The Next Economy Will You Be There? October 10–11, 2020 2 Days 20,000 Attendees 40+ Exhibitors

National Cooperative Business Association CLUSA International | Fall 2019

The Next Economy Will you be there? October 10–11, 2020 2 Days 20,000 Attendees 40+ Exhibitors

www.coopfestival.coop THE COOPERATIVE BUSINESS JOURNAL NCBA CLUSA 1775 Eye Street NW, 8th Floor, Washington DC 20006

NCBA CLUSA - PUBLISHER CONTENTS Doug O’Brien President & CEO 3 Perspectives Valeria Roach Doug O’Brien Chief Financial Officer

EDITOR IN CHIEF 4 Building the Next Economy John Torres Education. Advocacy. Policy. Vice President of Communication & Public Relations , NCBA CLUSA Doug O’Brien with Greg Irving

MANAGING EDITOR Elizabeth Lechleitner Senior Manager, Communication & Public Relations, NCBA CLUSA

SOCIAL MEDIA EDITOR Isabelle Shinsato 18 The Path to Shared Communication & Public Relations Associate, NCBA CLUSA Prosperity Insights from ESOPs reveal DESIGN the potential of employee Slice®Works ownership slice-works.com Janet Boguslaw and Lisa Schur EDITORIAL BOARD Emilia Istrate Vice President of Resource Development, NCBA CLUSA 28 Power in Purpose Leslie Mead Cooperatives and the Executive Director, Cooperative Development Foundation Sustainable Development Goals Rebecca Savoie Karen Miner and Sonja Cooperative Development Consultant Novkovic Jonathan White Director of Private Sector Partnerships & Foundations, NCBA CLUSA

38 A Solar Revolution Electric co-op technology innovations are reinventing rural America Russell Tucker, Joseph Goodenbery and Michael Leitman

43 Special Feature elevate your identity Elevate your cooperative identity with a .coop domain Lance Wolak

FALL 2019 | 1 Your Choices Reflect Your Values. Your Bank Should, Too.

2www.ncb.coop | THE COOPERATIVE BUSINESS JOURNAL Your Choices Reflect Your Values. Your Bank Should, Too.

www.ncb.coop FALL 2019 | 3 Perspectives

Power in Purpose: Building the Next Economy

Even while many indicators show a growing economy, more and more people feel excluded and disconnected from their economy and society. They are looking for ways to be locally rooted and engaged. By providing people the ability to own, control and benefit from the businesses they use, cooperatives are a natural vehicle to build an economy that works for everyone. Co-ops generate more broadly shared wealth through self-help and democratic governance. And, as people- centered, purpose-driven businesses, they are more likely to reflect the values of their members, resulting in more equitable and sustainable businesses.

There is power in purpose-driven businesses. Our cooperative moment could not be clearer. “There is power in purpose-driven We begin this issue by reflecting on what the next economy could businesses. Our cooperative movement look like, and the steps we need to take to get there—education, could not be clearer.” advocacy and policy. Next, new research on ESOPs provides insights that can inform worker co-op development and bring stability to an uncertain job market. We also explore how co-ops can embrace the UN Sustainable Development Goals as a tool to demonstrate their power in purpose and learn how electric co-op technology innovations are reinventing the economy in rural America.

As your national association, we believe that there is power in our purpose; all our work is geared toward realizing the economic and societal power of an inclusive economy. We truly believe that cooperatives are the foundation on which the next economy must be built. To achieve this, NCBA CLUSA works to increase public awareness and educate grassroots and thought leaders on the success, diversity and impact of cooperatives. We advocate for co-ops to ensure the policy environment supports people who want to use co-ops to build more inclusive communities. Together we have an opportunity to empower and inspire each other through cooperative solutions.

In Cooperation,

Doug O’Brien President & CEO NCBA CLUSA

4 | THE COOPERATIVE BUSINESS JOURNAL Together we will reach new heights Our co-operative IT solution includes everything needed to run a food co-op. Our mission is to help the food co-op movement thrive. We do this by reducing your society’s costs and helping your co-op be as efficient as possible through technology. We are truly co-operative – with lower prices for all food co-ops societies as more co-ops use VME technology.

FALL 2019 | 5 Building the Next Economy Education. Advocacy. Policy.

