/following-ncba-clusa-open-let-ter-to-presidential-candidates-gillibrand-rolls-out-rural-platform-emphasizing-co-ops/.

5 LaTour, Kate. “Senators pledge support for increased funding of Rural Cooperative Development Grant program.” April 23, 2019. NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/senators-pledge-support-for-increased-fund-ing-of-rural-cooperative-development-grant-program/.

6 Cohn, D’Vera and Paul Taylor. “Baby Boomers Approach 65-Glumly.” Pew Research Center. December 20, 2010. Accessed on Au-gust 28, 2019 at https://www.pewsocialtrends.org/2010/12/20/baby-boomers-approach-65-glumly/.

decade, baby boomers will retire in growing numbers. Roughly 10,000 boomers will turn 65 each day of every year through 2030.6 Many own successful businesses—often the hearts of the communities they serve—but have neither plans nor a clear buyer to preserve their business after they retire. Co-op conversions facilitate the buying of businesses by the workers or consumers who know the business well.

Last year’s passage of the bipartisan Main Street Employee Ownership Act is further evidence that policymakers in Congress are recognizing co-ops’ importance and potential. The law requires equal access for cooperatives and Employee Stock Ownership Plans (ESOPs) to Small Business Administration (SBA) technical assistance and loan programs. Food co-ops and worker co-ops stand to

The author, Doug O’Brien (left), with Bette Brand (right), Administrator of the U.S. Department of Agriculture’s Rural Business-Cooperative Service; and John Cardinal (center), Director of Economic Development for Sen. Kirsten Gillibrand at last year’s Policy Breakfast. Administrator Brand is the recipient of this year’s Co-op IMPACT Champion Award. Photo: NCBA CLUSA


expand and grow as a direct result. Like the RCDG program, Congressional policymakers view Main Street as an opportunity to use co-op conversions to save viable, healthy businesses from closing when their owners retire.7 Because SBA’s report to Congress did not fully address the challenge that co-ops face accessing SBA’s products, advocacy will be a key factor in ensuring that the SBA properly fulfills Congress’ clear mandate to support cooperatives.

Federal policymaking has tapped cooperatives to improve energy efficiency and lessen the financial burden for lower income homeowners in rural areas. Created in the 2014 Farm Bill, the Rural Energy Savings Program (RESP) provides rural electric cooperatives and other rural utilities with zero-interest loans.8 Co-ops use these to start or

7 Senator Kirsten Gillibrand and Representative Nydia Velázquez. “An exclusive statement for the Cooperative Business Journal from co-sponsors of the Main Street Employee Ownership Act”. June 11, 2019. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/an-exclusive-statement-for-the-cooperative-business-journal-from-co-sponsors-of-the-main-street-employee-owner-ship-act/.

8 “Rural Energy Savings Program.” United States Department of Agriculture Rural Development. Accessed on August 28, 2019 at https://www.rd.usda.gov/programs-services/rural-energy-savings-program.

expand energy efficient financing programs for their members. Members and co-ops can apply to replace outdated HVAC units, install energy-storage devices, build envelope upgrades and even replace manufactured homes with more energy efficient dwellings. The average investment is $7,500—a price otherwise out of reach for many residents. The loans are repaid through the utility bill with no upfront costs to the co-op members.

Both increasing energy efficiency and “beneficial electrification”—the replacement of equipment that directly burns fossil fuels with those that use electricity—reduce the demand for energy sources that emit carbon dioxide. RESP tightly links climate change mitigation with improved energy affordability in rural areas, an important component of reducing

Madison, Wisconsin Mayor Satya Rhodes-Conway, center, has proposed using housing co-ops to improve access to affordable housing. Photo: Sharon Vanorny/The Capital Times


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inequality. Rural households tend to pay more for energy—about 40 percent more on average when compared to urban households—while also generally earning less money.9 Cooperatives naturally see in RESP a program that helps their member-owners access 21st century energy technology. When one member saves because of an energy efficient investment, every member benefits from lower overall costs.

These encouraging signs of rising federal recognition and action build on long-running efforts to boost the profile and benefits of cooperatives. The return of a question asking businesses whether they identify as cooperatives to the 2017 Economic Census—after a decades-long absence—has opened new and exciting possibilities for expanded research on cooperative businesses.10 The data from this census will let researchers obtain a more accurate count of the number of cooperatives in the U.S., glean new insights into the state of cooperatives compared to other forms of businesses, and create an overall better picture of where co-ops stand in the economy.11 Data will be released over a period lasting several years, with a first look at economy-wide business statistics scheduled for Fall 2019 and further releases running until at least September 2021.12 Cooperatives additionally now have expanded opportunities to make effective use of this data thanks to new provisions in the Farm Bill’s re-authorization of the RCDG program. There are now authorized, set-aside funds specifically for research into the data.13

While we look forward to the benefits of this research, we should note that it will ultimately have come in

9 Ross, Lauren et al. “The High Cost of Energy in Rural America: Household Energy Burdens and Opportunities for Energy Efficiency.” American Council for an Energy-Efficient Economy. July 18, 2018. Accessed on August 28, 2019 at https://aceee.org/research-re-port/u1806. “Rural America at a Glance: 2017 Edition.” Economic Research Service, United States Department of Agriculture. 2017. Accessed on August 28, 2019 at https://www.ers.usda.gov/webdocs/publications/85740/eib-182.pdf.

10 “Co-ops Back in U.S. Census After 20-Year Absence”. NCBA CLUSA. May 9, 2017. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/co-ops-back-in-u-s-census-after-20-year-absence/

11 Hueth, Brent. “The 2018 State of the Co-op Economy”. The Cooperative Business Journal. NCBA CLUSA. Accessed on August 28, 2019 at http://online.fliphtml5.com/caqv/vcpp/#p=6.

12 “2017 Economic Census Planned Data Product Releases.” United States Census Bureau. Accessed on August 28, 2019 at https://www.census.gov/programs-surveys/economic-census/about/release-schedules.html.

13 “Advocacy Priorities: Rural Economic Growth.” NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/advocacy/ad-vocacy-priorities/rural-economic-growth/ .

14 “Interagency Working Group.” NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/advocacy/interagency-work-ing-group/.

15 “2016 Broadband Progress Report.” Federal Communications Commission. January 29, 2016. Accessed on August 28, 2019 at https://www.fcc.gov/reports-research/reports/broadband-progress-reports/2016-broadband-progress-report.

16 “Electric Co-ops and Expanded Rural Broadband Access.” National Rural Electric Cooperative Association. Accessed on August 28, 2019 at https://www.electric.coop/expanded-rural-broadband-access/.

large part through the Interagency Working Group on Cooperative Development (IAWGCD).14 The working group was created through successful advocacy by the cooperative community. This culminated in authorization by the 2014 Farm Bill. Headed by the USDA, the working group promotes a whole-of-government approach to using cooperative enterprise to solve specific public policy challenges. With more than a dozen government agencies as members, this group ensures the government is on the same page in its engagement with cooperative businesses. The group is critical in bringing key stakeholders and policymakers together to consider how federal agencies can better support cooperatives.

State and municipal policy initiatives Not to be outdone by their federal counterparts, state and municipal policymakers are harnessing co-ops to solve the needs of their communities. One important example is the growing recognition by states that access to swift, reliable broadband is crucial for continued economic development and growth in the 21st century. According to the Federal Communications Commission, approximately 34 million Americans currently lack access to high-speed internet.15 Most of them live in rural areas and are usually served by rural electric co-ops.16

A supportive policy environment accelerates cooperative development and growth.


State legislators know this, often because they are themselves members of cooperatives. Accordingly, many legislatures have established policies to expand opportunities for cooperatives to serve their members’ broadband needs. In January 2018, the Missouri legislature voted to lift a state ban that prevented electric cooperatives from supplying broadband. During 2017 and 2018 Georgia, Alabama, Illinois, Nebraska and Tennessee each passed legislation that empowers co-ops to increase broadband access for their members, too.17 These were part of a larger push for rural broadband legislation across the country. Since January 2018, more than 29 bills in 14 states were introduced that promoted rural broadband.18 At least 26 such bills have been enacted.19 At least six of these mentioned or explicitly required cooperative involvement either in state grant programs or task forces to address broadband access. Most of the remaining bills concentrated on funding general research programs or target specific types of broadband provision, such as at public libraries in rural areas. As such, broadband-interested co-ops will generally be able to access available funding and benefit from such legislation.

Some states are focusing on creating a more welcoming environment for co-ops by updating the statutes that govern cooperative formation

17 Georgia & Missouri, please see https://ncbaclusa.coop/blog/a-co-op-future-for-broadband-in-america/; Alabama Broadband Accessibility Act (March 2018) please see https://whnt.com/2018/03/28/governor-ivey-signs-alabama-broadband-accessi-bility-act-to-provide-better-internet-to-rural-areas/; Tennessee Broadband Accessibility Act, please see https://www.ten-nessean.com/story/news/local/2018/10/18/rural-broadband-internet-tennessee/1659004002/ (2017); Illinois HB 5752, please see http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=91&GA=100&DocTypeId=HB&DocNum=5752&-GAID=14&LegID=111843&SpecSess=&Session=; Nebraska LB994 (2018), please see https://ruralbroadband.nebraska.gov/stat-utes/index.html. All sites last accessed on August 28, 2019.

18 “Challenges Facing Rural Communities.” The National Conference of State Legislatures. August 20, 2019. Accessed on August 28, 2019 at http://www.ncsl.org/research/agriculture-and-rural-development/challenges-facing-rural-communities.aspx.

19 Stauffer, Anne. “Congress, More than a Dozen States Consider Legislation to Expand Broadband Access.” Government Technology. October 23, 2018. Accessed on August 28, 2019 at https://www.govtech.com/policy/Hows-Broadband-Deployment-Coming-An-Update-on-Federal-and-State-Support.html.

20 “Substitute for S.B. No. 138.” Connecticut General Assembly. Accessed on August 28, 2019 at https://www.cga.ct.gov/asp/cgabill-status/cgabillstatus.asp?selBillType=Bill&bill_num=SB-0138.

