How to Start a Co-op for Your Nonprofit Organization
A business that can be run for the benefit of all
While listening to the Shane Hughes TED Talk on Co-op with his organization, the Transition Network, and organization that helps over 2,000 community groups and nonprofit organizations learn how to start a co-op, Shane states that there are 30,000 Co-ops in the U.S. and over 1 Billion Co-op members worldwide. The reason these membership communities are so popular is because they are resilient to economic downturns. Think about how this organizational model has emerged through various economic models.
Think about it this way. The Agricultural Revolution led to new relationships between people and land. People were no longer tied to the land but rather the institution of labor was tied to the land. Tribes and people were tied to these institutions and culture. The Industrial Revolution introduced the market and capital into this dynamic between people and the land. And the newest revolution is the Information Economy. The information economy is making the industrial economy obsolete because in this new economy, sharing adss value. Think about Open source data, collaboration and peer to peer exchange.
Cooperative ("coop") or co-operative ("co-op"), an association of persons who cooperate for their mutual social, economic, and cultural benefit
Housing cooperative, e.g., a co-op apartment in a co-op apartment building
Food cooperative or "food co-op"
-Via Wikipedia
According to Reconomy.org a successful co-op limits interest and returns profits back as dividend payments to members either through cash, extreme discounts on amenities or services. Co-ops are owned and controlled by their members.
Essentially, a co-op is a business that can be run for the benefit of all.
Here are the 4 Questions to Ask Before Starting a Co-op at Your NonProfit
What is your membership model?
The co-op plan will take shape depending on the economic sector and the ownership model. First you have to name your owners/members. For the purposes of this Blog, imagine an affordable housing co-op. The members/owners will be tenant/renters. The PREC Model- Permanent Real Estate Co-op depends on community and participation and consensus building. In this membership model, community controlled housing allows for rents to remain low and enough funds to be collected for maintenance and funds raised by interest to be dispersed throughout the community. Examples of this include the East Bay Permanent Real Estate Cooperative. The Cooperative takes title to the land on which the property is built. Within the housing co-op framework, there is also the community co-ownership initiative where owners partner with a land trust to expand access to housing and and share technical know-how
member/tenant
food/farmers market
transportation/rider
Who are your partners?
When identifying your partners, you want to be mindful of who will have longer term impacts on your work and who can commit to this new way of thinking? A good ideal also is to complete a business model canvas. A Co-op is a business just as much as it it a way of thinking. The Business model canvas forces you to think about the resources and relationships at play to drive your revenue streams and ensure sustainability. It’s a great tool to use to make sure you and your partners are on the same page in regard to services and value proposition.
When looking at an affordable housing Co-op, partners could include:
Faith Institutions
Land Buyers
Land Developers
Land Owners
Legal Aid
Potential Tenants
Longer Term Investors
Service Providers
Maintenance and Repair
Are you prepared for a cultural shift?
Be prepared to reject the traditional notion of homeownership. The conventional financing structure of land ownership no longer applies here. The rate of return on investment for the member/tenants is capped and the dividends are paid out when they leave the community or slowly over time through amenities. So if a person bought a home in your co-op, they would not raise traditional equity in the home but rather those dividends would be paid out over time while they are in the co-op or they would be returned at the end of their stay; at a much reduced rate, in order to ensure affordability for the next member/tenant. - via https://www.theselc.org/from_homelessness_to_real_estate
Bay Area News Group
Are you ready to raise capital?
Revisit your business model canvas and look at the legal structures in place to allow for you to open a co-op in your community. Do you have the capital needed to acquire legal help and to acquire the initial land holdings? the legal entities that could “own” the co-op organization could either be the nonprofit itself or a co-op corporation (partnership). You will need to raise initial capital at the start for at least:
Put legal entity in place
Establish your value proposition and purchase goods (land, homes, food transportation)
Network with community members and investors
ll in all, you are ready for this world-changing adventure. After all the legal back and forth is in place, you’ll be able to establish some bylaws, and create your membership terms and begin to develop your community stakeholders list so that you can begin making a difference! Think about what’s in it for your community. Think about how you can create a sustainable model to help for generations to come.