If money changes hands, a cooperative just may be the smarter, better way to organize the transaction. Study cooperatives and what is stunning about them is how diverse the resulting organizations are.
Case in point: housing cooperatives. In a housing co-op the corporation owns the building – members own not an apartment as such but a share in the building, usually in proportion to the size of the apartment. Very common in New York City – in Manhattan, thousands of cooperatives are a primary vehicle for residential ownership – cooperatives are occasionally found in other cities (Chicago and Washington, DC for example) but the numbers fall off dramatically outside New York City.
What’s staggering about co-op apartments is how different they are. Across the country there are 6400 housing co-ops and they come in all forms. Some of the highest-end real estate in New York – apartments in the Dakota building, for instance, on Central Park West where John Lennon lived and where U2 frontman Bono now lives are multi-million dollar co-op apartments, where values typically are $3000 and higher per square foot. Across the Upper Westside and the Upper Eastside there are many co-ops that rank among the priciest and most exclusive buildings in the United States.
And then there are the trade union-spawned housing co-ops in New York. At Penn South – a huge, multi-block housing complex in Manhattan’s Chelsea neighborhood and originally seeded by help from the International Ladies Garment Workers Union (ILGWU) – there are strict limits on how much money owners can earn and there also are limits on how much units can be sold for. In both cases the limits set caps. The aim is to provide affordable housing for working people and that makes Penn South stand out in a town where $1 million is the average selling price for a one bedroom apartment.
Around New York there are dozens of these unusual cooperatives, most initially seeded by labor unions, that likewise set limits on owner income and on selling prices. This is not set in stone, however. The sprawling Cooperative Village in the Lower East Side – also initially started with labor union support – took notice of the rapidly escalating housing prices in what had been a depressed neighborhood but which lately has become trendy and in votes in 1997 and 2000 members eliminated the limits on selling prices. That is their right (limitations established with initial financing had expired some years earlier). In a cooperative, democracy does prevail, even when the votes go far towards eliminating the cooperative.
Utility cooperatives. Read More >
Typically electricity or telephone – bring much needed services to usually small and rural communities that otherwise would not be served. “This is a very different system. We are not about profits,” says Glenn English, chief executive officer of the National Rural Electric Cooperative Association. “We serve 70 percent of the US land mass, and two percent of the population. Our members have on average seven customers per mile.” All counted there are 900 rural electric cooperatives in the US and, without them, the majority of the country would literally be in the dark.
Over at the National Telecommunications Cooperative Association, some 580 member co-ops deliver services to about five percent of the US population, scattered across 40 percent of the land mass. The smallest member serves under 100 customers – who would be without landline telephony if their co-op did not deliver them service. Around one million Americans depend upon rural telephone co-ops for dial tones.
Just as with many other cooperatives, in utility co-ops the end-users own the co-op and they vote on management and business operational issues.
Utility cooperatives lately have pushed into new areas, particularly providing high-speed Internet to under-served communities. In an era where the ability to communicate over the Internet makes or breaks individuals and companies, Internet access has moved from a frill to a necessity. Thus offerings such as WildBlue, high speed Internet in southern Indiana, offered by a cooperative formed by Dubois Rural Electric Cooperative (REC), Perry-Spencer Rural Telephone Cooperative, and Southern Indiana Power. In northern New Mexico, the Kit Carson Electric Cooperative has explored, for some years, providing Internet hook-ups over already existing power lines, an option many electric co-ops are also exploring. Kit Carson also provides its members with access to high-speed DSL connections as well as satellite Internet for homes and businesses that cannot use DSL.
The bigger point: as need for services persists and in fact expands in rural America in particular, cooperatives are among the prime tools for giving people what they need, at prices they can afford. “It’s difficult for some people to understand,” says English. “We really are not about profit.”
Cooperative banks aka credit unions. Read More >
“We are the best kept secret in banking. Traditional banks have been having issues, to put it mildly, but credit unions are open for businesses and have had few problems,” says Fred Becker, ceo of the National Association of Federal Credit Unions.
Greed almost undid the nation’s banking system – indeed, the whole global economy – but credit unions, at which 90 million Americans bank, according to Becker, hit at worst a few bumps in the road. They did not issue toxic mortgages so they sidestepped that meltdown.
Most credit unions are at places of employment and, frequently, they serve only a few hundred members. But Navy Federal, the biggest credit union, serves over three million members and has upwards of $40 billion in assets – it is a big financial institution by any yardstick.
What differentiates credit unions is this: they exist to serve their members, not to enrich their bond traders or the people who package and sell blocks of mortgages or their shareholders. That difference is immense, it is about service, and that fundamentally is why credit unions have continued to do well even in tough times for traditional institutions.
Agricultural cooperatives. Read More >
Probably this is where almost every American bumps into a co-op, from Sunkist citrus to Blue Diamond almonds and of course Cabot Creamery. Farmers, for at least a century, have found cooperatives to be the way to provide a stable place to sell what they grow, at rates set not to make middlemen prosper but to provide farmers with a living, sustainable income. “Farmers join because you get a competitive and dependable place to deliver your crops,” says Chuck Conner, CEO of the National Council of Farmer Cooperatives, a Washington, DC-based group that communicate farmer interests to politicians. He adds that the “vast majority” of farmers belong to one co-op or another.
