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Co-operation Among Co-operatives in a Policy Governance
Context
Co-operation Among Co-operatives in a Policy Governance
Context2009 CCMA Conference
Pittsburgh, PA • 6/12/09
Erbin Crowell • Cooperative Fund of New
EnglandDon Kreis • Hanover Consumer Co-operative
Society
2009 CCMA ConferencePittsburgh, PA • 6/12/09
Erbin Crowell • Cooperative Fund of New
EnglandDon Kreis • Hanover Consumer Co-operative
Society
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Our BackgroundsOur Backgrounds
Board of Hanover Consumer Co-op since 2003, president ’06 to ’09.
Board of Cooperative Fund of New England since 2007.
Served on 3 other non-profit boards. Ass’t Professor, Vermont Law School. First job @ co-op – Associated Press. Member of 8 co-ops
Board of Hanover Consumer Co-op since 2003, president ’06 to ’09.
Board of Cooperative Fund of New England since 2007.
Served on 3 other non-profit boards. Ass’t Professor, Vermont Law School. First job @ co-op – Associated Press. Member of 8 co-ops
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Our BackgroundsOur Backgrounds
10+ Years with Equal Exchange Master in Management: Co-operatives &
Credit Unions, St. Mary’s University National Co-op Business Association 5 food co-ops, 3 credit unions, 1
worker/consumer co-op Co-operative Fund of New England / Co-
operative Capital Fund Neighboring Food Co-ops Association &
Valley Alliance of Worker Co-ops
10+ Years with Equal Exchange Master in Management: Co-operatives &
Credit Unions, St. Mary’s University National Co-op Business Association 5 food co-ops, 3 credit unions, 1
worker/consumer co-op Co-operative Fund of New England / Co-
operative Capital Fund Neighboring Food Co-ops Association &
Valley Alliance of Worker Co-ops
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OutlineOutline
Our context The sixth principle of co-operation Why co-operate? Co-operative economies The context of policy governance Model policies for food co-ops Monitoring for effective impact Discussion
Our context The sixth principle of co-operation Why co-operate? Co-operative economies The context of policy governance Model policies for food co-ops Monitoring for effective impact Discussion
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Our ContextOur Context
Crisis of Global Economic System
Unemployment & Instability Dramatic Shifts in Wealth Diminished Democracy Corporate Influence Instability & Change
Crisis of Global Economic System
Unemployment & Instability Dramatic Shifts in Wealth Diminished Democracy Corporate Influence Instability & Change
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Alternative VisionsAlternative Visions
Desire for Economic Alternatives
Social Entrepreneurship Demands for Greater Equity Community Democracy Grassroots Engagement Change as an Opportunity
Desire for Economic Alternatives
Social Entrepreneurship Demands for Greater Equity Community Democracy Grassroots Engagement Change as an Opportunity
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Co-operative HistoryCo-operative History
1800s: England’s Industrial Revolution…
Dislocation of local economies Dramatic shifts in structure of
labor Concentration of wealth & power Poor working conditions Limited democracy Globalization
1800s: England’s Industrial Revolution…
Dislocation of local economies Dramatic shifts in structure of
labor Concentration of wealth & power Poor working conditions Limited democracy Globalization
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Early Co-operatorsEarly Co-operators Robert Owen (1771–
1858) “The lowest stage of humanity
is experienced when the individual must labour for a small pittance of wages from others.”
William King (1786–1865) “Knowledge and union are
power. Power, directed by knowledge is happiness. Happiness is the end of creation.”
Robert Owen (1771–1858) “The lowest stage of humanity
is experienced when the individual must labour for a small pittance of wages from others.”
William King (1786–1865) “Knowledge and union are
power. Power, directed by knowledge is happiness. Happiness is the end of creation.”
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Rochdale Equitable Pioneers
Rochdale Equitable Pioneers Founded in 1844 Group of Weavers,
Unionists and other Community Activists
Established a Member-Owned Grocery Store
Basic Principles for Modern Movement
Founded in 1844 Group of Weavers,
Unionists and other Community Activists
Established a Member-Owned Grocery Store
Basic Principles for Modern Movement
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An Integrated Co-op Economy
An Integrated Co-op Economy Begin with a store Accumulate shared
capital Seed new co-ops:
worker, production, farming, housing, etc.