21 Crowell, Erbin. “Talking Points on Proposed Bill No. 138.” CT Co-op Statute Working Group. Accessed on August 28, 2019 at http://fiddleheadsfood.weebly.com/uploads/9/7/4/6/9746562/ct.statutes.talkingpoints.2019.02.04.pdf.

22 http://legislature.maine.gov/LawMakerWeb/summary.asp?LD=1520&SessionID=1323 “Creating an Ownership Economy in Maine: LD 1520, An Act to Create and Sustain Jobs through Development of Cooperatives and

Employee-owned Businesses.” Cooperative Maine Business Alliance. April, 2019. Accessed on August 28, 2019 at https://maine.coop/wp-content/uploads/2019/04/LD-1520-Ownership-Economy-Legislation-Fact-Sheet.pdf.

24 “Summary of LD 1520.” State of Maine Legislature. Accessed on August 28, 2019 at https://www.denverpost.com/2019/04/11/ared-polis-employee-owned-businesses/.

and governance. This year, the Connecticut General Assembly passed “Proposed Bill No. 138: An Act Modernizing the State’s Cooperative Association Statutes.”20 The legislation will make it easier to form and expand cooperatives, including by converting existing businesses into co-ops. This marks a welcome departure from Connecticut’s earlier laws, which had the cumulative effect of impeding cooperative development in that state.21 Cooperatives, including members of the Neighboring Food Co-op Association, were a major driving force behind getting these needed changes enacted. Meanwhile the Maine State Legislature has also advanced “An Act to Create and Sustain Jobs through Development of Cooperatives and Employee-owned Businesses” to its appropriations committees. This follows efforts from the Cooperative Maine Alliance, Cooperative Development Institute and numerous others.22,23

Governors also see the benefits of welcoming and supporting cooperatives and employee ownership. This past April, Colorado Governor Jared Polis used an executive order to establish a commission that will research and support employee-owned businesses—particularly cooperatives—as a means to ensure small businesses remain in operation after the retirement of their current owners.24 Out of a state population of roughly 5.7 million, more


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Attendees discuss the local policy environment at the Regional Cooperative Policy Roundtable in Denver, Colorado in May. The yearlong series marks the first effort to establish the national policy strategy cooperatives need to thrive. Photos: NCBA CLUSA


than 1 million Coloradans are employed by small businesses.25 “Increasing employee ownership will help support a strong economy and promote job security in communities across the state,” Polis said a press release announcing the commission. “Supporting employee ownership has been a top goal and now we are taking the necessary steps to make it a reality.”

States are innovating with cooperative-based solutions that can go to scale nationwide. The Pennsylvania Fresh Food Financing Initiative (FFFI) was established in 2004 by the Pennsylvania state legislature, which provided $30 million in seed money.26 The Reinvestment Fund, a Community Development Financial Institution (CDFI) with a history of supporting co-op development, leveraged crucial additional funds amounting to a $120 million total program budget. The program ran for six years (2004-2010) until all funds were deployed. Food co-ops accounted for many of the 88 successful applicants for FFFI assistance.27 The program succeeding in supplying more than 400,000 residents

25 Ibid.26 Soursourian, Matthew. “Healthy Food Financing Initiatives: Increasing Access to Fresh Foods in Underserved Markets.” Community

Investments. Winter 2010/11. Vol. 22, Issue 3. 2010. Accessed on August 28, 2019 at https://www.frbsf.org/community-develop-ment/files/CI_Soursourian.pdf.

27 “Pennsylvania Fresh Food Financing Initiative.” The Reinvestment Fund. 2011. Accessed on August 28, 2019 at https://consumer-fed.org/wp-content/uploads/2011/10/Evans_Food_Deserts_panel_FPC_2011.pdf.

28 “A Healthy Food Financing Initiative: An Innovative Approach to Improve Health and Spark Economic Development.” PolicyLink, The Food Trust and The Reinvestment Fund. March 1, 2012. Accessed on August 28, 2019 at http://thefoodtrust.org/uploads/me-dia_items/hffi-one-pager.original.pdf.

29 “Healthy Food Financing Initiative.” The Reinvestment Fund. Accessed on August 28, 2019 at https://www.reinvestment.com/ini-tiatives/hffi/.

30 “The Healthy Food Financing Initiative Financial Assistance Awards.” Community Development Financial Institutions Fund. 2011. Accessed on August 28, 2019 at https://www.cdfifund.gov/Documents/HFFI%20Book%20508.pdf.

31 “The Healthy Food Financing Initiative (HFFI): An Innovative Public-Private Partnership Sparking Economic Development and Improving Health.” PolicyLink, The Food Trust and The Reinvestment Fund. April 4, 2015. Accessed on August 28, 2019 at https://www.frbsf.org/community-development/files/healthy_food_financing_initiative.pdf.

with increased access to healthy food, retaining roughly 5,000 jobs and adding at least $540,000 in tax revenue.28

These state polices can go to scale nationally. In 2010, the Obama Administration created the Healthy Food Financing Initiative (HFFI), motivated partly by the successes of Pennsylvania’s program to increase healthy food provision. Members of Congress took note of the program’s early successes and made it part of the 2014 Farm Bill,29 thereby mandating public-private partnership between USDA Rural Development and CDFIs. The Healthy Food Financing Initiative supplies technical assistance and funding “to eligible healthy food retail projects to overcome the higher costs and initial barriers to entry in underserved areas.” These take the form of one-time grants. The program has provided funding to several cooperatives, cooperative development organizations and other organizations that used funds to support cooperatives. These include the Cooperative Fund of New England, the Lowcountry Housing Trust, Capital Impact Partners and ASI Federal Credit Union, among others.30 Since 2011 the program has leveraged over $1 billion in funds through its public-private partnerships. These funds have supported more than 200 projects in over 30 states and helped create or retain over 3,000 jobs.31

Like states, city governments have been supporting cooperatives to achieve their policy goals. The city council of Berkeley, California recently allocated $100,000 for worker co-op development over the


By living out Cooperative Principle #6—cooperation among cooperatives —we build the strength and resilience of our businesses against unfair political efforts that would disadvantage cooperatives.

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next two years.32 This came about after the city’s Office of Economic Development commissioned a study of area businesses—conducted by Project Equity, an organization that promotes co-ops—“as an exit strategy for business owners, and as an important approach for increasing employee engagement and wellbeing.”33 It found that 1,200 local businesses would require succession planning over the coming 15 years as business owners retire. These businesses total $1.6 billion in annual sales revenue and provide a third of local jobs. The allocated funds will be used to expand an existing worker co-op pilot program. The program supports conversion to worker cooperatives as a means of securing these jobs against possible loss due to owner retirements.

Elsewhere local political candidates recognize that cooperatives are vital to local growth and a winning component of their electoral platforms. As just one example, Satya Rhodes-Conway—current mayor of Madison, Wisconsin—was elected to office on a platform that featured cooperatives prominently. Rhodes-Conway proposed using housing co-ops to improve access to affordable housing.34,35 Her proposals reflect research from Madison’s own University of Wisconsin Center for Cooperatives, which has analyzed the ways co-ops can increase affordable housing and done significant research on housing co-ops in Madison and nearby areas.36

The need for co-op community advocacy While more policymakers see the wisdom of supporting the cooperative business model, the cooperative movement will build strength

32 “City of Berkeley Commits $100,000 to Worker Cooperative Development.” Sustainable Economies Law Center. June 25, 2019. Accessed on August 28, 2019 at https://www.theselc.org/berkeley_commits_two_years_of_funds_to_worker_coops.

33 “About Us”. Project Equity. Accessed on August 28, 2019 at https://www.project-equity.org/about-us/.34 Dahmer, David. “’In Madison, we are not using our assets to the extent that we should be.’ Satya Rhodes-Conway Enters Race for

Mayor.” Madison 365. June 6, 2018. Accessed on August 28, 2019 at https://madison365.com/in-madison-we-are-not-using-our-assets-to-the-extent-that-we-should-be-satya-rhodes-conway-enters-race-for-mayor/.

35 “Satya for Madison: Issues”. Satya for Madison. Accessed on August 28, 2019 at https://www.satyaformadison.com/issues. 36 See the UWCC’s relevant research at https://uwcc.wisc.edu/resources/housing-2/, accessed last on 8/28/2019.37 “April advocacy efforts kick off with Co-op Tax and Policy discussion, include work to protect credit unions.” NCBA CLUSA. April 9,

2019. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/april-advocacy-efforts-kick-off-with-co-op-tax-and-policy-discussion-include-work-to-protect-credit-unions/.

38 “Legislative Forum: February 2, 2018.” Iowa Credit Union League. February 2, 2018. Accessed on August 28, 2019 at https://www.iowacreditunions.com/icul/aspx/legislativeforum.aspx?minutesid=1349.

and sustain itself only through the actions and advocacy of the cooperative community. Federal advocacy efforts often get attention, but we should also keep keen eyes on local and state-level policymaking. Events earlier this year in the Iowa Legislature can demonstrate why. Lobbyings by certain banking organizations sought to increase taxes and impose membership restrictions on credit unions and their member-owners.37 This is part of an ongoing, multi-year effort to reduce the community-enhancing work of credit unions in order to bolster the positions and profits of banks. The Iowa Credit Union League’s monitoring and engagement with the Iowa credit union community and the larger co-op community have been vital to the continued defense of credit unions and their members.38 The League’s efforts should remind us that there are cooperative members in virtually every state or federal legislative district whom we can call on for support. By living out Cooperative Principle #6—cooperation among cooperators—we build the strength and resilience of our businesses against unfair political efforts that would disadvantage cooperatives.

Just as a cooperative thrives when members are engaged in its success, our attempts to build a better policy environment for co-ops will succeed only if we participate in the policymaking process.


The examples in this piece have primarily concerned policymakers’ focus on cooperatives. This work is united by the fact that it succeeds only through the participation and efforts of active members of the co-op community. To become better advocates, we need to be in dialogue with one another, learning about the cross-sector issues our movement is facing and leveraging resources and ideas to promote cooperative solutions to pressing issues.