By Doug O’Brien, with Greg Irving t critical moments throughout U.S. history, people have looked to cooperatives as a key strategy to solve major challenges—such as when farmers looked to cooperatives in the early 20th Acentury to access markets and gain market power, when rural people looked to cooperatives a generation later to access electricity, and when

6 | THE COOPERATIVE BUSINESS JOURNAL Representatives from the U.S. Federation millions of people looked to credit unions to gain of Worker Co-ops and other worker control of their financial future. These solutions ownership stakeholders join Sen. Kirsten Gillibrand and Rep. Nydia Velázquez at occurred only when policymakers created laws a Main Street Employee Ownership Act press conference. Photo: Office of Rep. and regulations that supported the model. And Nydia Velázquez these policymakers created this policy only when people in the cooperative community educated and persuaded policymakers on the power of the cooperative business model. >>

FALL 2019 | 7 Building the Next Economy

Today’s environment represents another “cooperative Cooperatives must be part of any effective plan or moment.” As policymakers seek answers to today’s platform that addresses these challenges. greatest challenges, the cooperative business model poses proven solutions. And just as in the past, Cooperatives are a proven policy strategy. They the most effective way for policymakers to grasp deliver results. Co-ops have reduced poverty, the cooperative potential is for the cooperative improved food security, supplied rural electrification community to be active in educating and advocating and provided affordable financial services where for better cooperative policy. none existed. Cooperatives are a more stable form of business than their competitors, making their Recently NCBA CLUSA wrote an open letter benefits likelier to endure.2 Because they exist to addressed to the 2020 presidential candidates serve members that tend to live locally, they are from both major parties, urging them to consider more likely to lead efforts to create more sustainable how cooperatives can be a vital component of their local economies. This makes it easier for members policy platforms.1 The letter made the point that as of cooperatives and, indirectly, their communities to candidates seek solutions to some of today’s most attain economic security that extends to a greater critical challenges, they should look to cooperatives swath of the population. as a strategy with a record of empowering people in their businesses and communities. These facts demonstrate that co-ops should be an integral component of every policymaker’s A cooperative’s members drive its success and platform. One reason co-ops are not as prominent a supportive policy environment accelerates in community economic development policy is cooperative development and growth. Robust, co-op a lack of understanding of cooperatives by the friendly policies raise the likelihood that co-ops can broader public. Another is that policymakers do not thrive and enable them to solve problems that we realize how often cooperatives are successfully as a nation face today. People in the U.S. are eager employed to solve problems. Co-ops could benefit for a renewed debate about the issues that matter our communities more if policymakers were to them most and for an opportunity to participate better informed about current policy examples in their democracy. We are in a critical moment. involving co-ops. The best method for educating While multiple economic indicators are strong and policymakers has always been the advocacy work unemployment is low, many Americans are still of the co-op community. We should develop a sharp excluded from the economy as a result of growing curiosity for the work of our fellow cooperators, inequality, the changing nature of work and the finding inspiration and strategies to advance our increasing usage of new and disruptive technology. own efforts. To that end, this article amplifies some recent examples of policymaking that are creating a better policy environment for cooperatives.

“Increasing employee ownership will help Federal policymaking and cooperatives In recent years, there have been encouraging signs support a strong economy and promote that federal policymakers are taking a keener interest job security in communities across the in cooperatives. Particularly, many in Congress state” – Gov. Jared Polis have recently recognized the vital importance of cooperatives. Several Democratic and Republican lawmakers, including some 2020 presidential

1 “Co-ops should be on the policy platform of every presidential candidate,” NCBA CLUSA says in open letter.” NCBA CLUSA. June 19, 2019. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/co-ops-should-be-on-the-policy-platform-of-every-presidential-candidate-ncba-clusa-says-in-open-letter/. 2 See, e.g., Gordon Nembhard, Jessica. Benefits and Impacts of Cooperatives. White Paper. February 2014. Accessed on August 21, 2019 at http://geo.coop/sites/default/files/0213-benefits-and-impacts-of-cooperatives.pdf.