Stores as leverage for new enterprises
Integrated co-operative economy as goal
Begin with a store Accumulate shared
capital Seed new co-ops:
worker, production, farming, housing, etc.
Stores as leverage for new enterprises
Integrated co-operative economy as goal
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Sectoral ExpansionSectoral Expansion Worker co-ops Farm & fishery co-ops Food co-ops Housing co-ops Credit unions & co-op
banks Health services co-ops Insurance co-ops Multistakeholder co-
ops
Worker co-ops Farm & fishery co-ops Food co-ops Housing co-ops Credit unions & co-op
banks Health services co-ops Insurance co-ops Multistakeholder co-
ops
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International Co-operative Alliance
International Co-operative Alliance Founded in 1896 Cross sector organization 800 million are members
of co-ops worldwide 100 million jobs (20%
more than multinationals)
www.ica.coop
Founded in 1896 Cross sector organization 800 million are members
of co-ops worldwide 100 million jobs (20%
more than multinationals)
www.ica.coop
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The Co-operative IdentityThe Co-operative Identity
A co-operative is an autonomous association of persons united
voluntarily to meet their common economic, social, and cultural
needs and aspirations through a jointly-owned and democratically-
controlled enterprise.
International Co-operative Alliance, 1995 • www.ica.coop
A co-operative is an autonomous association of persons united
voluntarily to meet their common economic, social, and cultural
needs and aspirations through a jointly-owned and democratically-
controlled enterprise.
International Co-operative Alliance, 1995 • www.ica.coop
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Co-operative PrinciplesCo-operative Principles
Voluntary & Open Membership Democratic Member Control Member Economic Participation Autonomy & Independence Education, Training & Information Co-operation Among Co-operatives Concern for Community
Voluntary & Open Membership Democratic Member Control Member Economic Participation Autonomy & Independence Education, Training & Information Co-operation Among Co-operatives Concern for Community
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The Co-operative PromiseThe Co-operative PromiseCorporate Globalization Co-operation
Purpose of Business is Maximization of Profit
Purpose is to Serve Member-Defined Needs
Transitory Economic Development
Enterprise Rooted in Members’ Community
Increase in Local, Regional & Global Inequality
Emphasis on Equality
Inappropriate Development
Community GuidedDevelopment
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The Co-operative PromiseThe Co-operative PromiseCorporate Globalization Co-operation
Accountable to Investors;
Profitability is Priority
Accountable to Members;
Service is Priority
Suppression of Local Entrepreneurship
Development of LocalSkills and Capacities
Undermines Local, Regional
& National Political Processes
Democratic in Nature, Reinforces Political &
Social Democracy
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Sustainable Regional Development & Co-
operation
Sustainable Regional Development & Co-
operationLimitations of Small & Medium
Enterprises High failure rate Succession challenges Vulnerable to buy-outs Isolated enterprises Unstable employment & services
Limitations of Small & Medium Enterprises
High failure rate Succession challenges Vulnerable to buy-outs Isolated enterprises Unstable employment & services
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Sustainable Regional Development & Co-
operation
Sustainable Regional Development & Co-
operationAdvantages of Co-op Enterprise Community ownership, community
wealth Focus on service, meeting needs Ability to assemble limited resources Low failure rate Difficult to move or buy-out Mobilize member & customer loyalty Stable employment & services
Advantages of Co-op Enterprise Community ownership, community
wealth Focus on service, meeting needs Ability to assemble limited resources Low failure rate Difficult to move or buy-out Mobilize member & customer loyalty Stable employment & services
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Sustainable Regional Development & Co-
operation
Sustainable Regional Development & Co-
operationChallenges to Co-op Potential Lack of awareness of co-op model Slow to launch Access to financial resources Risk averse Democracy is an asset, but also a
process Sectoral isolation
Challenges to Co-op Potential Lack of awareness of co-op model Slow to launch Access to financial resources Risk averse Democracy is an asset, but also a
process Sectoral isolation
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Co-operationamong Co-operatives
Co-operationamong Co-operatives
“Co-operatives serve their members most effectively and strengthen the
movement by working together through local, national, regional and
international structures.”