The Cooperative Development Foundation and NCBA CLUSA have created one such opportunity this year: the “Power in Purpose” Cooperative Policy Roundtable Series.39 These roundtables followed on our work with the Urban Institute to develop metrics to assess cooperative social and economic impacts on their communities, culminating in a report called “The ABCs of Cooperative Impact.”40 These regional cooperative policy roundtables have been designed to consider policies that could empower people to use cooperatives to build more inclusive local economies. The conversations are part of ongoing research funded by the Robert Wood Johnson Foundation to research the social and economic impact of cooperatives—part of the philanthropy’s longtime focus on healthy communities. Events have been held in Harrisburg, Pennsylvania; Denver, Colorado; Billings, Montana; Madison, Wisconsin; and Maple Grove, Minnesota. Upcoming events are also scheduled for Olympia, Washington and Sacramento, California with further locations to be determined.41

Cooperative solutions have immense promise for solving today’s issues. As we look ahead to the 2019 and 2020 election cycles, we should work to ensure our elected officials know more about cooperatives.42 They need to see the long-term benefits and potential of our business model. Cooperatives have

39 “Power in Purpose: Cooperative Policy Roundtable Series.” NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/power-in-purpose-cooperative-policy-roundtable-series/.

40 Theodos, Brett, Corianne Payton Scally & Leiha Edmonds. “ABCs of Cooperative Impact.” NCBA CLUSA. December 2018. Accessed on August 28, 2019 at https://ncbaclusa.coop/resources/abcs-of-cooperative-impact/.

41 For the calendar of events, please go to https://ncbaclusa.coop/power-in-purpose-cooperative-policy-roundtable-series/#round-table-calendar. Last accessed on August 28, 2019.

42 In 2019, gubernatorial and legislative elections will occur in the following states: Virginia, Kentucky, Louisiana, Mississippi, and New Jersey. Numerous municipal elections, as well as special federal elections, will also take place. Cooperators should ensure candidates are hearing their voices during all such elections.

the power to improve people’s lives for the better beyond the next election cycles. Their strength comes from their members, who own their businesses and seek to ensure that they remain stable and sustainable parts of their local communities.

In urging policymakers to utilize the cooperative business model, let’s consider some of the growing challenges where cooperatives should be an essential part of the solution, including:

• Homecare for seniors In an industry plagued by an 82 percent turnover rate nationally, employee-owned homecare improves quality of care and reduces annual turnover to 30 percent.

• Rural broadband and connectivity Nearly 100 electric co-ops (and counting) now provide reliable, high-speed internet to rural consumers whom investor-owned internet providers fail to serve.

• Financial products Credit unions serve consumers of all backgrounds and provide credit and banking services to traditionally under-banked communities.

• Clean energy Consumers should be at the heart of the burgeoning clean energy sector.

• Stable and affordable housing Housing cooperatives are a lower-lending risk, with lower monthly costs to residents and higher housing satisfaction by owner-tenants.

• Food Food cooperatives provide access to nutritious, affordable food.

• Platform cooperatives People who work in the fast-growing gig


https://seniors.coop/

https://ncbaclusa.coop/blog/a-co-op-future-for-broadband-in-america/

http://reic.uwcc.wisc.edu/CU/

https://www.eesi.org/Access-Clean-Energy-Savings

https://coophousing.org/wp-content/uploads/2013/11/What-is-a-Housing-cooperative.pdf

https://www.fastcompany.com/40575728/worker-owned-co-ops-are-coming-for-the-digital-gig-economy

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economy should have the ability to participate more fully in their businesses through the cooperative business model.

• Information technology and big data Consumers should reap more of the value created by their data through cooperative ownership.

• Childcare More childcare providers could own use this solution that has proven successful in the more than 500 existing childcare cooperatives.

To empower more people to use cooperatives, policymakers should:

• Increase access to capital for cooperatives to startup, expand or innovate;

• Support innovative strategies to deliver technical assistance;

• Encourage broader interagency coordination at the federal and state levels; and

• Increase investment in research and development of cooperative businesses.

By working together, we can show policymakers what cooperatives can do to improve the lives of every American. Through our advocacy efforts, we can build a stronger, more inclusive economy. Just as a cooperative business thrives when members are engaged in its success, our attempts to build a better policy environment for cooperatives will succeed only if we actively participate in the policymaking process.

Doug O’Brien is President and CEO of NCBA CLUSA, where he works with the cooperative community, both domestically and internationally, to deepen its impact on the economy. Doug has been with NCBA CLUSA since 2016, when he joined the association as Executive Vice President of Programs. Previously, he led the work of the White House Rural Council and served in top positions at the U.S. Department of Agriculture’s Rural Development. Greg Irving is a Research Assistant at NCBA CLUSA.

©2019 CROPP COOPERATIVE | 19-12031

Learn more about our mission at

www.OrganicValley.coop

THE WITMER FAMILYRockingham County, VirginiaFARMER-OWNERS SINCE 2010

WHEREWHO

WHY

BEHIND YOUR FOOD

Not just the

http://reic.uwcc.wisc.edu/childcare/

Insights from ESOPs reveal the potential of employee ownership

A Path to Shared Prosperity 18 | THE COOPERATIVE BUSINESS JOURNAL

With growing wealth inequality in the U.S. and an increasingly fragmented relationship to the workplace driven by contingent and

contract work, it is critically important for individuals, families and communities that the rewards of work take center stage. >>

By Janet Boguslaw and Lisa Schur

< CLEAN Carwash is a worker-owned car wash cooperative in Los Angeles that prioritizes worker and environmental rights. Photo: Capital Impact Partners

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Insights from ESOPs reveal the potential of employee ownership

A Path to Shared Prosperity


In 2015, the W.K. Kellogg Foundation engaged the Institute for the Study of Employee Ownership and Profit Sharing at the Rutgers University School of Management and Labor Relations to conduct a qualitative study examining the potential impacts of employee ownership for low- and moderate-income employees and their families. Its purpose was to provide insight into the role of employee ownership in supporting employees’ asset/wealth accumulation and related issues of financial security, economic mobility, and family well-being. With a large research team, we conducted interviews with long-tenured employees having low- to moderate-incomes at companies with Employee Stock Ownership Plans (ESOPs).

ESOPs and worker cooperatives are similar in that both involve broad-based ownership of a firm by its workers. One difference is that in a cooperative,

company decisions and board elections are conducted on a one-person/one-vote basis, while in the typical ESOP workers do not elect the board and major decisions are conducted on a one-share/one-vote basis (although ESOPs can be set up to give one vote to each employee). Another difference is that funding for cooperatives typically comes from cooperative member savings, while funding for ESOPs is often borrowed from lenders, with the ESOP trust promising to repay the loan out of future earnings. The cooperative model is most frequently used to start new businesses, while ESOPs are generally used to buy out existing businesses (often from retiring owners). Given that both models involve broad-based ownership, and some ESOPs try to involve workers in decisions in order to create a greater sense of ownership, important lessons from our study of ESOPs have the potential to inform worker cooperatives.

The first national legislation to address worker cooperatives evens access to SBA loans, paving the way for more success stories like Opportunity Threads, an immigrant-owned textile co-op in North Carolina. Photo: Opportunity Threads


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As shared capital organizations, cooperatives and ESOPs can learn a lot from each other and, together, can fight wealth inequality.

Our study1 focused on interviewing women and people of color. In this article, we want to highlight three of our findings on the relationship of employee ownership to

1.) shared prosperity and wealth accumulation across race and gender categories,

2.) intergenerational transfers of wealth and wellbeing, and

3.) cooperation, participation and skill building.

The role of assets and ownership Why is asset building important? The reality and lived experience of expanding wealth inequality in the U.S. is well documented. Today, the top 10 percent of households own more wealth than the bottom 90 percent combined. Assets are an alternative term for wealth or the collective set of resources held, in both tangible and intangible forms, which can be leveraged or invested for economic stability, security and well-being. Wealth is not built through income alone. It is the product of equity built through home ownership. It is cash savings from earnings, profit sharing, gifts or inheritances, and holdings of stocks and bonds. It is ownership of vehicles, retirement accounts and businesses. It is education, job skills and experience, and access to opportunity. It is the product of good health and healthcare, social networks and support, and more. Since wealth consists of more than simply cash, income or stocks, we refer to all of these components of wealth as assets. The combination of resources that constitute a household’s assets enable individuals and families to move from just making ends meet to managing life’s challenges and being able to plan and invest in the future.

Shared prosperity and wealth accumulation across race and gender categories We compared the wealth of the individual workers in our sample to the wealth of single workers in national samples. This is an appropriate comparison because the data from our study are about individual workers’ 401(k) and ESOP accounts, thus we compare individual workers (our sample) with individual workers (national sample) in the same

1 Janet Boguslaw and Lisa Schur co-authored the report: Building the Assets of Low and Moderate Income Workers and Their Families: The Role of Employee Ownership. Institute for the Study of Employee Ownership and Profit Sharing. Rutgers Univer-sity School of Management and Labor Relations. March 2019 https://smlr.rutgers.edu/sites/default/files/rutgerskelloggreport_april2019.pdf

income categories. The individual earners we studied have much more total wealth through their ESOP and 401(k) accounts than single male and single female workers’ total wealth nationally. The comparisons are especially striking for workers of color, who generally tend to have lower wealth levels across the U.S. For instance, black women in our study had an average of over 275 times the wealth of black single women nationally. Still, in our study sample of ESOPs, black women have about one-fourth the average wealth of black men, white women and Latinx employees. All of these groups of employees have lower assets than do white men in our low- to moderate-income sample when considering both ESOP and 401(k) accounts, although they have higher average assets than single white men in the national sample. Employee ownership does not eliminate racial or gender wealth gaps, since ownership stakes are typically based on income that reflects racial and gender disparities. However, when compared to workers at traditional firms, women and people of color in employee-owned firms have significantly more assets.