8 | THE COOPERATIVE BUSINESS JOURNAL The author, Doug O’Brien (left), with Bette Brand (right), Administrator of the U.S. Department of Agriculture’s Rural Business-Cooperative Service; and John Cardinal (center), Director of Economic Development for Sen. Kirsten Gillibrand at last year’s Policy Breakfast. Administrator Brand is the recipient of this year’s Co-op IMPACT Champion Award. Photo: NCBA CLUSA hopefuls, have proposed legislation to promote the decade, baby boomers will retire in growing numbers. increased utilization of cooperatives in areas such Roughly 10,000 boomers will turn 65 each day of as worker co-op conversions, childcare, homecare, every year through 2030.6 Many own successful internet access, food and housing.3,4 Further, both the businesses—often the hearts of the communities House and Senate have maintained funding support they serve—but have neither plans nor a clear buyer for Rural Cooperative Development Grants program to preserve their business after they retire. Co-op (RCDG) even though the Administration’s budget conversions facilitate the buying of businesses by the continues to propose the elimination of this vital workers or consumers who know the business well. program. In the Senate, eight senators wrote a letter to the Senate Appropriations Committee urging them Last year’s passage of the bipartisan Main Street to increase RCDG funding to by nearly 30 percent.5 Employee Ownership Act is further evidence that (Continued advocacy on this critical issue will be policymakers in Congress are recognizing co- important as the Senate and the House negotiate ops’ importance and potential. The law requires final spending levels.) equal access for cooperatives and Employee Stock Ownership Plans (ESOPs) to Small Business After stagnant funding for more than five years, Administration (SBA) technical assistance and loan increasing RCDG only makes sense. Over the next programs. Food co-ops and worker co-ops stand to

3 Dubb, Steve. “Will Worker Ownership Seize Center Stage in US Politics in 2020?.” Nonprofit Quarterly. June 3, 2019. Accessed on August 28, 2019 at https://nonprofitquarterly.org/will-worker-ownership-seize-center-stage-in-us-politics-in-2020/. 4 LaTour, Kate. “Following NCBA CLUSA’s open letter to presidential candidates, Gillibrand rolls out rural platform emphasizing co- ops.” August 13, 2019. NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/following-ncba-clusa-open-letter-to-presidential-candidates-gillibrand-rolls-out-rural-platform-emphasizing-co-ops/. 5 LaTour, Kate. “Senators pledge support for increased funding of Rural Cooperative Development Grant program.” April 23, 2019. NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/senators-pledge-support-for-increased-funding-of-rural-cooperative-development-grant-program/. 6 Cohn, D’Vera and Paul Taylor. “Baby Boomers Approach 65-Glumly.” Pew Research Center. December 20, 2010. Accessed on Au- gust 28, 2019 at https://www.pewsocialtrends.org/2010/12/20/baby-boomers-approach-65-glumly/.

FALL 2019 | 9 Building the Next Economy

Madison, Wisconsin Mayor Satya Rhodes-Conway, center, has proposed using housing co-ops to improve access to affordable housing. Photo: Sharon Vanorny/The Capital Times

expand and grow as a direct result. Like the RCDG expand energy efficient financing programs for program, Congressional policymakers view Main their members. Members and co-ops can apply to Street as an opportunity to use co-op conversions replace outdated HVAC units, install energy-storage to save viable, healthy businesses from closing devices, build envelope upgrades and even replace when their owners retire.7 Because SBA’s report to manufactured homes with more energy efficient Congress did not fully address the challenge that co- dwellings. The average investment is $7,500—a ops face accessing SBA’s products, advocacy will be price otherwise out of reach for many residents. The a key factor in ensuring that the SBA properly fulfills loans are repaid through the utility bill with no upfront Congress’ clear mandate to support cooperatives. costs to the co-op members.

Federal policymaking has tapped cooperatives to Both increasing energy efficiency and “beneficial improve energy efficiency and lessen the financial electrification”—the replacement of equipment burden for lower income homeowners in rural that directly burns fossil fuels with those that use areas. Created in the 2014 Farm Bill, the Rural electricity—reduce the demand for energy sources Energy Savings Program (RESP) provides rural that emit carbon dioxide. RESP tightly links climate electric cooperatives and other rural utilities with change mitigation with improved energy affordability zero-interest loans.8 Co-ops use these to start or in rural areas, an important component of reducing

7 Senator Kirsten Gillibrand and Representative Nydia Velázquez. “An exclusive statement for the Cooperative Business Journal from co-sponsors of the Main Street Employee Ownership Act”. June 11, 2019. Accessed on August 28, 2019 at https://ncbaclusa.coop/ blog/an-exclusive-statement-for-the-cooperative-business-journal-from-co-sponsors-of-the-main-street-employee-ownership-act/. 8 “Rural Energy Savings Program.” United States Department of Agriculture Rural Development. Accessed on August 28, 2019 at https://www.rd.usda.gov/programs-services/rural-energy-savings-program.