International Co-operative Alliance • www.ica.coop
“Co-operatives serve their members most effectively and strengthen the
movement by working together through local, national, regional and
international structures.”
International Co-operative Alliance • www.ica.coop
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Mondragón Co-operative Corporation
Mondragón Co-operative Corporation
Basque Region of Spain 1943 - Training school 1956 - First factory ±1960 - Credit union Educational co-ops Strategic expansion of
network to maximize employment
Basque Region of Spain 1943 - Training school 1956 - First factory ±1960 - Credit union Educational co-ops Strategic expansion of
network to maximize employment
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Mondragón Co-operative Corporation
Mondragón Co-operative Corporation
1950s 1 co-op (1956) 5 employees Import substitution Credit union with
entrepreneurial division (1959)
1950s 1 co-op (1956) 5 employees Import substitution Credit union with
entrepreneurial division (1959)
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Mondragón Co-operative Corporation
Mondragón Co-operative Corporation
1985 86 production co-ops 44 educational co-ops 7 agricultural co-ops 15 building co-ops Grocery co-op Insurance co-op Credit union with 130
branches
1985 86 production co-ops 44 educational co-ops 7 agricultural co-ops 15 building co-ops Grocery co-op Insurance co-op Credit union with 130
branches
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Mondragón Co-operative Corporation
Mondragón Co-operative Corporation
1997 $5+ billion in sales 34,000 employees $7.5 billion in assets Largest domestic
grocery chain in Spain (worker & consumer co-op)
1997 $5+ billion in sales 34,000 employees $7.5 billion in assets Largest domestic
grocery chain in Spain (worker & consumer co-op)
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Mondragón Co-operative Corporation
Mondragón Co-operative Corporation
2008 $21 Billion in Sales 103,700 Employees $25 Billion in Assets 264 Co-ops &
Subsidiaries Leading Producer of
Domestic Appliances
2008 $21 Billion in Sales 103,700 Employees $25 Billion in Assets 264 Co-ops &
Subsidiaries Leading Producer of
Domestic Appliances
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The Italian Co-operative Movement
The Italian Co-operative Movement Most co-ops per capita Decentralized but
integrated Co-op consortia Cross-sector
federations Economic expansion
Most co-ops per capita Decentralized but
integrated Co-op consortia Cross-sector
federations Economic expansion
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The Region of Emilia Romagna
The Region of Emilia Romagna 4 million people 7,500+ co-ops (2/3 are
worker co-ops) 30-40% of GDP 2 out 3 are members of co-
ops 10% employed by co-ops Cross-sector collaboration Full employment (2.9%) High standard of living
4 million people 7,500+ co-ops (2/3 are
worker co-ops) 30-40% of GDP 2 out 3 are members of co-
ops 10% employed by co-ops Cross-sector collaboration Full employment (2.9%) High standard of living
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A Co-operative Economy A Co-operative Economy
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Giovani Relagatori Social Co-op
Imola
Giovani Relagatori Social Co-op
Imola
Employment & training for marginalized individuals
25 permanent employees €1.25 ($1.79) million in sales Social co-op legislation Key loan from co-op
federation 60% of customers are co-ops
Employment & training for marginalized individuals
25 permanent employees €1.25 ($1.79) million in sales Social co-op legislation Key loan from co-op
federation 60% of customers are co-ops
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Coopfond Bologna
Coopfond Bologna
“External mutuality” Lending & equity Technical assistance Cross-sector role Funded by co-ops through
contribution of 3% of surplus
Ready source of funds and expertise for co-opreneurship
“External mutuality” Lending & equity Technical assistance Cross-sector role Funded by co-ops through
contribution of 3% of surplus
Ready source of funds and expertise for co-opreneurship
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Legacoop Imola District of Imola
Legacoop Imola District of Imola
Cross-sector federation Coordination, advocacy,
training, funding Growth 1982 - 2007
52 co-ops - 84 co-ops 18,336 members - 65,604 (258%) 2,910 direct employees - 6,863
(136%) €164,743 revenue - €2.4 billion
(1,365%)
Industrial expansion in foundering economy
Cross-sector federation Coordination, advocacy,
training, funding Growth 1982 - 2007
52 co-ops - 84 co-ops 18,336 members - 65,604 (258%) 2,910 direct employees - 6,863
(136%) €164,743 revenue - €2.4 billion
(1,365%)
Industrial expansion in foundering economy
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What’s Going On?What’s Going On?