A crucial point is that employee ownership wealth does not substitute for lower wages or other forms of wealth. The most recent research on this issue comes from Nancy Wiefek at the National Center for Employee Ownership’s study of the U.S. National Longitudinal Survey. This work provides evidence that young ESOP workers have 92 percent higher median wealth than their non-ESOP working peers. Importantly, it finds the ratio of household income to poverty levels is higher for young ESOP workers both overall and among single women, single women of color, workers with children age eight or under,


and those with less than $25,000 in wages. Young ESOP workers also tend to have separate additional diversified 401(k) retirement plans. And, the median wage income of low-income women (earning less than $30,000) in employee owned companies was $21,000 compared to $17,000 among low-income women who were not employee owners.

Intergenerational transfers of wealth and well-being ESOPs offer the opportunity for making intergenerational investments, creating opportunities for parents to help their children while still living, as well as potentially through the inheritance of ESOP values after death. They are also a form of life insurance, as a few workers we interviewed noted. If they should die before they retire, the ESOP value will be transferred to their families. Several mentioned the sense of security this provided them. ESOP accounts can also be drawn upon to reduce debt or cover unexpected economic shocks, as they

represent resources that are not income dependent. Among employees who reached the age or years of tenure at the firm when they became eligible to either borrow or draw upon their ESOP accounts, a number say this enabled them to spend on their families while still retaining resources for retirement security. They used ESOP accounts to pay for children’s college tuition, weddings and down payments on homes. Others say that they are planning, once retired, to use the ESOP for these purposes. Many report that they will be secure in retirement and will not have to draw on their children’s resources for security and well-being. Several of the interviewees talk about their hope that they will have some resources to pass on to their children or grandchildren when they die. Parental ESOP wealth transfers to children while living increase young and adult children’s security, investments and next-generation opportunities.

Cooperation, participation and skill building Employee ownership can help foster positive


Employee-owned since 1971, The Cheese Board Collective is part of the Arizmendi Association of Cooperatives. Photo: Around the World Documentary Series

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workplace relations and build employee skills. A study that reviewed results from 102 samples with over 56,000 firms found that there is a small but strongly significant link between employee ownership and better economic performance on average.2 The interviews provided a number of examples of how the ESOPs can create an ownership culture that encourages cooperation among employees. One woman said, “Things changed when the company became employee-owned. There is more of a sense of community,” while another said she feels “more secure at an employee-owned company… There is less conflict between employees… Management and co-workers care about me, not just as an employee, but as a person.”

Several employees gave specific examples of how the ESOP changed their views and behavior, such as a woman who said she told other workers not to be “so quick to FedEx everything” and another who said that people are more careful with company money “because it’s our ESOP dollars.”

National survey data show that employee owners are more likely than other workers to receive company-sponsored training—close to two-thirds (66 percent) of employee owners received company training in the past year compared to less than half (46 percent) of non-employee-owners, based on analysis of the 2014 and 2018 General Social Surveys. While ESOP companies vary, many of them provide opportunities for participation and training, such as financial education for understanding the ESOP model and company finances along with open book management.

One good example is a company that integrates work structure with workforce development. In this company, employee-owners at all levels are included in training and education programs for career advancement. Attendance at ESOP conferences is rotated to give everyone an opportunity to learn from them, and all employees are included in the annual business planning cycle when plants are shut down for a few days so that employees can help develop priorities and operational plans for the

2 O’Boyle, E. H., Patel, P. C., & Gonzalez‐Mulé, E. (2016). Employee ownership and firm performance: a meta‐analysis. Human Re-source Management Journal, 26(4), 425-448.

coming year. “I started here as a very shy person,” one employee said. But participation in leadership training, running meetings, attendance at ESOP conferences and the opportunity to be heard have given her the confidence to voice her views and lead others—skills she says are useful in her professional and personal life.

One worker put that spillover effect this way: “What I learned [at work] made it easier for me [to navigate daily life]—I felt more comfortable talking to my kids’ teachers, coaching my kids’ baseball team, dealing with the other parents, and just being more comfortable in my neighborhood.”

OUR REPORT IS BASED ON INTERVIEWS WITH 92 LOW- TO

MODERATE-INCOME EMPLOYEES.

72% had been at their company for at least 15 years

62% were women

48% were people of color

26% were women of color

8% had not graduated high school

50% had graduated high school or received a GED

32% had some college, vocational school or an associate’s degree

8% had a bachelor’s degree

$165,000 was the median ESOP account value (ranging from $15,000 to $6 million)

The 21 companies included 9 in manufacturing, 5 in engineering, 2 in healthcare, with the rest scattered across several industries. All of the companies are ESOPs.


Translating findings into action We learned a lot about strategies ESOPs can use to build assets for their low- to moderate-income workforce. While there is much more still to learn, we can begin to provide some direction. Our report details a number of key insights and possible suggestions about how to enhance the asset building opportunities from ESOPs from the point of view of different stakeholders. Several strategies can be particularly effective in building the assets of the low- to moderate-income workforce. These include the following:

• Provide financial literacy training and make linkages to personal family budgets This helps inform employees about the ESOP business model while helping transfer their new financial skills and knowledge to other contexts that may bolster personal asset development.

• Provide tuition support for both degree and non-degree courses Pay for tuition upfront and provide mentoring and support for success within the workplace. Engage more senior staff to coach or tutor employees for up to 2-3 hours per week in subject areas on company time. When needed, allow flexible scheduling so employees can take classes or prepare for exams. This saves personal budget assets and builds human capital.

• Adopt a more progressive ESOP share structure that ensures the lowest-paid employees receive a larger percentage of income share of ESOP value each year, consistent with pension law. This is one way to overcome some of the wealth inequality gap that continues even within ESOPs when share value is tied to income or earnings.

Public policy can also play an important role in advancing asset building through ESOPs. A variety of federal, state and local policies are designed to encourage employee ownership. Two of these are:

• The Main Street Employee Ownership Act of 2018 directs the Small Business Administration to support employee ownership in a variety of ways including loans, loan guarantees and technical assistance. This can help expand

the opportunities for employee ownership conversions that will benefit low- and moderate-income earners. It could also be used to provide workforce education and training for ownership.

• The Preferred Status Certification would allow women-owned, veteran-owned and minority-owned ESOPs to retain their preferred status certification because they are majority owned by an ESOP trust. Instead of viewing the trust as a legal entity and disqualifying an ESOP-owned company, certifying agencies could instead consider the identities of the ESOP participants in whose interest the trust owns those shares. This can help broaden access to asset building opportunities.

Finally, there are ways that other stakeholders—those self-identified and those we want to engage in this work—can support low- and moderate-income asset building through ESOPs. In our full report we talk about several stakeholders, but here will focus on two, philanthropy and community advocates:

• Philanthropy Large national philanthropies, along with their local family and community counterparts, can play an important role in three ways. First, they can spread knowledge about ESOPs to employers and community players. They can make opportunities for employee ownership more broadly visible and understood within communities where there remain existing privately-held companies—particularly in those communities where the firms employ significant numbers of women and/or people of color. Second, philanthropy might consider the development of an ESOP investment fund through a combination of philanthropic actors, or through a program-related investment model. The goal would be to increase the ease and accessibility of ESOP conversions from retiring business owners. Third, foundations can contribute to an education and training fund to help ESOPs structure the transition of their organizations in participatory ways, and to support new ownership training.

• Community Advocates Increasingly, community players are involved in finding ways to stem the


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tide of industry and job loss in communities. The more they proactively approach business owners and educate residents about the opportunities ESOPs present, the more likely that asset building opportunities will be retained or grow in their community. Community advocates may include employees, but it also means that Community Development Corporations (CDCs), Community Development Financial Institutions (CDFIs), Community Action Programs (CAPs), agencies, chambers of commerce, regional and economic development offices, and other local actors can become engaged. Labor unions and workers centers, too, are recognizing employee ownership as a path for enhancing worker empowerment and job security. Similar to the roles of philanthropy noted above, community players need to build awareness of employee ownership, and begin proactively educating their communities to develop an early warning system of businesses that may be likely to transition due to aging owners or other markers. They can also begin a process of new ownership training preparedness, similar to homeownership counseling, so that working people in communities are made aware of the steps and finances of such a transition. In this way both workers and businesses can act more proactively to retain the assets of the community.

A new frontier Our study provides a successful proof of concept and opens up a new frontier for fighting wealth inequality through employee ownership. It demonstrates that each of the key stakeholders—employees through education and investment, managers through organizational practices at the site of work, and the private and public sector through policy that affects investments and performance—together can produce productive and efficient workplaces while simultaneously building the asset wealth of low- and moderate-income earners.

Cooperatives and ESOPs as shared capital organizations can learn a lot from each other and, together, can fight wealth inequality. ESOPs provide an important path for workers—especially those who are low-income and low-skilled—to become owners without drawing on their own limited savings

or depleting low-income flows. Cooperatives are increasingly working to identify ways to preserve the assets of their potential members along similar lines. Both business models provide greater job stability and security to the workforce, and most examples of both provide greater opportunities for education and training targeted toward employee advancement and leadership than non-capital share enterprises. Cooperatives by structure can help reduce racial and ethnic wealth gaps more effectively than ESOPs, unless the latter are able to adjust the compensation formula, while both advance intergenerational transfers of wealth.

It is critical to note, in summary, that new structures of work and relations to the workplace do not preclude the opportunity for everyone to build wealth through work. Brick and mortar as well as gig-based businesses, service work and production can adopt the cooperative or ESOP business model. Work can and should ensure economic and social stability and greater opportunities and well-being for families. When work “works” for all employees, we have stronger, more stable, more secure and financially thriving communities.

Janet Boguslaw is Senior Lecturer and Senior Scientist, Institute on Assets and Social Policy, Heller School for Social Policy and Management, Brandeis University. She is also a Louis O. Kelso Fellow & Wawa Inc. Fellow, Institute for the Study of Employee Ownership and Profit Sharing at the Rutgers School of Management and Labor Relations, Rutgers University.

Lisa Schur is Professor and Chair, Department of Labor Studies and Employment Relations and the Program for Disability Research at Rutgers School of Management and Labor Relations, Rutgers University. She is also an Executive Fellow at The Institute for the Study of Employee Ownership and Profit Sharing at the Rutgers School of Management and Labor Relations, Rutgers University.