10 | THE COOPERATIVE BUSINESS JOURNAL inequality. Rural households tend to pay more for energy—about 40 percent more on average when compared to urban households—while also generally A supportive policy environment accelerates earning less money.9 Cooperatives naturally see in RESP a program that helps their member-owners cooperative development and growth. access 21st century energy technology. When one member saves because of an energy efficient investment, every member benefits from lower large part through the Interagency Working Group on overall costs. Cooperative Development (IAWGCD).14 The working These encouraging signs of rising federal recognition group was created through successful advocacy and action build on long-running efforts to boost the by the cooperative community. This culminated in profile and benefits of cooperatives. The return of a authorization by the 2014 Farm Bill. Headed by the question asking businesses whether they identify USDA, the working group promotes a whole-of- as cooperatives to the 2017 Economic Census— government approach to using cooperative enterprise after a decades-long absence—has opened new to solve specific public policy challenges. With more and exciting possibilities for expanded research on than a dozen government agencies as members, cooperative businesses.10 The data from this census this group ensures the government is on the same will let researchers obtain a more accurate count of the page in its engagement with cooperative businesses. number of cooperatives in the U.S., glean new insights The group is critical in bringing key stakeholders into the state of cooperatives compared to other forms and policymakers together to consider how federal of businesses, and create an overall better picture of agencies can better support cooperatives. where co-ops stand in the economy.11 Data will be released over a period lasting several years, with a first State and municipal policy initiatives look at economy-wide business statistics scheduled Not to be outdone by their federal counterparts, for Fall 2019 and further releases running until at least state and municipal policymakers are harnessing September 2021.12 Cooperatives additionally now co-ops to solve the needs of their communities. have expanded opportunities to make effective use of One important example is the growing recognition this data thanks to new provisions in the Farm Bill’s by states that access to swift, reliable broadband re-authorization of the RCDG program. There are now is crucial for continued economic development and authorized, set-aside funds specifically for research growth in the 21st century. According to the Federal into the data.13 Communications Commission, approximately 34 million Americans currently lack access to high-speed While we look forward to the benefits of this research, internet.15 Most of them live in rural areas and are we should note that it will ultimately have come in usually served by rural electric co-ops.16

9 Ross, Lauren et al. “The High Cost of Energy in Rural America: Household Energy Burdens and Opportunities for Energy Efficiency.” American Council for an Energy-Efficient Economy. July 18, 2018. Accessed on August 28, 2019 at https://aceee.org/research-report/u1806. “Rural America at a Glance: 2017 Edition.” Economic Research Service, United States Department of Agriculture. 2017. Accessed on August 28, 2019 at https://www.ers.usda.gov/webdocs/publications/85740/eib-182.pdf. 10 “Co-ops Back in U.S. Census After 20-Year Absence”. NCBA CLUSA. May 9, 2017. Accessed on August 28, 2019 at https://ncbaclusa. coop/blog/co-ops-back-in-u-s-census-after-20-year-absence/ 11 Hueth, Brent. “The 2018 State of the Co-op Economy”. The Cooperative Business Journal. NCBA CLUSA. Accessed on August 28, 2019 at http://online.fliphtml5.com/caqv/vcpp/#p=6. 12 “2017 Economic Census Planned Data Product Releases.” United States Census Bureau. Accessed on August 28, 2019 at https:// www.census.gov/programs-surveys/economic-census/about/release-schedules.html. 13 “Advocacy Priorities: Rural Economic Growth.” NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/advocacy/advocacy-priorities/rural-economic-growth/ . 14 “Interagency Working Group.” NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/advocacy/interagency-working-group/. 15 “2016 Broadband Progress Report.” Federal Communications Commission. January 29, 2016. Accessed on August 28, 2019 at https://www.fcc.gov/reports-research/reports/broadband-progress-reports/2016-broadband-progress-report. 16 “Electric Co-ops and Expanded Rural Broadband Access.” National Rural Electric Cooperative Association. Accessed on August 28, 2019 at https://www.electric.coop/expanded-rural-broadband-access/. FALL 2019 | 11 Building the Next Economy