Shared co-op identity… Cross sector
collaboration… Mobilization of co-op
resources… Co-opreneurship Co-operation among co-
ops
Shared co-op identity… Cross sector
collaboration… Mobilization of co-op
resources… Co-opreneurship Co-operation among co-
ops
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Co-ops in the U.S.Co-ops in the U.S.
29,285 co-ops 350+ million members $514+ billion in annual revenue 856,000+ employees $25+ billion in wages $3+ trillion in assets
University of Wisconsin, 2009 • http://reic.uwcc.wisc.edu
29,285 co-ops 350+ million members $514+ billion in annual revenue 856,000+ employees $25+ billion in wages $3+ trillion in assets
University of Wisconsin, 2009 • http://reic.uwcc.wisc.edu
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Some QuestionsSome Questions
Do we as co-operators have an opportunity as well as a responsibility to make co-operation available to more people?
What could these numbers look like if co-ops across sectors had policies that supported the principle of “Co-operation among Co-operatives” and the development of a co-operative economy?
What could such policies look like and how could they be monitored?
Do we as co-operators have an opportunity as well as a responsibility to make co-operation available to more people?
What could these numbers look like if co-ops across sectors had policies that supported the principle of “Co-operation among Co-operatives” and the development of a co-operative economy?
What could such policies look like and how could they be monitored?
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How Policy Governance Can Help
How Policy Governance Can Help
“There must be systematic encouragement to think the unthinkable and to dream. . . . The governing board is a guardian of organizational values. The framework must ensure that the board focuses on values . . . All functions and decisions need to be rigorously weighed against the standard of purpose. A powerful model would have the board not only establish a mission in terms of an outcome but procedurally enforce such a mission as the central organizing focus.” (Carver, Boards that Make a Difference, 3d ed., at 30-31)
“There must be systematic encouragement to think the unthinkable and to dream. . . . The governing board is a guardian of organizational values. The framework must ensure that the board focuses on values . . . All functions and decisions need to be rigorously weighed against the standard of purpose. A powerful model would have the board not only establish a mission in terms of an outcome but procedurally enforce such a mission as the central organizing focus.” (Carver, Boards that Make a Difference, 3d ed., at 30-31)
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Obviously…Obviously…
The Cooperative Principles, and in particular, here, the 6th Principle, are “unthinkable” (in the sense of being idealistic), are “organizational values,” reflect “purpose,” and provide a “central organizing focus,” in the sense Carver uses these terms.
The Cooperative Principles, and in particular, here, the 6th Principle, are “unthinkable” (in the sense of being idealistic), are “organizational values,” reflect “purpose,” and provide a “central organizing focus,” in the sense Carver uses these terms.
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Ends PoliciesEnds Policies
According to Carver, these describe “[t]he organizational swap with the world. What human needs are to be met (in results terms), for whom (outside the operating organization), and at what cost or relative worth. It is important that no means be included in this category.”
An excellent policy home for “cooperation among cooperatives!”
According to Carver, these describe “[t]he organizational swap with the world. What human needs are to be met (in results terms), for whom (outside the operating organization), and at what cost or relative worth. It is important that no means be included in this category.”
An excellent policy home for “cooperation among cooperatives!”