Work can and should ensure economic and social stability and greater opportunities and well-being for families.


Transformation toward a sustainable society, economy and natural environment is an urgent need within the U.S. and

around the globe. In our globalized society, acting local does not limit our impact to our own backyards. In some cases, cascading impact can be negative, but it can also be positive. The power in the purpose of cooperatives is the potential to have transformative local-to-global impact on the most pressing issues that affect all of us—in direct or indirect ways.

Cooperatives and the Sustainable Development Goals

By Karen Miner and Sonja Novkovic

POWER IN PURPOSE

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The United Nation’s Sustainable Development Goals are a powerful tool cooperatives can use to demonstrate their power in purpose. Graphic: United Nations


The United Nations Sustainable Development Goals (SDGs) require changes to business as usual, and while they are an excellent fit with the cooperative business model, existing cooperatives have not transformed sufficiently to meet these calls to action. If all corners of the cooperative sector were to use the SDG framework as a call to action, there is deep potential to create meaningful impact. Failing to show leadership in this area is a missed opportunity that will ultimately contribute to the continued degradation to social, economic and environmental systems within our communities.

The development process for the SDGs was initiated at the UN Conference on Sustainable Development (Rio+20) in Rio de Janeiro, Brazil in 2012.1 “Transforming Our World: The 2030 Agenda for Sustainable Development” was adopted in 2015 through a resolution at the UN General Assembly in New York.2 This 2030 Agenda established the 17 SDGs and related 169 targets. The aim of the SDGs is to address the most pressing contemporary issues of economic, social and environmental development—poverty, hunger, health, education, jobs, inequality and climate change, among others.

While the previous Millennium Development Goals (MDGs) and the SDGs both contain specific objectives, targets and indicators to track progress, the SDGs are more ambitious and include developing and developed countries in both the process of consultation and targets. It is a global effort to address global issues through partnerships and transformative action. The 17 interconnected goals address systemic issues facing the planet.3 Five fields (called the “5 P’s”) of critical importance recognized by the signatories of the SDGs are People, Planet, Prosperity, Peace and Partnerships.

1 The SDGs build upon the Millennium Development Goals (MDGs), in place between 2000-2015.2 A comprehensive timeline can be found here: https://sustainabledevelopment.un.org/sdgs3 https://www.un.org/sustainabledevelopment/sustainable-development-goals/4 UN global compact White paper 20145 R. Scheyvens, G. Banks and E. Hughes 2016 The Private Sector and the SDGs: The Need to Move Beyond ‘Business as Usual’.

Sustainable Development 24: 371–3826 E. Kumi,,A. Arhin and T. Yeboah 2014 Can post-2015 sustainable development goals survive neoliberalism? A critical examination

of the sustainable development–neoliberalism nexus in developing countries. Environment, d development and sustainability 16,3: 539–554

7 Van Vuuren, et al 2014. Pathways to achieve a set of ambitious global sustainability objectives by 2050: explorations using the IMAGE integrated assessment model. Technol. Forecast. Soc. ; UNRISD 2016

The consensus is that all stakeholders—governments, private sector and civil society organizations—need to contribute equally to the SDGs.4 While businesses are recognized to be the source of economic growth, employment and innovation, they are often at the root of environmental degradation and social inequity when they are driven purely by profit. Critics therefore debate whether businesses can truly contribute to the transformation of the global economy and society unless they first transform their business5 and deploy a different economic paradigm to replace neoliberal systems and policies.6 To that end, this paper offers a discussion about contribution toward SDGs by cooperatives as a distinct business form with dual socio-economic purpose.

Transformative changeSustainable Development Goal stakeholders acknowledge that marginal policy changes will not be enough for meaningful global impact; rather, what is needed to reach the targets are transformative long term changes.7 The UN’s efforts to deploy new approaches to development—in particular to engage the potential agents of transformative change—include the promotion and scaling up of the Social and Solidarity Economy (SSE).

“The forms of economic activity that make up the SSE generally acknowledge and apply a set of principles, norms and practices that seem particularly conducive to meeting peoples’ basic needs and promoting environmental protection, decent work, the equitable distribution of resources and profits, and democratic forms of governance. Such attributes stand in sharp contrast to ‘business as usual,’” the UN’s Peter Utting wrote in “Mainstreaming Social and Solidarity Economy: Opportunities and Risks for Policy Change.”

Power in Purpose

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Cooperative enterprises form the core of the social economy.8 Although all types of cooperatives are included in the SSE concept, we argue elsewhere9 that all cooperatives are not made equal: some (Type 1) are created to serve as agents for social and economic transformation and pursue explicit social, economic and/or environmental objectives; while others (Type 2) are motivated purely by increasing economic value to their members. For those in the latter category, a paradigm shift is needed to embrace the full potential of the cooperative business model and contribute to the pressing issues of our time.

All cooperatives are associations of members; as such, they fall under the umbrella of democratically governed and member-owned and -controlled enterprises.10 Utting’s assertion—that the SSE is about “reasserting social control over the economy by giving primacy to social and often environmental objectives above profits, emphasizing the place of ethics in economic activity and rethinking economic practice in terms of democratic self-management and active citizenship”—applies to all cooperatives that abide by the International Cooperative Alliance’s Statement of Cooperative Identity.

Cooperatives have the potential to instigate transformative change as they rest on a different (not-for-profit and people-centered) logic. Anchored in local communities, they operationalize ethical values such as self-help, equity and solidarity. They address the structural causes of inequality and social injustice, which are the root causes of contemporary development issues, rather than just treat the symptoms. However, like the SSE more generally, cooperatives are exposed to institutional barriers and isomorphism (the tendency of institutions that face similar conditions to develop

8 Social economy typically includes democratic organizations - cooperatives, mutuals and associations. The Solidarity economy represents a wider network of like-minded entities set up to transform the economy, including governments and NGOs besides the social economy actors. See Utting 2016 Mainstreaming Social and Solidarity Economy: Opportunities and Risks for Policy Change

9 Novkovic S. 2018 The impact of cooperatives: Transformative, or just business? The Cooperative Business Journal, Fall issue, Sep-tember, NCBA Washington DC.

10 It is less evident that members in cooperatives set up for financial gain pursue social change, although such change may be an outcome of the mode of governance. This is particularly true if applying cooperative values, such as equity, equality and solidarity, in the organizational design.

11 DiMaggio and Powell 1984 The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American sociological review 48 (2): 147-160.; Utting 2018 Achieving the Sustainable Development Goals through Social and Solidarity Economy: Incremental versus Transformative Change. UNRISD

12 Examples include credit unions, rural electric cooperatives, or organic food cooperatives.

similar processes or structures),11 thus curbing their full potential for social transformation.

Isomorphic tendencies are more pronounced in larger, more mature cooperatives, especially as the conditions for their initial need are no longer a driving force—e.g. those of socio-economic injustice or market failures. For example, cooperatives that formed as a response to a lack of access to goods or services may find themselves in competition with other types of enterprises years after their establishment.12 In order to serve their members in these new market conditions, cooperatives need to stay in touch with member and community needs and find purpose in protecting member vulnerabilities. Deep forms of member participation, engagement and social innovation are key elements of success in these efforts.

The SDG framework, targets and indicators can serve as a tool to reinvigorate the difference cooperatives make in their communities. Cooperatives not only contribute to SDGs, but also serve as a vehicle to achieve many of the goals. Historical examples abound: from the war-ravaged Emilia Romagna region in Italy that is currently one of the most developed regions in Europe to the Kerala state in India, Kumasi region in Ghana, Mondragon region in Spain, and Parana state in Brazil. With human dignity as their driving force, cooperatives have provided well-paying jobs, reduced income inequality, lifted people out of poverty, secured access to finance and energy sources, and provided healthcare and education. Access to cooperative finance is a critical element in the ability of cooperative networks to contribute to the sustainable development of entire regions. The role of credit unions should therefore not be understated.


It is easy to become overwhelmed by the magnitude of the Sustainable Development Goals. Efforts have been made, specific to cooperatives, to shed light on some of the areas where cooperatives can focus their impact. For example, the International Cooperative Alliance (ICA) launched Co-ops for 2030 in July 2016. Using the SDGs as a basis, the Co-ops for 2030 campaign determined four action areas viewed as most relevant to the cooperative model: eradicating poverty, improving access to basic goods and services, protecting the environment, and building a more sustainable food system. For cooperatives in the food and agricultural sector, the Food and Agriculture Organization of the United Nations (FAO) provides even more guidance.

This narrowing of focus into four key areas can give the impression that these are the only areas of work for cooperatives, but this list is not exhaustive: one can always revisit the 17 SDGs to determine other priority areas. It is not difficult to develop frameworks to guide specific sectors. As an example, a credit union leadership program has done just that.13

Credit unions as agents of community developmentCredit unions are income-pooling institutions. Under isomorphic pressures in mature financial markets, they are often perceived to be financial service providers like any other. Their historical role has been to pool community income, pool risks and invest in the real economy, therefore serving as vehicles for community development. As cooperatives, credit unions can play an important role in localizing the SDG implementation.

13 CanadaDE is an intensive leadership program, modeled after the U.S. Credit Union Development Education (DE) program active since 1982. The U.S. program is housed within the National Credit Union Foundation (NCFU). The CanadaDE program has fully integrated the UN SDGs throughout its curriculum.

14 https://www.ncuf.coop/how-we-help/de/credit-union-development-education-program.cmsx

However, we are seeing intense regulatory and competitive pressures on credit unions. These isomorphic pressures lead to weaker credit unions that may underperform in the delivery of community, economic and environmental impact.

To linger on the credit union model, the SDGs are a lens through which impact can be understood, implemented and measured. SDGs are specific issues that bring to light unmet needs and illustrate how impact is created and measured.

To illustrate this point, we draw attention to the Credit Union Development Education (DE) Program that has been running in the U.S. since 1982.14 This program is also active in Canada, the Caribbean, Africa, Europe and Asia. The program’s purpose and curriculum is framed by “development issues” language, and each arm is focused on the needs for development in the host countries or regions.

