I am grateful to be invited here today by Jo Bird and the organizers of Ways Forward.
My great – great grandfather lived in Manchester and is buried in Southern Cemetery. My Lancashire and co-operative roots are deep and I am proud of them. I left Lancashire to start a new life in the US and over there I found co-ops so although I travelled 5,000 miles away geographically I ended up spiritually 12 miles away in Rochdale.
The title for this Ways Forward 6 Conference is Co-operative Solidarity. In the USA we have three co-op sectors that have built solidarity and reciprocity into their support systems and they have the success to prove it
- Agricultural Co-ops
- Credit Unions
- Rural Electric Co-ops
The strengths of those three Co-op sectors are:
- Plentiful support from their own system wide organizations
- Direct control and access to system wide providers of capital
- Each sector models has shareable formulas
- Due to model repetition senior management have easily transferable skills to other co-ops within that sector
- The replication costs of best practices are low and uptake faster
- And lastly, more of the operating costs are covered for much less expense further up the chain
When some of us created the National Cooperative Bank in the early 1980’s we had visions of what might be possible. In particular I personally wanted to replicate lessons learned from Mondragon and Emilia Romagna but in the age of the Reagan administrations that would be political suicide. So quickly, we fell back on those home grown cooperative development systems and tried to apply those practices to three newly emerging sectors with lots of potential which were at the core of why we lobbied for the new Co-operative Bank:
- Consumer Food Co-ops
- Worker Co-ops &
- Housing Co-ops
I went to Washington DC to create the bank, was # 6 employee of the bank and at one point I was appointed Director of Strategic Planning. The biggest problem the early Bank faced was that the vast majority of the co-op customers were what I called one –off co-ops and the costs to the Bank to advise, help, fund and monitor those single co-op loans were loss producing and unsustainable. Remember also, that serving one off co-ops in different businesses in many far away communities all across the USA was economically impossible.
I proposed that we use our limited resources to support the development of specific co-op sectors in a number of co-op zones such as; the San Francisco Bay Area, Boston, Seattle, Minneapolis/St Paul and New York City. Areas were we already had a core of co-ops, where our service costs would make sense and where we could build out from those cores. In the end, with the Reagan Administration pulling the plug on our funding, the Co-op Bank chose to survive by pursuing a wider set of clients that were not cooperatives (for example, community health centers and charter schools) but were more bankable, less costly to serve and were part of built in business systems.
Regretfully, even provided with a development bank the three co-op sectors have not been able to pursue their full potential.
The challenge to having more co-ops play an impactful role in the economy is as follows:
- We need to substantially reduce the costs of developing each new individual co-op
- We need to place more focus on co-ops that can go system wide; either be easily replicated or focus on co-ops that can multiply. Why cannot there be a franchise model for co-ops?
- We need to create larger pools of equity like capital to shorten the cost of the development timeline. Our biggest development cost in the US is the wait for membership capital. That is where the Cooperative Community Fund program and Cooperative Development Organizations come in with their $150 million of mezzanine lending capacity so come to that workshop. However, the equity capital gap is still too large and the wait too long and the individual co-op borrower still too costly.
Where are we having the type of results I am looking for?
In New Hampshire. The law was change to give residents first option to buy the mobile home park they lived in at market value. The NHCLF was started in 1984 to lend to the first, the NHCLF has now lent to 125 resident groups to buy their parks. Over 10% of all parks in NH are now resident owned. NHCLF has freed about 20,000 residents of NH from being permanent renters to being proud owners of their parks. A Park comes up for sale and an entire team goes into action. The transaction is now rote in NH. An offshoot organization has now gone national with the product. That is the best ongoing US example of solidarity and reciprocity.
Thank you for allowing me to share the US experiences.
Best wishes to all of you here bringing a new chapter of cooperative development to the country of my birth.
David J. Thompson.