Cooperatives and
Community Economic
Development
Exploring Cooperatives
Economic Democracy and CED – PA &WI
Philadelphia, June 13, 2012
Jessica Gordon Nembhard, Ph.D.
jgordonnembhard@gmail.com
Themes
•
•
•
•
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Need and Marginalization
Champions, Affinities Trust Social Energy
Financing and capitalization schemes
Democratic practice, learning
Linkages – coops, community, enabling
institutions
• Multiple sectors
• Sustainability and “Failure”
Cooperatives - CED Tool
• Cooperatives address market failure, and are
both anti-poverty strategies and community
building strategies.
• Cooperative ownership helps address
underdevelopment and economic isolation and
marginality.
• Co-ops anchor the local economy.
• Keep the benefits of capital & production recirculating among those who produce them,
service them, and need them.
Economic Challenges,
Cooperative Solutions
Challenges
• Market Failure
• Export of Capital
• Predatory lending
• Unemployment
• Poor quality
education
• Housing Crisis
• Poor nutrition
Solutions
• Consumer Coopera.
• Community-based
• Credit Unions
• Worker Cooperatives
• Co-op Schools,
Continuous
Education Principle
• Co-op Housing
• Co-op Grocery
Ten Reasons Why
Cooperatives Promote
Community-Based
Economic
Development
1. Anchoring and Re-circulation of resources
2. Education, Orientation, Training –
continuous education
3. Job Creation and meaningful work
4. Economic and Environmental
Sustainability
5. Address market failure and
marginalization – need, African
Americans, women, Immigrants, youth
6. Joint ownership
7. Building wealth – individual and
cooperative asset ownership, and
community wealth; challenge of lowwealth community
8. Democratic participation – social
efficiencies, participatory budgeting,
consensus building
9. Leadership development – women, youth
10.Civic Participation – transparency,
engagement
Co-op linkages
•Mortgages to local
businesses & residents;
savings of residents;
donations to community
•Wages used to buy
goods in store;
mortgage from CU;
dividends increase
residents’ assets;
anchored in community
Credit
Union
Worker
Co-op
Housing
Co-op
Co-op
Store
•Mortgage from CU;
materials from store;
more civically involved;
more home ownership
• Mortgage from CU;
affordable local produce
& supplies; anchored in
community
Jessica Gordon Nembhard (c) 2009
8
Barriers?
• Capitalization and access to capital
• Adequate and proper orientation and training
(cooperative econ , co-op management ed,
conflict resolution)
• Distrust and Ideology
• Excessive Competition, - what is the biz plan?
• Racism and Patriarchy
• Class and Gender inequality
• Deep analysis, description not enough
• Politics and policy
Ten Reasons Why
Cooperatives Promote
Community-Based
Economic
Development
(details)
1. Re-Circulation
Co-ops (especially worker) re-circulate
resources in a local economy and leverage
local resources:
• Local wages are used in the community and for
goods and services that benefit the community.
• Surplus is returned to members, who live in the
community and invest in the community or
leverage their local dollars out in the world.
Recirculation cont’d
• Co-ops often buy local - use local
suppliers whose activity originates in the
community and whose resources also
recirculate.
• Co-ops deliberately direct dollars to the
community and support community
development ($ donations, in kind
contributions of meeting space and
supplies, etc., volunteer hours).
2. Education and Training
Co-ops promote education and training through:
• training about how to run a business and read an
income and expense statement;
• industry training;
• training in meeting facilitation and democratic
participation;
• a well trained board of directors; and
• public education using orientation brochures,
information boards, and product labeling.
Continuous Education
• Many began with study circles.
• Skills developed from cooperative
ownership are transferable to other
economic, political and social
situations.
• Training is continuous over the
member’s participation in the
cooperative.
3. Job Creation
• Co-ops create local jobs and meaningful work;
• keep jobs in the neighborhood, creating new
jobs as the co-op grows, supporting local
businesses;
• value and promote team work;
• provide job ladder opportunities; and
• a self management environment.
Meaningful Work
• Co-ops (especially worker) often lead
their industries in providing living
wages, and wages higher than industry
standards;
• high quality work with a variety of
benefits; and
• establish democratic control over
income and work rules.