The Canadian version of the program (CanadaDE) is hosted at Saint Mary’s University and attracts an international audience typically comprised of staff and participants from the U.S., Canada, the Caribbean and Africa. The program curriculum starts with a foundation built on the cooperative enterprise model with an overlay of the SDGs. The use of the SDGs caters to credit unions, illustrating the fit across four

Power in Purpose

Certified Credit Union Development Educators (CUDEs) gather in Tampa, Florida to celebrate the 35th anniversary of the Credit Union Development Education (DE) Program. Photo: National Credit Union Foundation

FALL 2019 | 31

pillars—equitable access; economic empowerment; healthy environment, strong communities; and participation and inclusion. When studied, one is hard pressed to identify an SDG for which the cooperative model is not a good fit, and the use of these four pillars (while different from the ICA action areas) resonates with cooperative financial institutions. Furthermore, while some may be given greater focus, none of the SDGs are excluded in the DE program.

Use of the SDGs links easily to tangible, operational examples. For example, in credit unions, financial literacy is an imperative to manage a credit union’s risk profile but also to counter low levels of financial literacy, high personal debt and bankruptcy. This has a direct link to SDG 4 (quality education) as well as SDG 8 (decent work and economic growth). Indirect links to other SDGs can be identified, as financial security has cascading benefits tied to poverty, hunger, health and well-being.

While the DE leadership program was designed for delivery to the credit union sector, the content fits all cooperative sectors. The program’s purpose of achieving a just and equitable social, economic and environmental systems is the model that we must all be working within to maximize the development potential of cooperative enterprise.

The following examples illustrate this deep connection between the cooperative purpose and the SDGs that the DE program unpacks.

Cooperation among cooperativesLike all other cooperatives, credit unions subscribe to the 7 Cooperative Principles, including Principle #6, “Cooperation Among Cooperatives,” but these alliances do not come naturally to all credit unions. One notable example of a cooperative initiated by a credit union is the Growing Our Future Childcare Co-operative in Newfoundland, Canada.15 This cooperative’s creation story is the direct result of deliberate changes within Leading Edge Credit Union

15 Growing Our Future Childcare Co-operative Video - https://youtu.be/uDIl6dWFYhg16 Cory Munden (CEO) has been with Leading Edge Credit Union for 20 years. In 2014, he started his Master of Management,

Co-operatives and Credit Unions (Saint Mary’s University). And, in 2017, he graduated from the CanadaDE program, along with his Board Chair. Since then, Cory has gone on to complete the International Credit Union Development Education (I-CUDE) designation, awarded by the World Council of Credit Unions.

over the past five years. Under the CEO’s leadership, the credit union has shifted toward a values-based financial cooperative.16 This transformation was initiated and continues to be fueled by a belief in the power of cooperative education (Principle #5) and deep implementation of that education at all levels of the organization.

Prior to the launch of the childcare co-op, Leading Edge Credit Union was the only cooperative in town. This new cooperative now provides daycare services to 40 families (including low-income families) and employs 11 people. When compared to the SDGs, impacts can be demonstrated clearly across six goal areas: no poverty, good

health and well-being, quality education, decent work and economic growth, sustainable cities and communities, and gender equality. In rural communities like Newfoundland, the benefits of a new daycare cannot be overstated. Growing Our Future Childcare Co-operative is building community cohesion, supporting future generations, and fueling the region’s economic development.

A recent focus on Cooperative Principle #6 has led the Leading Edge Credit Union to help establish Newfoundland’s second co-op: The Growing our Future Childcare Co-operative. Photo: Leading Edge Credit Union


Impact in purposeEstablished in 2009, the Global Alliance for Banking on Values (GABV) is a network of values-based banks committed to “using finance to deliver sustainable economic, social and environmental development.”17 With such a focus, the work of this network is closely aligned with the SDG framework and cooperative financial institutions. In the U.S., four of the nine members are cooperatives: Missoula Federal Credit

17 www.gabv.org18 Member list as of May 2019 - http://www.gabv.org/wp-content/uploads/List-of-the-GABV-Member-Banks-1.pdf

Union, National Cooperative Bank, Verity Credit Union and Vermont State Employees Credit Union.18 The triple bottom line (people, planet and profits) and real economy focus of the GABV makes its framework a strong proxy for the SDGs.

Vancity Credit Union—a Canadian member of the GABV—makes the connection between impact and the SDGs explicit in their annual report. This approach is a quantitative illustration of impact. “Vancity’s values-based banking model is aligned with the United Nations’ Sustainable Development Goals to end poverty, protect the planet and ensure prosperity for all by 2030,” their 2018 Annual Report states. Based on methodology developed by the Global Alliance for Banking on Values, the accompanying table shows how the credit union’s assets support each of those goals.

Furthermore, Vancity has determined that their work aligns most closely to seven of the SDGs. Not all of the impact is about the asset base of the credit union. Instead, it also points to the fundamental people-centered aspect of the cooperative enterprise model through such examples as commitments to living wage, diversity and inclusion.

Closer to Washington, DC, Carla Decker, president and CEO of DC Credit Union, is also a champion of the SDGs. In part, this is a result of her longstanding involvement in the DE programs in the U.S., the Caribbean and Canada.

“Our mission of financial inclusion may not be self-attributed as an effort to further the SDGs, but you will see the direct impacts,” Decker said—especially in goals #1 No Poverty, #5 Decent Work & Economic Growth, #10 Reduced Inequalities, #11 Sustainable Cities and Communities, and #17 Partnerships. Contributions are also being made to #4 Quality Education, #12 Responsible Consumption and Production, and #16 Peace, Justice and Strong Institutions.

Decker’s responses on SDG contributions are a result of a deep connection with the cooperative

Power in Purpose

An excerpt from Vancity Credit Union’s Annual Report. Graphic: Vancity Credit Union

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business model. A case study on DC Credit Union written by Margaret Lund as part of the ABCs of Cooperative Impact project19 and immediately following this article, is a testament to the deep alignment both within that project’s areas of impact, but also cooperative values and principles. Therefore, linking that impact to the SDGs is a natural extension. DC Credit Union illustrates the importance of going deep and being authentic in all aspects of how a cooperative is governed and managed over the long-term.

Power in purposeCooperatives are self-help organizations that address their members’ needs, making them a natural vehicle for sustainable development. They address market access, scale up production, provide decent jobs, create community-owned renewable energy and more—in part due to their democratic governance. It is imperative that cooperatives stay in touch with their members’ changing needs. They must also address external conditions such as climate change, demographic shifts and migration. The UN Sustainable Development Goals are a powerful tool cooperatives can use to demonstrate their power in purpose.

Sonja Novkovic is a Professor of Economics and Academic Director of the International Centre for Co-operative Management at Saint Mary’s University in Halifax, Canada. She is a member of NCBA CLUSA’s Council of Cooperative Economists and a regular contributor to the Cooperative Business Journal.

Karen Miner is the Managing Director of the International Centre for Co-operative Management, where she works with cooperative and credit union professionals from around the world.

19 ABCs of Cooperative Impact measures impact across these areas: access, business sustainability, community commitment, democratic governance and empowerment, equity, diversity and inclusion, financial security and advancement for workers, and growth. https://ncbaclusa.coop/resources/abcs-of- cooperative-impact/

Vancity’s work aligns most closely to seven of the Sustainable Development Goals. Graphic: Vancity Credit Union


DC Credit Union, Washington, DCBy Margaret Lund

“People over products is what makes us different,” the DC Credit Union website proudly and succinctly proclaims, along with the belief—unorthodox in many American financial circles—that “financial equity is a right, not a privilege.”

This admirable and innovative financial institution began in the same way as many local credit unions, with an employer-based field of membership. Founded in 1954 to serve employees of the District of Columbia, DC Credit Union has since expanded to include residents of several core DC neighborhoods, and members of a variety of community-based organizations. With $63 million in assets and 11,000 members, DC Credit Union is still on the small side for a credit union, but it packs a big punch.

DC Credit union is a U.S. Department of Treasury certified Community Development Financial Institution (CDFI), one of only two such credit unions in the District, and also a recognized Minority Depository Institution (MDI). DC Credit Union has always had a focus on serving the financial needs of its primarily African American base of low- and middle-income public sector workers, including the basic “bread and butter” services familiar to all employer-based credit unions, such as checking accounts, car loans, CDs and specialized savings accounts for holidays, education and other needs. Over the past 20 years, however, the credit union has expanded its vision to include a broad range of community-based products and services, and embraced an increasingly diverse field of membership. In the process, they have become a leader and exemplar of creative and inclusive finance.

This expansion of focus and activities began modestly enough, when the credit union was contacted by its regulatory agency, the NCUA, to see if it could possibly take over the charter of a small, struggling, Latino-based

credit union serving the Mount Pleasant neighborhood of Washington, DC. With its strong balance sheet and stable history, DC Credit Union had the wherewithal to make the move, but credit union leaders were initially unsure of the mission fit. On the surface, the two institutions did not appear to have much in common: DC Credit Union has an employer-based field of membership, not a geographic one, and its membership was primarily African American, not Hispanic. The credit union had few Spanish-speaking staff, and no specialized services for immigrants. Many of the new credit union members would be undocumented, while DCCU’s existing membership included many in law enforcement. The two seemed worlds apart.

Yet a visionary group of credit union board members saw something more. They saw a future of growth beyond the limitations of a finite field of District employees and, more importantly, they saw an affinity between two groups of minority District residents, along with a common need for a variety of more inclusive financial products and services that was not being met by conventional financial institutions. Their vision attracted others to the board who were able to look beyond what was, to what could be. The two groups shared the same space, and had many common experiences, so why not work together? The merger was a success, and DC Credit Union has never looked back.

Washington, DC is beautiful city of green spaces and cultural jewels. But this attractive exterior masks a

Power in PurposeCASE STUDY

DC Credit Union’s ACCESO addresses the otherwise unmet financial needs of Latino immigrants in the District with a multi-cultural, multi-lingual community branch. Photo: DC Credit Union

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wide gap in income disparities and pockets of deep poverty. DC also has a high degree of “unbanked” residents, with a rate that is 20 percent above the national average. DC Credit Union has responded with a focus on financial access, and on basic services that are designed to bring those who are marginalized into the financial mainstream.

