March 27, 2008
CoopZone Tele-learning session
Topic: Starting co-ops within a Host organization
Some issues to be explored:
* Roles and relationships between the co-op facilitator/developer, the co-op members/steering committee and the host organization
* Developing the autonomy of the co-op
Presenters: Melanie Conn, Cathy Lang
Melanie:
A Sponsoring Organization, or Parent Organization gets involved in developing co-ops: think about whether or not this is a good idea; when to get involved or step back.
One case: began 8 years ago, from a non-profit development disability organization.
The group was interested in converting its sheltered-workshop into a worker co-op, to circumvent changes in the Employment Standards Act in BC that minimum wage be paid in all circumstances, which would threaten the feasibility of the workshop.
I didn't think that circumventing a law would be a good reason to start a co-op. I thought it was bad optics to be seen as a way to not pay minimum wage, and I was also concerned with using the co-op structure as a shell, instead of an entity that embodies the values of ownership, and controls, participation, etc. I didn't think they were coming at this for malicious reasons, and they didn't know much about co-ops - someone had just suggested this to them. So we talked a bit more and there were three things that came up that remained important when I think of this work:
1) This organization was really interested in helping their clients make somewhat of a transition from their identity of client i.e. passive recipient, so they were interested in some of the co-op values such as self-reliance. They weren't sure how far the control could go, but they were really interested in exploring that possibility. They didn't like the traditional sheltered-workshop experience that people had, which felt like it wasn't meaningful work, which leads to the second point that came up.
2) It was more like "make work”, and creating a context for meaningful employment that could match members’ abilities and resources" that was very appealing to them.
3) They understood very quickly, once we'd started talking, that the non-profit couldn't own the co-op, and only the members could own the co-op. But they were insterested in ways to provide ongoing support; they weren't expecting to just 'release' this sheltered-workshop as a business in the community and say good-bye to it. We talked about a number of possibilities: having a management contract with them; or continuing to offer training; having a seat on the board with them; fundraising...
Over time, there have been many of these situations. The Health Authority in B.C. had started a co-op with people with mental health history, or are living with it; they started a co-op with what they call 'worker-pools' in Penticton and maintained a relationship with that co-op. There is a small non-profit group in Victoria called Park, that started a market garden co-op called Market Garden, and their members are people with mental health disabilities. The Canadian Mental Health Association in Burnaby still has a program with consumer-run businesses and at least two of them have been co-operatives.
This whole movement has evolved with the Social Enterprise Movement. The Immigrant Services Society here has started a group with Afghan women, a sewing and crafts coop; there is a women's group called Akira that has a well-known social enterprise - they are a property management company but they also started a group called Enterprising Women, making art, which is looking to become a co-op; the coalition of Experiential Women and Communities, which is a coalition of sex-workers which just started an umbrella co-op with many purposes; and a future development co-op here that has started an artisan co-op in the prison system.
1) The shared common mission that co-ops are a powerful strategy to support the participation in the community. These values have to be shared by them as well as the parent organization.
2) There is an objective to create access to some sort of meaningful employment: either directly, which would mean running a business together, or training, or through sales/operation of business.
3) The importance of establishing clear roles for the sponsoring organization and the group which is going to become a co-op. This frames the relationship from the beginning, right through to the incorporation of the co-op, and maybe to its ultimate independence and complete separation from the sponsoring organization.
Issues to be considered, and benchmarks to the readiness for the new group to move away from the parent organization. Whether or not that is the plan, some groups may know from the beginning. *The 'Sponsor' or 'Parent' organization usually offers a nurturing, or parental role - it must be recognized that the new group must be allowed room to grow.
The partnership agreement has some general principles:
1) The two parties are committed to a co-op process, and they both recognize that the partnership will evolve over time.
2) Both groups need to establish communication to solve problems and meet goals. Sometimes I require that the sponsoring organization will appoint a representative that is going to work with the group (and the developer).
-Four areas to cover:
1) Financial Matters
2) Communication
3) Human Resources
4) Decision-Making
1-The parent organization has applied for funding. There needs to be some understanding where the money has come from, who's administering it, the status of the funds, and who will handle it. The group needs a bank account, receipts, limits on spending...
2-Internal and External communication.