4. Economic & Environmental
Sustainability
• Co-operatives provide economic stability by
providing members with a viable communitybased business; and
• environmentally friendly products and services.
• As residents, co-op members care about the
environment and their working conditions.
• Triple bottom line – profit, human & social
capital, environmental capital.
• Greensaw Design and Build
5. Address Market Failure and
Marginalization
• Co-ops produce affordable and high quality
goods and services usually because the market
does not provide them – healthy food,
sustainable energy, non-predatory lending,
quality job.
• Marginalization forced subaltern groups such as
African Americans to find alternative economic
solutions.
African American Co-op Dev.
• In response to marginalization, segregation and
discrimination, African Americans practiced
economic cooperation and established mutual
societies and cooperatives.
• Free and enslaved Blacks pooled their money to
buy their own and their family members’
freedom.
• “Freedmen” established beneficial societies and
mutual aid companies to help cover costs of
illness and death.
AA Economic Independence
• More currently African American have
used cooperatives when they needed more
income, could not find work, and/or
needed products that were not being
supplied.
• Freedom Quilting Bee: share cropping
insufficient and exploitative, political
repression, need control over land and
economic independence.
Immigrant Women
• Immigrant women have also
created cooperatives to help them
survive, maintain their own culture,
and balance work and family life.
• Cooperative Economics for
Women, WAGES.
6. Joint Ownership
Joint ownership means
• Pooling scarce resources;
• Leveraging resources;
• Reducing individual risks; and
• Profit sharing.
• Addresses low income, capital flight –
and lack of experience.
7. Building Wealth
• In addition to generating income,
cooperatives contribute to asset building
and wealth accumulation.
• Stable jobs, equity in the business,
patronage refunds and other returns on
their investment do provide memberowners with wealth, although this is often
difficult to document.
Community-Based Asset
Building
• Democratic joint ownership and cooperative
ownership can be viewed as a type of
community-based asset; and
• contribute to community asset building –
augmenting individual member’s assets and
increasing the wealth of the company and the
community.
• Beginning to document and measure this.
8. Democratic Participation
• Being a decision maker in the business,
having a say in cooperative governance
has personal and business benefits.
• Research has found that both participation
and ownership have positive effects on
productivity:
– lower turnover and absenteeism
– higher worker satisfaction.
Social Efficiencies
• Social efficiencies are derived from
democratic participation.
• Team work, inter-cooperation
combined with self help and self
management increase productivity
and job satisfaction.
9. Leadership Development
• Democratic participation and self
management develop leadership skills in
co-op members.
• Some cooperatives deliberately encourage
members to alternate leadership roles and
share leadership to enhance team work.
• Co-op members are found to assume
leadership in other settings as well.
Women’s Leadership
• Cooperatives “afford women a
number of important benefits,
including empowerment, leadership
training, learning opportunities not
available in traditional work settings,
and increased self-esteem.” (Weiss &
Clamp)
Youth Development
• We are also finding that involving
youth in cooperative business
development in schools increases their
motivation to stay in school, helps
them to earn money for college, and
develops leadership.
10. Civic Participation
• Democratic participation and decision-making,
as well as skill and leadership development often
spill over into other arenas,
• co-op members become more active in civic
organizations and politics.
• Take on leadership roles in community
organizations.
• Participate in policy advocacy.
Transparency
• In addition, co-op members and employee
owners become used to the transparency
and accountability in their economic
organizations (open book policies, one
member one vote, shared management,
etc.).
• They come to expect transparency and
accountability generally, and help re-create
this in civil society and political arenas.
Conclusions
Cooperatives are an important ced tool
because of their economic and social
benefits:
• Re-circulate local resources
• Support education and training
• Create jobs and meaningful work
• Address market failure and marginality
Co-op Benefits cont’d
• Are economically and environmentally
sustainable
• Facilitate joint ownership
• Build wealth
• Require democratic participation
• Develop leadership capacity and
• Promote civic participation.
IN SUM
They are a mechanism to provide most of the
elements we look for in economic development:
Efficient resource allocation
Profit or surplus
Human capital development
Social capital leveraging
Individual and community prosperity.