Some differences are simple, including having branches with hours designed with working people in mind, and a fully bi-lingual staff in the Mount Pleasant branch. Others are more complex. Like many progressive credit unions, DC Credit Union offers accounts that do not require social security numbers to provide non-citizens with a safe and convenient place to keep and build assets. They have found this approach is not only useful for immigrants, but also for the District’s young people, some of whom do not have a responsible adult in their lives to act as custodian for their accounts as minors, as required by most financial institutions. Working with the DC government, DCCU offers all participants in the District’s youth summer employment program automatic direct deposit into their own non-custodial account, coupled with education in basic budgeting and other useful skills. While many banks push credit cards on young people regardless of their ability to manage debt, DC Credit Union is much more circumspect, emphasizing core savings and building lifetime financial skills over credit for this vulnerable population.

A key factor in economic disparities in our country is not only differences in income between racial groups, but the profound and growing differences in wealth. According to data compiled by the Urban Institute, the median family wealth for a white family in 2016 was over $170,000—a rate ten times more than the modest $17,409 average for African American families and eight times more than the $20,920 median for Hispanic families.1 To promote racial equity in this vital sphere, DC Credit Union focuses products and services on strategies that build family assets. This includes products such as affordable mortgages and small business loans, but also a host of supportive educational tools and resources, including guides and classes on topics like how to rebuild credit, save for a major purchase, and protect yourself from fraud. Just as importantly, it includes a dedicated staff that often know

1 The Urban Institute, http://apps.urban.org/features/wealth-inequality-charts/ accessed December 11, 2018.

members by name, and can help to access opportunities like free tax preparations services, or navigate the unfamiliar world of finance.

Recognizing that their membership also may not have significant assets to collateralize a loan, DCCU also offers a range of creative unsecured loans for situations and needs that are common for members. Part of the democratic and empowering nature of cooperatives is that they meet their members where they are at, and provide the right kind of tools to help people to bring themselves to a different place. For qualified DCCU members seeking citizenship, this might mean an unsecured “citizenship” loan to help front the costs of legal services for immigrants working with approved partner nonprofits. For a faith-based neighborhood civic club, it might mean a small loan to cover seasonal expenses before revenue can be raised. For a prospective homeowner, it might mean unsecured funds for down payment costs or a loan to consolidate existing credit into a more manageable structure. Building upon relationships and the existing civic infrastructure of the community through the city, religious institutions and local nonprofits, DC Credit Union is able to offer these unsecured loans without undue financial risk to the institution.

By focusing on commonalities rather than differences, DC Credit Union has built a powerful model for simultaneously pursuing both growth and inclusivity. Through the addition of other small minority-focused credit unions over the years, DCCU has embraced a diverse membership base and helped to create a stable and prosperous foundation for all to pursue their needs and aspirations, whether shared among many or distinctive to a particular segment of the group. Alone, small credit unions often struggle to provide even the most basic array of financial products. Joined together in a visionary, creative and responsive institution like DC Credit Union, however, vulnerable populations can change their circumstances, build on opportunities and create their own tailored tools and resources through the power of their common cooperative action. “Life throws challenges at each of us” the DC Credit union website reminds its members. But “we believe that where you start shouldn’t determine where you end up.”


Electric co-op technology innovations are reinventing rural America

REVOLUTIONA

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By Russell Tucker, Joseph Goodenbery and Michael Leitman1

Technology innovation and deployment are essential to rural America. In agriculture, manufacturing and commerce, it raises productivity and enhances the competitiveness of rural businesses. Technology innovation and deployment also helps ensure an affordable and reliable electricity supply to

support the rural economy. From large centralized electric generating stations to community solar arrays and battery storage, many electric cooperatives are providing the technology investments and operational expertise to power rural America and, in turn, create economic benefits locally and throughout the economy.

1 This article is part of a continuing series about electric co-ops and their positive impacts. See “Electric Co-ops Powered America: What’s the Next Energy Revolution?” Cooperative Business Journal, Fall 2017 and “The Digital Divide: Electric Co-ops Can Provide Last-Mile Broadband to Rural America,” Cooperative Business Journal, Fall 2018.

Phot

o: N

RECA


Meeting the evolving needs of consumers In the mid-to-late 1930s, the electric cooperative movement gained traction as members of rural communities formed more than 500 electric co-ops. They served sparsely populated areas that were deemed unprofitable to reach by other utilities. In these early years, co-op members often took it upon themselves to perform the challenging tasks of setting poles, running lines and connecting neighbors to the grid. Their efforts paved the way for deployment of lighting for work and study after dark, electric pumps to provide running water, and washing machines that “made washday almost fun.”1

Over time, through innovation and technology deployment, electric cooperatives became specialists at providing reliable and affordable power to low-population service areas across rural America. Today, 8312 electric distribution cooperatives provide service to one in eight Americans over 2.6 million miles of electric distribution lines.

Initially, rural electrification involved purchasing electric generating supplies from facilities owned by the federal government or neighboring utilities. However, as new electric cooperatives were formed and electricity demand growth soared, new electric

1 “Rural Lines: The Story of Cooperative Rural Electrification,” U.S. Rural Electrification Administration, 1972, p 22.2 This includes rural public and mutual utilities that are members of NRECA. 3 “Rural Lines: The Story of Cooperative Rural Electrification,” p. 25.4 “Rural Lines: The Story of Cooperative Rural Electrification,” p. 27.

generating supply was difficult to secure. New supplies from federal facilities were limited and neighboring utilities often would not commit to selling electric power to meet the growing electricity requirements of electric cooperatives. While some co-ops had small generators to meet their emergency needs, these were inefficient and expensive to operate. The solution lay in larger, state-of-the-art steam-powered electric generating plants, which achieved low operating costs through improved economies of scale. But these plants were costly, and their electric output far exceeded the requirements of any single distribution co-op.

Cooperatives innovatively responded to this challenge by extending the electric cooperative model upstream to electric generation. Electric distribution cooperatives across the rural landscape collectively banded together to create “federated” electric generation and transmission co-ops (G&Ts). These new organizations supplied wholesale power to their distribution co-op members, with boards of directors made up of representatives from each of these members.3 This scaling-up allowed the G&Ts and their members to plan and finance state-of-the-art power plants and also facilitated power purchase negotiations.

This business model where geographically dispersed electric distribution co-ops received power largely from centralized generating plants created new challenges. Electricity line losses are substantial when transmitting electricity over long distances at low voltages, making long distance transmission impractical. The solution was the deployment of high voltage electric transmission. G&Ts constructed electric transmission and interconnected these systems with those owned by other utilities and federal agencies across broad geographic spans. They also interconnected with neighboring power companies and entered into pooling arrangements that improved the reliability of their own operations while similarly benefiting metropolitan areas of the country.4

A Solar Revolution

More than 450 electric distribution co-ops include solar energy in their supply mix, either directly or in partnership with their generation and transmission co-op. Electric cooperatives lead the utility sector in community solar, with more than 200 distribution co-ops offering consumer members access to solar energy through a community solar program.

FALL 2019 | 39

Today, 62 G&T cooperatives provide wholesale power to distribution co-ops by generating electricity at their own facilities or by purchasing power on behalf of their distribution members. Collectively, G&Ts have made substantial investments in more than 65,000 megawatts of electric generating capacity, generating about 5 percent of the nation’s electricity across nearly 71,000 miles of transmission lines.

A solar revolution in rural AmericaTwentieth century technology motivated investments in large-scale centralized generating stations and high voltage transmission to meet the increasing electricity needs of rural America. However, today electricity demand growth is increasingly being met through investments in renewable generating resources often sited within the low-voltage distribution grid. Many of America’s electric cooperatives are expanding the nation’s solar power footprint, motivated by a desire to enhance member satisfaction by meeting increased demand for solar

5 DOE provided $3.6 million in research grants, matched by a $1.2 million cost share for NRECA, the National Rural Utility Cooperative Finance Corporation, Federated Rural Electric Insurance Exchange, PowerSecure Solar LLC, and 17 participating electric cooperatives.

offerings and made possible by a decline in the cost of installed solar.

In 2013, as part of the U.S. Department of Energy (DOE)’s SunShot Initiative, the National Rural Electric Cooperative Association (NRECA) launched the Solar Utility Network Deployment Acceleration (SUNDA) project in collaboration with electric co-ops and other partners to demonstrate the potential for solar in rural America.5 The project was structured as a knowledge accelerator for co-ops, utilizing an iterative and learning-by-doing process to develop photovoltaic (PV) engineering designs, streamlined business models, and effective financing and tax structures. The experiences of 17 electric co-ops in the SUNDA program provided guidance to make solar projects more prudent and accelerate development across the cooperative network. Today, more than 450 electric distribution co-ops provide solar offerings to their members, either directly or in partnership with their G&T.

Source: NRECA

EARLY SOLAR ADOPTERS PAVE THE WAYThe experiences of 17 electric cooperatives provide guidance for the co-op network; more than 400 co-ops now have a solar energy option.

Cooperativesparticipating inSUNDA (2013)Cooperatives withsolar o�erings forconsumer members (2018)

Seventeen early adapters participated in the Solar Utility Network Deployment Acceleration (SUNDA) project to demonstrate the potential for solar in rural America. Graphic: NRECA


An important innovation from the SUNDA project was the development of community solar programs, which offer all interested consumer-members an option to participate in solar energy, including renters and low- and moderate-income consumers who might not otherwise have access. The community solar model aligns well with the co-op business model. It allows individual households to purchase or lease solar panels or to purchase a share of the output of a solar photovoltaic project. Larger projects benefit from economies of scale in construction and co-ops can size and price their programs to fit member demand. Today, cooperatives lead the utility sector in the penetration of community solar with more than 200 distribution co-ops across more than 30 states

6 Powering America: The Economic and Workforce Contributions of the U.S. Electric Industry, M.J. Bradley & Associates, 2017, p.6.7 Net utility plant refers to the non-depreciated fixed assets of the co-ops. Total distribution cooperative and G&T cooperative net

utility plant investment ($133 billion) divided by the number of consumer-members (20 million).8 See “The Economic Impact of America’s Electric Cooperatives,” FTI Consulting, March 2019.

offering a community solar program directly or in cooperation with their G&T.