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Ends Policy ExamplesEnds Policy Examples
Because of the Hanover Consumer Cooperative Society . . . 3. Customers will be better educated
about food issues and, as a result, make healthier choices than those who shop elsewhere.
4. There will be vibrant cooperative sector in the economy, both nationally and regionally, and a local community educated in the value of cooperative principles and enterprises.
[Actually 2 of 7 specified ends]
Because of the Hanover Consumer Cooperative Society . . . 3. Customers will be better educated
about food issues and, as a result, make healthier choices than those who shop elsewhere.
4. There will be vibrant cooperative sector in the economy, both nationally and regionally, and a local community educated in the value of cooperative principles and enterprises.
[Actually 2 of 7 specified ends]
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An alternative formulationAn alternative formulation
The purpose of the Vladivostok Consumer Cooperative Society is . . . to give cooperators in the Primorski
Region enduring ties to cooperators in other parts of the nation and world, and the cooperative movement a growing role in assuring the economic and ecological health of human civilization.
A pleasantly global ring, but too vague?
The purpose of the Vladivostok Consumer Cooperative Society is . . . to give cooperators in the Primorski
Region enduring ties to cooperators in other parts of the nation and world, and the cooperative movement a growing role in assuring the economic and ecological health of human civilization.
A pleasantly global ring, but too vague?
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Monitoring the PolicyMonitoring the Policy
Under Policy Governance, promulgating any policy is just the opening move in the dance.
General manager regularly interprets the policy and provides evidence to the Board of its compliance.
Board can accept GM’s interpretation and accept her report as in compliance, or not.
Under Policy Governance, promulgating any policy is just the opening move in the dance.
General manager regularly interprets the policy and provides evidence to the Board of its compliance.
Board can accept GM’s interpretation and accept her report as in compliance, or not.
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If “not”…If “not”…
The Board can Change the policy so as to rule out
the GM’s interpretation Decline to accept the report and
require GM to marshal more evidence Revoke the policy on grounds of
impracticality or otherwise Take adverse personnel action
against GM
The Board can Change the policy so as to rule out
the GM’s interpretation Decline to accept the report and
require GM to marshal more evidence Revoke the policy on grounds of
impracticality or otherwise Take adverse personnel action
against GM
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Implications of the ProcessImplications of the Process
This cycle of interpretation, monitoring, board review of monitoring and revisitation of policies is the ongoing work of the board.
The record of this work is what documents for the ownership the extent to which the co-op is achieving anything for them.
Members who think the 6th Principle is a waste of time can vindicate that view in Board elections.
This cycle of interpretation, monitoring, board review of monitoring and revisitation of policies is the ongoing work of the board.
The record of this work is what documents for the ownership the extent to which the co-op is achieving anything for them.
Members who think the 6th Principle is a waste of time can vindicate that view in Board elections.
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Monitoring the 6th PrincipleMonitoring the 6th Principle
Amount and type of goods/services purchased from (or sold to) other co-ops
Funds invested in or loaned to other co-ops or development funds
Staff hours spent assisting other co-ops or participating in national or regional organizations
Sales by, members of, GDP contributions of, cooperative sector in relevant region
Penetration of cooperative membership in relevant geographic area
Number of members also belonging to other co-ops
Multi-year trends in this data
Amount and type of goods/services purchased from (or sold to) other co-ops
Funds invested in or loaned to other co-ops or development funds
Staff hours spent assisting other co-ops or participating in national or regional organizations
Sales by, members of, GDP contributions of, cooperative sector in relevant region
Penetration of cooperative membership in relevant geographic area
Number of members also belonging to other co-ops
Multi-year trends in this data
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Yes We Can! (Monitor, that is.)
Yes We Can! (Monitor, that is.)
’08-’09 NCBA/U-Wisconsin study $652 billion in annual revenue, 2.1 million jobs, 29,000
firms – in just four biggest co-op sectors (not grocery or housing)
2008 Doug Hoffer report: “The Economic and Fiscal Impacts of Food Co-operatives in Northwestern New England” $161 million in revenue, or 9% of counties’ grocery sector,
plus $118 million indirectly 2,289 in direct and indirect employment
Research is expensive but costs can be shared and benefits can be leveraged
The Federal Rules of Evidence recognize the probative value of circumstantial evidence – and so should we!