The group should know where it is going, and know that the Board of Directors has some ideas about where the new group should be moving. There needs to be good communication: trading minutes, going to each others' meetings, etc. Press releases and presentations are a significant area for mutual agreement.
3-HR requires a lot of co-ordination. I like for there to be a paid coordinator to be with the group because it is a tricky and complex role who works with, or for the sponsoring organization who is assisting the new group, who has and maintains the confidence of both groups. The Coordinator deals with changes in plans, particularly as the group is moving towards independence, or change in direction.
4-The essence of the co-op is that members are making decisions themselves on how to move forwards, yet we have a parent organization that has been extremely involved in setting up the co-op in the first place and perhaps maintaining funding, supplying staff, or other areas of support - then suddenly the group wants to move away, or change direction, or expand its membership, etc. Therefore, how decisions are made need to be established in the beginning so that there are policies and procedures that people can be practicing with as they begin dealing with more complex issues.
Independence Benchmarks:
Finances:
-Healthy bottom line for the co-op - beyond breaking even. Sales goals are achieved, or look very promising.
-Financing is in place - credit, grants, effective financial management, and capacity for fundraising.
Organizational:
-The Board functions well.
-Membership is committed to participate.
-Succession plan.
Operations:
-Effective management, administration.
Timeline:
-Depends on how the Parent and new organization work together: it could be possible that the Parent has a permanent place on the Board of the new group; the group may continue to use facilities or equipment of the Parent organization for as long as they need. These issues should be discussed and written down; the main message is to have the groups understand what the landscape looks like, and issues that the group may encounter along the way so they can work on them together.
Cathy Lang:
Much of my work in the last 6-7 years has been with social enterprise - looking at organizations that are more socially/community-based organizations that are exploring the idea of a social purpose enterprise. I will be looking at how to assess whether an opportunity that arises could be a co-op, and how to advise the co-op. I have also worked on the other side as a funder, and learned how to encourage, or discourage someone in pursuing co-op development.
My perspective is based on the sub-set that deals with social cooperatives, and social purpose enterprises. It is a revenue-generated business operated by a non-profit to provide meaningful employment for individuals who have difficulty finding or keeping employment. That may include new comers, people with disabilities, substance users, the homeless or people at risk of being homeless. There is a role for the non-profit organization for hosting and supporting the development of the social enterprise. Usually this comes from their commitment to a particular kind of programming for employment development or skills development. Most of the enterprises that I've worked with in this regard are still divisions of the host organization operating as a program within the organization - they are within the organization without a separate incorporation. Sometime the enterprises are conceived to be spun-off as stand-alone businesses, either as partnerships or business corporations, other non-profits or as co-ops.
We were approached to support the conversion of a program within the Community Living Organization in Sudbury, Ontario. They wanted to set up their business to be owned and directed by people with intellectual disabilities who are active in their program. The people in the program had wanted more control, and not a conversion from a workshop. We asked Russ Christianson, who is a co-op developer, to go in and work with them. His first step was to assess their readiness, and was at first concerned they were being pushed by their parent organization, or weren't ready. When he went in, he was surprised to find they were absolutely clear about their goals, and committed to running their own business. This group had been together for some time, and were ready. He also did some co-op education, and found they really did understand what working co-ops meant, which was important to give us the go-ahead in the co-op development process. This group had a positive experience and track record, so we already had an established relationship, which is a very good asset. There was core-support available through Community Living, to provide assistance in their day-to-day work as new owners and operators of the business. They had job coaches, and a very supportive manager who was coordinating the job coaches and had a very good relationship with the new owners. Community Living was absolutely committed to working with the group over the long haul, and addressing their needs as they evolved over time. That is a particular thing that may be different in other organizations where this group of people of are clients of Community Living, and may be for the rest of their lifetime. This was one part of their journey which had evolved out of a previous experience, and may evolve further in the game. The business of the program was already running, which sufficiently warranted turning it over to the participants. They didn't have to create the business, or the group, or the relationship - they were all in place. So they went ahead and were incorporated as an Employee-Owned Co-op under the Ontario Co-op Corporations Act. Russ provided further education and support before moving on. Years later, I spoke to the woman whom I had spoken to before when they had the idea, and she told me the group had dissolved. I was a little disappointed, and concerned that it hadn't been a success... but my fears were not founded, and quite the contrary. In fact, the members of the co-op had decided to semi-retire, and the original owners had run the space in the mall very successfully, but they decided they wanted to work a little less and move on to other things. The co-op was absorbed back into Community Living, the original owners worked less hours, continued to work part-time and occasional, they trained other participants, and the business continues to this day as much as I know from our last contact. That co-op successfully addressed the goals of the last business owners, and that is the most important thing.