The economic impact of investment in technology innovation and deploymentEnergy technology innovation and deployment is capital intensive and the electric industry is regarded as the most capital-intensive U.S. industry.6 Electric co-ops have deployed substantial capital in meeting the electricity requirements of rural America. In 2017, net utility plant across both distribution and G&T cooperatives totaled more than $133 billion, an average of $6,650 per consumer-member.7

The financial management associated with these investments—combined with ensuring safe, affordable and reliable electric operations—pose important fiduciary responsibilities for a cooperative’s leadership. More than 7,000 members from local communities serve on their electric cooperative boards. Director education and training programs, experience and stability on the board, and appropriate director compensation are critical to assuring the dependable operations that have allowed electric co-ops to become central to the social fabric of the communities they serve.

Technology innovation and deployment also requires a capable and technically skilled workforce. Electric co-ops fulfill their mission through the direct employment of more than 68,000 people. The job classification with the largest number of co-op employees is electric lineworkers. These jobs involve extensive safety training and project-management skills. Lineworker wages average about $35 per hour plus health and retirement benefits. Moreover, co-ops directly support the employment of more than 97,000 contractors who provide various services including vegetation management and construction services.8

Direct co-op jobs, spending and investments create positive economic effects, which ripple throughout the economy as materials are purchased from suppliers and as employees of co-ops and their

Community solar programs allow all interested consumer-members to participate in solar energy, including renters and low- and moderate-income consumers who might not otherwise have access. Graphic: NRECA

A Solar Revolution

FALL 2019 | 41

suppliers spend their income.9 NRECA and the National Rural Utilities Cooperative Finance Corporation recently commissioned a study of the economic value of electric cooperatives across their communities, regions and the country. Considering the full range of effects, America’s electric cooperatives annually contribute $88 billion in value added gross domestic product (GDP) across the U.S. economy; $40 billion in labor income; $22 billion in federal, state and local tax revenues; and support an average of nearly 612,000 U.S. jobs each year.10

Russell Tucker is Chief Economist at the National Rural Electric Cooperative Association (NRECA), where he provides economic analysis to help America’s Electric Cooperatives adapt and thrive in today’s challenging environment. Joseph Goodenbery is Lead Economist at NRECA, where he provides economic modeling and analysis of issues that impact electric cooperatives. Michael Leitman is Senior Analyst

9 While direct economic effects are computed from direct co-op employment and expenditures, “indirect” effects are computed throughout the co-op’s industrial supply chain and the “induced” effects result from consumer expenditures by the employees of co-ops and their supplier firms.

10 “The Economic Impact of America’s Electric Cooperatives.”

of Economics and Business and monitors NRECA’s members’ increasing portfolio of renewable investments.

The Spartan Solar Array in Cadillac, Michigan. Photo: NRECA

Electric cooperatives nationwide are creating economic benefits for rural America. Graphic: NRECA


Bringing the Benefits of Solar to Low-Income Households*

By Eric P. Cody

Low-income households typically spend a disproportionate share of their monthly income on energy; many also lack the ability to invest in energy efficiency improvements and renewable energy systems. In May 2018, Cherryland Electric Cooperative—serving 35,000 members across six northwest Michigan counties—began participating in a low-income solar pilot program that seeks to reduce the energy costs for these households by combining weatherization and clean energy initiatives. “Filling an unmet need for a segment of our membership that deserves the same treatment as any other member is one more step towards ‘walking’ our leadership ‘talk,’” says Cherryland General Manger Tony Anderson.

The program is designed to educate, influence and ultimately enable low-income households to actively manage and control their energy budgets. Under this innovative program, 50 low-income households receive the benefit of electricity from nine solar panels from the Spartan Solar Array, a community solar project that is a partnership between Cherryland’s G&T, Wolverine Power Cooperative, and its distribution member cooperatives. Cherryland applies a 10¢ credit for each kilowatt-hour produced by the panels—the same amount offered to all community solar participants. Typical annual bill credits are expected to be around $350 per household over the 15-year enrollment period.

Weatherization is another important facet of the program. To be considered for the solar benefit, households must have had weatherization measures installed or an energy audit performed indicating that no additional measures would be cost effective. Typical

energy savings from weatherization range from 15 to 40 percent and are essential to enable households to gain more control over their energy spending. Overall expected savings from the solar credits are expected to increase total savings to participating households by as much as 70 percent.

Upfront program costs were $270,000. The Michigan Agency for Energy (MAE) provided $80,000, with Cherryland funding the remaining $190,000. These funds were used to acquire the 15-year community solar panel leases for the program participants. The pilot is being delivered jointly by the cooperative and the Northwest Michigan Community Action Agency (NMCAA). NMCAA provides the weatherization programs and manages income qualification, while solar participation and program tracking are managed by Cherryland. Lost revenues to Cherryland are projected at $17,500 annually, but this will be partially offset by Cherryland’s reduced electricity purchases from its wholesale supplier.

*This case study is an excerpt of Eric P. Cody, “Bringing the Benefits of Solar to Low-Income Households: The Case of Cherryland Electric Cooperative, NRECA, June 2019.

A Solar Revolution

CASE STUDY

Cherryland Electric Cooperative serves 35,000 members across six northwest Michigan counties. Graphic: NRECA

CherrylandElectric

Cooperative

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Violetta Nafpaktiti, Managing Director of DotCoop Enterprises, raises awareness of the .coop domain at last year’s Co-op IMPACT Conference. Photo: NCBA CLUSA

By Lance Wolak

With its joint ownership of the .coop domain registry, NCBA CLUSA enables cooperatives to elevate their identity online and to participate and thrive in the digital

economy. NCBA CLUSA’s support of cooperatives in the digital marketplace is part of its work to build a more inclusive economy—empowering people to have a greater say in their futures and more equitable access to economic opportunities.

The early days of .coop domainsLaunched in 2001, .coop was created as the exclusive domain for cooperatives and cooperative organizations that are guided by the 7 Cooperative Principles. DotCooperation, LLC became the manager of the .coop domain, and has defined and implemented the domain’s eligibility policies and the cooperative verification process.

Early in its life, the domain registry began offering .coop domains for registration through a small collection of domain name registrars (retail organizations) and through its subsidiary retail business Domains.coop. While its closely-aligned Domains.coop registrar captured a large percentage of the early .coop domain registrations, it was clear to the domain registry DotCooperation that it needed to build a global registrar

channel in order to provide local support to cooperatives that reside in all parts of the world, across many time zones, speaking many different languages, and using many different currencies.

Looking ahead with .coopThe .coop domain is now available and supported by over 45 domain name registrars, offering domain

Be part of the growing impact of the .coop domain in the global, digital economy



registration and traditional services like website hosting, email hosting and more, along with customer support native to all regions of the world. For the cooperative community, these registrars also offer easy-to-use website builders, e-commerce toolkits, online payment processing, secure network connections, and more.

DotCooperation continues to on-board additional registrars to bolster its global support network. As the importance of participating in the digital economy has increased, the localized, expert resources for the .coop domain are now in place to support the global cooperative community.

Become a verified cooperative with a .coop domain nameThe .coop domain is available exclusively to organizations that are guided by 7 Cooperative Principles, as outlined by the International Cooperative Alliance. Your “verified” .coop domain reminds the world that your co-op is a bona fide member of the trusted global cooperative community.

The global network of .coop domain name registrars offer the .coop domain name at a price far lower than

the alternative of using a generic .com domain name with an organization verification certificate (SSL OV). Grassroots cooperatives benefit greatly from their .coop verification status, raising public awareness of their identify. Even a newly established cooperative with a .coop domain can leap ahead with its business, elevated by its identity as a verified cooperative.

Using your .coop domain Cooperatives regularly choose a .coop domain name to headline their primary website. This gives them the best choice of domain names to select from. A .coop domain name also immediately identifies them as a cooperative—whether their domain name is seen in advertising, business correspondence, or in web searches. Cooperatives that may have initially built their website on a generic domain name can later add a .coop domain name as an additional address for the same website.

In addition to your cooperative’s primary website, there are many other uses for a .coop domain name:

• Use .coop domains for your other websites, such as member newsletters, community e-magazines, event websites, a partner portal, news blog, etc.

• Use a .coop domain for email addresses to immediately identify you and your colleagues as members of a cooperative in your day-to-day communications.

• A new .coop domain name can be set up to forward viewers to a specific section of your existing website, as a useful shortcut.

Elevate your identityEvery .coop domain name that you register and use reinforces the public’s view that verified cooperatives can be found online with this domain address. Become more visible to the public—start telling your story on a .coop website today. Visit identity.coop to learn more.

The .coop domain is managed by DotCooperation, LLC, which is jointly owned by NCBA CLUSA and the International Cooperative Alliance.

Did you know?• Aciamericas.coop, first registered in June 2001, is the

longest in use .coop domain. This domain name belongs to ACI Americas, the International Cooperative Alliance’s regional office in San Jose, Costa Rica.

• NCBA CLUSA registered two .coop domains in July 2001, making them the longest in use in North America.

• Cooperatives located across 79 countries are using the .coop domain name to elevate their co-op identity.

• There are more than 45 .coop domain name registrars offering .coop domains and related web products, providing customer support services in the .coop global support network.


www.coopfestival.coop

2 Days

20,000 Attendees

40+ Exhibitors

Will you be there?

October 10–11, 2020

Harrisburg, PA | Denver, CO | Billings, MT | Madison, WI Maple Grove, MN | Arlington, VA | Olympia, WA | Sacramento, CA

N a t i o n a l C o o p e r a t i v e B u s i n e s s A s s o c i a t i o n C L U S A I n t e r n a t i o n a l | F a l l 2 0 1 9

The Next Economy

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