State legislators know this, often because they are and governance. This year, the Connecticut General themselves members of cooperatives. Accordingly, Assembly passed “Proposed Bill No. 138: An Act many legislatures have established policies to Modernizing the State’s Cooperative Association expand opportunities for cooperatives to serve their Statutes.”20 The legislation will make it easier members’ broadband needs. In January 2018, the to form and expand cooperatives, including by Missouri legislature voted to lift a state ban that converting existing businesses into co-ops. This prevented electric cooperatives from supplying marks a welcome departure from Connecticut’s broadband. During 2017 and 2018 Georgia, earlier laws, which had the cumulative effect Alabama, Illinois, Nebraska and Tennessee each of impeding cooperative development in that passed legislation that empowers co-ops to state.21 Cooperatives, including members of the increase broadband access for their members, Neighboring Food Co-op Association, were a too.17 These were part of a larger push for rural major driving force behind getting these needed broadband legislation across the country. Since changes enacted. Meanwhile the Maine State January 2018, more than 29 bills in 14 states Legislature has also advanced “An Act to Create were introduced that promoted rural broadband.18 and Sustain Jobs through Development of At least 26 such bills have been enacted.19 At Cooperatives and Employee-owned Businesses” to least six of these mentioned or explicitly required its appropriations committees. This follows efforts cooperative involvement either in state grant from the Cooperative Maine Alliance, Cooperative programs or task forces to address broadband Development Institute and numerous others.22,23 access. Most of the remaining bills concentrated on funding general research programs or target Governors also see the benefits of welcoming and specific types of broadband provision, such as at supporting cooperatives and employee ownership. public libraries in rural areas. As such, broadband- This past April, Colorado Governor Jared Polis used interested co-ops will generally be able to access an executive order to establish a commission available funding and benefit from such legislation. that will research and support employee-owned businesses—particularly cooperatives—as a means Some states are focusing on creating a more to ensure small businesses remain in operation welcoming environment for co-ops by updating after the retirement of their current owners.24 Out the statutes that govern cooperative formation of a state population of roughly 5.7 million, more

17 Georgia & Missouri, please see https://ncbaclusa.coop/blog/a-co-op-future-for-broadband-in-america/; Alabama Broadband Accessibility Act (March 2018) please see https://whnt.com/2018/03/28/governor-ivey-signs-alabama-broadband-accessibility-act-to-provide-better-internet-to-rural-areas/; Tennessee Broadband Accessibility Act, please see https://www.ten- nessean.com/story/news/local/2018/10/18/rural-broadband-internet-tennessee/1659004002/ (2017); Illinois HB 5752, please see http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=91&GA=100&DocTypeId=HB&DocNum=5752&- GAID=14&LegID=111843&SpecSess=&Session=; Nebraska LB994 (2018), please see https://ruralbroadband.nebraska.gov/statutes/index.html. All sites last accessed on August 28, 2019. 18 “Challenges Facing Rural Communities.” The National Conference of State Legislatures. August 20, 2019. Accessed on August 28, 2019 at http://www.ncsl.org/research/agriculture-and-rural-development/challenges-facing-rural-communities.aspx. 19 Stauffer, Anne. “Congress, More than a Dozen States Consider Legislation to Expand Broadband Access.” Government Technology. October 23, 2018. Accessed on August 28, 2019 at https://www.govtech.com/policy/Hows-Broadband-Deployment-Coming-An- Update-on-Federal-and-State-Support.html. 20 “Substitute for S.B. No. 138.” Connecticut General Assembly. Accessed on August 28, 2019 at https://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=SB-0138. 21 Crowell, Erbin. “Talking Points on Proposed Bill No. 138.” CT Co-op Statute Working Group. Accessed on August 28, 2019 at http:// fiddleheadsfood.weebly.com/uploads/9/7/4/6/9746562/ct.statutes.talkingpoints.2019.02.04.pdf. 22 http://legislature.maine.gov/LawMakerWeb/summary.asp?LD=1520&SessionID=13 23 “Creating an Ownership Economy in Maine: LD 1520, An Act to Create and Sustain Jobs through Development of Cooperatives and Employee-owned Businesses.” Cooperative Maine Business Alliance. April, 2019. Accessed on August 28, 2019 at https://maine. coop/wp-content/uploads/2019/04/LD-1520-Ownership-Economy-Legislation-Fact-Sheet.pdf. 24 “Summary of LD 1520.” State of Maine Legislature. Accessed on August 28, 2019 at https://www.denverpost.com/2019/04/11/ ared-polis-employee-owned-businesses/.