’08-’09 NCBA/U-Wisconsin study $652 billion in annual revenue, 2.1 million jobs, 29,000
firms – in just four biggest co-op sectors (not grocery or housing)
2008 Doug Hoffer report: “The Economic and Fiscal Impacts of Food Co-operatives in Northwestern New England” $161 million in revenue, or 9% of counties’ grocery sector,
plus $118 million indirectly 2,289 in direct and indirect employment
Research is expensive but costs can be shared and benefits can be leveraged
The Federal Rules of Evidence recognize the probative value of circumstantial evidence – and so should we!
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An Executive Limitation policy?
An Executive Limitation policy?
Not the preferred option, since cooperation has intrinsic worth. The same rose, from a Piggly Wiggly, would not smell as sweet.
But if you insist: The GM “shall not fail to strengthen the co-
operative movement by working with other cooperatives through local, national, regional and international structures.”
Appealing because it quotes directly from the latest iteration of the 6th Principle
Easy to generate monitoring data – too much so!
Not the preferred option, since cooperation has intrinsic worth. The same rose, from a Piggly Wiggly, would not smell as sweet.
But if you insist: The GM “shall not fail to strengthen the co-
operative movement by working with other cooperatives through local, national, regional and international structures.”
Appealing because it quotes directly from the latest iteration of the 6th Principle
Easy to generate monitoring data – too much so!
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Three concluding thoughtsThree concluding thoughts
“Take care not to be fooled by the immediate attractiveness of good deeds. Well-intended organizational activity may be impressive, but under the harsh light of subsequent judgment will be hollow if results are poor.” – John Carver, May 1, 1992
“United, there is little we cannot do in a host of cooperative ventures.” – John F. Kennedy, January 20, 1961 (noting that “the energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it—and the glow from that fire can truly light the world.”)
“Nation shall not lift up sword against nation, . . . tanks will be beaten into tractors, . . . every man and every woman shall sit under his or her own vine and fig tree, and none shall be afraid; . . . justice will roll down like waters and righteousness as a mighty stream.” – Rev. Joseph Lowery, January 20, 2009 (proposing Global Ends statement for Obama Administration)
“Take care not to be fooled by the immediate attractiveness of good deeds. Well-intended organizational activity may be impressive, but under the harsh light of subsequent judgment will be hollow if results are poor.” – John Carver, May 1, 1992
“United, there is little we cannot do in a host of cooperative ventures.” – John F. Kennedy, January 20, 1961 (noting that “the energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it—and the glow from that fire can truly light the world.”)
“Nation shall not lift up sword against nation, . . . tanks will be beaten into tractors, . . . every man and every woman shall sit under his or her own vine and fig tree, and none shall be afraid; . . . justice will roll down like waters and righteousness as a mighty stream.” – Rev. Joseph Lowery, January 20, 2009 (proposing Global Ends statement for Obama Administration)
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“The Rochdale Pioneers conceived in one association of what would now make a multisectoral co-operative movement.
The complementary half of this multisectoral vision is that it was a
localized vision: integrated co-operation within a geographically compact
community…
The plan laid out… was one of active progress toward the vision of a new kind
of society.”
Brett Fairbairn, The Meaning of Rochdale
“The Rochdale Pioneers conceived in one association of what would now make a multisectoral co-operative movement.
The complementary half of this multisectoral vision is that it was a
localized vision: integrated co-operation within a geographically compact
community…
The plan laid out… was one of active progress toward the vision of a new kind
of society.”
Brett Fairbairn, The Meaning of Rochdale
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For a copy of this presentation to share with your co-op, please leave your business card or e-mail address.
For further dialog:Don Kreis • [email protected]
Erbin Crowell • [email protected]
For a copy of this presentation to share with your co-op, please leave your business card or e-mail address.
For further dialog:Don Kreis • [email protected]
Erbin Crowell • [email protected]