The history is that a lot of co-ops got started in the 1930s when farmers did not have a dependable place to sell their grain. Middlemen, in those days, wanted to set prices that benefitted the middlemen, not the farmers, and farmers rebelled by creating their own buyer of crops that frequently are perishable. It has changed how America farms – about 30 percent of all agricultural in the US goes into cooperatives, says Brent Hueth, director of the University of Wisconsin’s Center for Cooperatives.
Buying cooperatives. Read More >
How could an independent hardware store compete with Lowe’s or Home Depot? Not very effectively, to be blunt, unless it allies itself with Ace or True Value, two buying cooperatives that exist to provide members with competitive prices on inventory, mainly because the goods are bought not just by a lone store, but by the collective membership.
It’s not just hardware stores that join together. ShopRite, a thriving northeast grocery brand, is a buying cooperative that lets its members compete very successfully against big brands. Meantime, at Subway, the sandwich chain, owners have joined together to form a buying cooperative that lets them get competitive pricing on bologna, lettuce, mustard, and the rest. In the Carpet One cooperative, members – who collectively are the nation’s largest floor-covering retailer – enjoy sufficient pricing leverage to let them very capably compete. Otherwise independent and usually small floor covering stores in fact prosper under the Carpet One banner.
The possibilities for buying cooperatives are immense. Whenever organizations or individuals can join together, to create the force of buying in bulk, usually they will see bigger discounts on every purchase. It adds up. Buy some counts there are 20 large buying cooperatives, but there easily could be many more.
Retail cooperatives. Read More >
Just as with Rochdale, retail cooperatives continue to fill needs for members who want products they won’t otherwise see (at the Belfast, ME co-op there is a strong emphasis on locally grown produce, for instance, and this is food not otherwise readily available in the area), or they want prices for-profit retailers cannot match, or – in many cases – people who join simply want to feel they have an ownership stake in the business. Probably grocery co-ops are the most numerous, but arguably the best known retail co-op in the US is REI, the sporting goods retailer.
“Our stores are owned by the consumers – that’s what makes us different,” says Robynnn Shrader, founder and CEO of National Cooperative Grocers Association. Member stores also are not cookie cutter, says Shrader. Some are vegetarian only, others resemble traditional grocery stores, it comes down to what best serves this community. “There’s rising interest in food co-ops,” adds Shrader, in part because consumers are increasingly interested in saving money.
“Our members distribute ‘profits’ back to members in the form of a patronage dividend,” says Shrader. “Our purpose is to serve members, not to make profits.”
Specialty Co-ops Read More >
Where money changes hand, a co-op may rise. Just about anything can be done as a co-op. Case in point: Cooperative Coffees, a bean importer owned by 24 community-based coffee roasters in the US and Canada. What those roasters want are direct, fair-trade relationships with coffee farmers and Cooperative Coffees delivers. “We cut out normal export-import middlemen,” says Bill Harris, a spokesperson for the co-op. Importantly, the co-op lets small roasters secure coffee that would not otherwise be available to them because coffee is sold in container lots, around 40,000 pounds. Divide that purchase among 24 roasters, however, and it makes sense. “We import 80 containers per year,” says Harris, and wherever possible the co-op forges one on one relationships with the growers in Guatemala, Mexico and El Salvador. “Coffee comes from farmers, usually people working small farms. We want to put a face on our coffees and, working with our members and our farmers, we do.”
Are there more types of cooperatives? Absolutely, but these types comprise the broadest share of cooperatives. Even so, where money changes hands, a cooperative may be the better way to do business – and people may well talk about forming a cooperative to get the job done more effectively. “We helped found around 25 cooperatives this year alone,” reports Steve Thomas, executive director of the Cooperative Development Foundation, which provides seed money and counsel to start-up co-ops. Most, he says, were retail food co-ops, but he indicates there now is growing interest – riding the aging Baby Boom wave – in senior housing co-ops. And that is a proof of the power and flexibility of the cooperative model. As needs arise, it just may be the solution.
Getting Healthier Read More >
Another kind of cooperative that has won major attention due to the White House’s initiative regarding healthcare is the healthcare co-op and while this might all seem new to most Americans, parts of the country have long familiarity with this kind of medicine. “Forming a co-op is a major survival strategy for rural hospitals,” says Terry Hill, Executive Director of the Northern Lakes Health Consortium headquartered in Duluth, MN and past president of the National Cooperative of Health Networks Association. He adds: “the days of the free-standing, independent hospital are over.”
What that hospital can do to survive and continue to serve its community is join a cooperative that may share everything from back-office billing and computer services through medical specialists, even expensive equipment. “Small hospitals don’t see themselves in competition with their peers, that’s why cooperatives make sense,” says Hill, who indicates that nationally there are around 300 healthcare cooperatives, mainly in rural America.
There are multiple variations on this theme. In the south Bronx neighborhood of New York City, some 300 providers of home healthcare services have banded together in Cooperative Home Care Associates, a worker-owned cooperative formed to improve working conditions and incomes.
Another option – the one under discussion in Washington, DC – is forming health insurance cooperatives, to help deliver coverage to individuals who, acting alone, might be uninsurable or forced to pay exceptionally high rates. Health insurance cooperatives, which are owned by the members-insured, are popular in some parts of the country. In Seattle, for instance, Group Health cooperative provides coverage and care to 590,000 people in Washington and Idaho.
Exactly how cooperatives might help address the nation’s gaps in delivery of medical care remains to be resolved, but what is obvious is that cooperatives definitely already play a role in keeping America healthy.