12 | THE COOPERATIVE BUSINESS JOURNAL Attendees discuss the local policy environment at the Regional Cooperative Policy Roundtable in Denver, Colorado in May. The yearlong series marks the first effort to establish the national policy strategy cooperatives need to thrive. Photos: NCBA CLUSA

FALL 2019 | 13 Building the Next Economy

than 1 million Coloradans are employed by small with increased access to healthy food, retaining businesses.25 “Increasing employee ownership will help roughly 5,000 jobs and adding at least $540,000 in support a strong economy and promote job security tax revenue.28 in communities across the state,” Polis said a press release announcing the commission. “Supporting These state polices can go to scale nationally. employee ownership has been a top goal and now we In 2010, the Obama Administration created the are taking the necessary steps to make it a reality.” Healthy Food Financing Initiative (HFFI), motivated partly by the successes of Pennsylvania’s program States are innovating with cooperative-based to increase healthy food provision. Members solutions that can go to scale nationwide. The of Congress took note of the program’s early Pennsylvania Fresh Food Financing Initiative (FFFI) successes and made it part of the 2014 Farm Bill,29 was established in 2004 by the Pennsylvania state thereby mandating public-private partnership legislature, which provided $30 million in seed between USDA Rural Development and CDFIs. The money.26 The Reinvestment Fund, a Community Healthy Food Financing Initiative supplies technical Development Financial Institution (CDFI) with a assistance and funding “to eligible healthy food history of supporting co-op development, leveraged retail projects to overcome the higher costs and crucial additional funds amounting to a $120 million initial barriers to entry in underserved areas.” These total program budget. The program ran for six years take the form of one-time grants. The program (2004-2010) until all funds were deployed. Food has provided funding to several cooperatives, co-ops accounted for many of the 88 successful cooperative development organizations and applicants for FFFI assistance.27 The program other organizations that used funds to support succeeding in supplying more than 400,000 residents cooperatives. These include the Cooperative Fund of New England, the Lowcountry Housing Trust, Capital Impact Partners and ASI Federal Credit Union, among others.30 Since 2011 the program has By living out Cooperative Principle #6— leveraged over $1 billion in funds through its public- cooperation among cooperatives —we build private partnerships. These funds have supported more than 200 projects in over 30 states and helped the strength and resilience of our businesses create or retain over 3,000 jobs.31 against unfair political efforts that would Like states, city governments have been supporting disadvantage cooperatives. cooperatives to achieve their policy goals. The city council of Berkeley, California recently allocated $100,000 for worker co-op development over the

25 Ibid. 26 Soursourian, Matthew. “Healthy Food Financing Initiatives: Increasing Access to Fresh Foods in Underserved Markets.” Community Investments. Winter 2010/11. Vol. 22, Issue 3. 2010. Accessed on August 28, 2019 at https://www.frbsf.org/community-development/files/CI_Soursourian.pdf. 27 “Pennsylvania Fresh Food Financing Initiative.” The Reinvestment Fund. 2011. Accessed on August 28, 2019 at https://consumer- fed.org/wp-content/uploads/2011/10/Evans_Food_Deserts_panel_FPC_2011.pdf. 28 “A Healthy Food Financing Initiative: An Innovative Approach to Improve Health and Spark Economic Development.” PolicyLink, The Food Trust and The Reinvestment Fund. March 1, 2012. Accessed on August 28, 2019 at http://thefoodtrust.org/uploads/me- dia_items/hffi-one-pager.original.pdf. 29 “Healthy Food Financing Initiative.” The Reinvestment Fund. Accessed on August 28, 2019 at https://www.reinvestment.com/initiatives/hffi/. 30 “The Healthy Food Financing Initiative Financial Assistance Awards.” Community Development Financial Institutions Fund. 2011. Accessed on August 28, 2019 at https://www.cdfifund.gov/Documents/HFFI%20Book%20508.pdf. 31 “The Healthy Food Financing Initiative (HFFI): An Innovative Public-Private Partnership Sparking Economic Development and Improving Health.” PolicyLink, The Food Trust and The Reinvestment Fund. April 4, 2015. Accessed on August 28, 2019 at https:// www.frbsf.org/community-development/files/healthy_food_financing_initiative.pdf.