I want to focus here on organizations that want to spin the business off. Generally the reasons for doing this are to provide greater autonomy to the participants and for the business.
The criteria I look for when assessing these opportunities may be:
1) Business: Is this enterprise idea feasible? Where is the backup for the impression of feasibility?
2) Are the participants aware and interested in taking on the business? Has there been a process where they have been engaged in the decision making? If the idea came from the host organization, in what way have the participants been polled, or engaged in the decision making? Do they really want to own the business? Or are they content with just having employment in a Social Purpose Enterprise that is not a co-op?
3) Is there participant turnover? Is there a consistent group involved? If we have a lot of people going through a program, then that to me is not a fertile ground for co-ops.
4)Do the participants have the financial, social and emotional capacity to take on a business? What are the assets they can bring to a business? Do they want to work together in a business?
5) Does the sponsoring organization have the commitment to support and provide resources to the participants in their transition to developing the business. It is not just about early start-up; it could be for 3-5 years.
If the answers to these questions are not yes, then the business may not be feasible, or may be in a very, very early stage of co-op development. With a Social Enterprise, they may not have much to do with the ownership issue because they may bring their own management with them, and not necessarily a co-op decision-making structure. It has been brought up that these groups are really looking for more empowerment among the participants to give them greater sense of inclusion, ownership, and control of the business. However, many of the groups I have worked with do not have a really good sense of what it takes to run a business. So they may not have an adequate assessment of what it will take to move the participants into the role of an owner.
Many sponsor organizations are not adequately informed as to what it takes to set up a co-op. They need to know there are very few funders, resources, and often not enough time to support an organization to commit to the process.
Social agencies have often been prompted by other funders to look for ways to sustain an enterprise. Often, the reaction is that they may be able to spin it off as a co-op, and perhaps that may require fewer grants, etc…, and they may move this budding enterprise prematurely to something that is beyond grant-based funding and it can be very dangerous.
This is a long-term proposition - the enterprise may never mature enough to warrant participant ownership. Sometimes when social enterprises are ready for independence, they move towards a private/for-profit business model because the co-op aspect can take the focus off the scaling-up, and can take a lot of energy to set the co-op part up where the business aspect requires more attention to marketing, and growth and scaling.
Two Questions:
What are some of the criteria you use to determine if a co-op is the right model for a sponsoring organization to use?
What are some of the milestones you look for in determining readiness for spinning off a co-op from a host organization?
Participant: Question regarding the notion of why we can't scale up using a co-operative model.
There seems to be a lack of knowledge about the co-op structure, or lack of knowledge of good co-op managers. For me, it is not about the model, but we haven't the competency, or skill, or knowledge of being able to scale-up. I think that being able to franchise through the co-op model would enable scaling-up, and I don't know why we haven't been able to do that.
Participant: The Arizmendi Bakery ( in California basically created a co-op which was a replication of a private business but the business owner trained them and allowed new formations. They basically started a development co-op which then turned into an on-going federation for evolving co-ops; they are all in the same area of business; they are all roughly in the same geographic location. The original owners are gone now, but when they started, they were essentially people with no co-op backgrounds, and they've done it with some folks who have certainly needed some support in terms of training and development, and they've produced four very successful enterprises. They actually use a very different model; the model they use in these particular co-ops is actually an Effective Management model which is even more difficult because it is even a higher level of skill for most people than using a more conventional management system. But they have put the resources in the development process in place, and they have obviously an effective business model in place that makes the whole thing work. They actually integrate the co-ops that are being developed - they don't leave, they become part of a system. Although they are independent, and autonomous organizations, they have contractual relationships with the development co-op and sit on the board with other representatives from the other co-ops.