14 | THE COOPERATIVE BUSINESS JOURNAL next two years.32 This came about after the city’s Office of Economic Development commissioned a study of area businesses—conducted by Project Equity, an organization that promotes co-ops—“as Just as a cooperative thrives when members an exit strategy for business owners, and as an are engaged in its success, our attempts to important approach for increasing employee engagement and wellbeing.”33 It found that 1,200 build a better policy environment for co-ops local businesses would require succession planning will succeed only if we participate in the over the coming 15 years as business owners policymaking process. retire. These businesses total $1.6 billion in annual sales revenue and provide a third of local jobs. The allocated funds will be used to expand an existing worker co-op pilot program. The program supports and sustain itself only through the actions and conversion to worker cooperatives as a means of advocacy of the cooperative community. Federal securing these jobs against possible loss due to advocacy efforts often get attention, but we owner retirements. should also keep keen eyes on local and state-level policymaking. Events earlier this year in the Iowa Elsewhere local political candidates recognize Legislature can demonstrate why. Lobbyings by that cooperatives are vital to local growth and a certain banking organizations sought to increase winning component of their electoral platforms. As taxes and impose membership restrictions on just one example, Satya Rhodes-Conway—current credit unions and their member-owners.37 This is mayor of Madison, Wisconsin—was elected to part of an ongoing, multi-year effort to reduce the office on a platform that featured cooperatives community-enhancing work of credit unions in prominently. Rhodes-Conway proposed using order to bolster the positions and profits of banks. housing co-ops to improve access to affordable The Iowa Credit Union League’s monitoring and housing.34,35 Her proposals reflect research from engagement with the Iowa credit union community Madison’s own University of Wisconsin Center and the larger co-op community have been vital to for Cooperatives, which has analyzed the ways the continued defense of credit unions and their co-ops can increase affordable housing and done members.38 The League’s efforts should remind significant research on housing co-ops in Madison us that there are cooperative members in virtually and nearby areas.36 every state or federal legislative district whom we can call on for support. By living out The need for co-op community advocacy Cooperative Principle #6—cooperation among While more policymakers see the wisdom of cooperators—we build the strength and resilience supporting the cooperative business model, of our businesses against unfair political efforts the cooperative movement will build strength that would disadvantage cooperatives.

32 “City of Berkeley Commits $100,000 to Worker Cooperative Development.” Sustainable Economies Law Center. June 25, 2019. Accessed on August 28, 2019 at https://www.theselc.org/berkeley_commits_two_years_of_funds_to_worker_coops. 33 “About Us”. Project Equity. Accessed on August 28, 2019 at https://www.project-equity.org/about-us/. 34 Dahmer, David. “’In Madison, we are not using our assets to the extent that we should be.’ Satya Rhodes-Conway Enters Race for Mayor.” Madison 365. June 6, 2018. Accessed on August 28, 2019 at https://madison365.com/in-madison-we-are-not-using-our- assets-to-the-extent-that-we-should-be-satya-rhodes-conway-enters-race-for-mayor/. 35 “Satya for Madison: Issues”. Satya for Madison. Accessed on August 28, 2019 at https://www.satyaformadison.com/issues. 36 See the UWCC’s relevant research at https://uwcc.wisc.edu/resources/housing-2/, accessed last on 8/28/2019. 37 “April advocacy efforts kick off with Co-op Tax and Policy discussion, include work to protect credit unions.” NCBA CLUSA. April 9, 2019. Accessed on August 28, 2019 at https://ncbaclusa.coop/blog/april-advocacy-efforts-kick-off-with-co-op-tax-and-policy- discussion-include-work-to-protect-credit-unions/. 38 “Legislative Forum: February 2, 2018.” Iowa Credit Union League. February 2, 2018. Accessed on August 28, 2019 at https://www.iowacreditunions.com/icul/aspx/legislativeforum.aspx?minutesid=1349.

FALL 2019 | 15 Building the Next Economy

The examples in this piece have primarily concerned the power to improve people’s lives for the better policymakers’ focus on cooperatives. This work is beyond the next election cycles. Their strength comes united by the fact that it succeeds only through the from their members, who own their businesses participation and efforts of active members of the and seek to ensure that they remain stable and co-op community. To become better advocates, we sustainable parts of their local communities. need to be in dialogue with one another, learning about the cross-sector issues our movement is In urging policymakers to utilize the cooperative facing and leveraging resources and ideas to promote business model, let’s consider some of the growing cooperative solutions to pressing issues. challenges where cooperatives should be an essential part of the solution, including: The Cooperative Development Foundation and • Homecare for seniors NCBA CLUSA have created one such opportunity In an industry plagued by an 82 percent turnover this year: the “Power in Purpose” Cooperative rate nationally, employee-owned homecare Policy Roundtable Series.39 These roundtables improves quality of care and reduces annual followed on our work with the Urban Institute turnover to 30 percent. to develop metrics to assess cooperative social and economic impacts on their communities, • Rural broadband and connectivity culminating in a report called “The ABCs of Nearly 100 electric co-ops (and counting) now Cooperative Impact.”40 These regional cooperative provide reliable, high-speed internet to rural policy roundtables have been designed to consumers whom investor-owned internet consider policies that could empower people to providers fail to serve. use cooperatives to build more inclusive local • Financial products economies. The conversations are part of ongoing Credit unions serve consumers of all research funded by the Robert Wood Johnson backgrounds and provide credit and banking Foundation to research the social and economic services to traditionally under-banked impact of cooperatives—part of the philanthropy’s communities. longtime focus on healthy communities. Events have been held in Harrisburg, Pennsylvania; • Clean energy Denver, Colorado; Billings, Montana; Madison, Consumers should be at the heart of the Wisconsin; and Maple Grove, Minnesota. Upcoming burgeoning clean energy sector. events are also scheduled for Olympia, Washington • Stable and affordable housing and Sacramento, California with further locations Housing cooperatives are a lower-lending risk, 41 to be determined. with lower monthly costs to residents and higher housing satisfaction by owner-tenants. Cooperative solutions have immense promise for solving today’s issues. As we look ahead to the 2019 • Food and 2020 election cycles, we should work to ensure Food cooperatives provide access to nutritious, affordable food. our elected officials know more about cooperatives.42 They need to see the long-term benefits and • Platform cooperatives potential of our business model. Cooperatives have People who work in the fast-growing gig

39 “Power in Purpose: Cooperative Policy Roundtable Series.” NCBA CLUSA. Accessed on August 28, 2019 at https://ncbaclusa.coop/ power-in-purpose-cooperative-policy-roundtable-series/. 40 Theodos, Brett, Corianne Payton Scally & Leiha Edmonds. “ABCs of Cooperative Impact.” NCBA CLUSA. December 2018. Accessed on August 28, 2019 at https://ncbaclusa.coop/resources/abcs-of-cooperative-impact/. 41 For the calendar of events, please go to https://ncbaclusa.coop/power-in-purpose-cooperative-policy-roundtable-series/#roundtable-calendar. Last accessed on August 28, 2019. 42 In 2019, gubernatorial and legislative elections will occur in the following states: Virginia, Kentucky, Louisiana, Mississippi, and New Jersey. Numerous municipal elections, as well as special federal elections, will also take place. Cooperators should ensure candidates are hearing their voices during all such elections.

16 | THE COOPERATIVE BUSINESS JOURNAL economy should have the ability to participate more fully in their businesses through the cooperative business model.

• Information technology and big data Consumers should reap more of the value created by their data through cooperative ownership.

• Childcare More childcare providers could own use this solution that has proven successful in the more than 500 existing childcare cooperatives.

To empower more people to use cooperatives, policymakers should:

• Increase access to capital for cooperatives to startup, expand or innovate;

• Support innovative strategies to deliver technical assistance; • Encourage broader interagency coordination at the federal and state levels; and • Increase investment in research and development of cooperative businesses. THE WITMER FAMILY Rockingham County, Virginia By working together, we can show policymakers what FARMER-OWNERS SINCE 2010 cooperatives can do to improve the lives of every American. Through our advocacy efforts, we can build a stronger, more inclusive economy. Just as a cooperative business thrives when members are engaged in its success, our attempts to build a better policy environment Not just the for cooperatives will succeed only if we actively participate in the policymaking process. WHERE Doug O’Brien is President and CEO of NCBA CLUSA, where BEHIND YOUR FOOD he works with the cooperative community, both domestically and internationally, to deepen its impact on the economy. WHO Doug has been with NCBA CLUSA since 2016, when he joined the association as Executive Vice President of Programs. WHY Previously, he led the work of the White House Rural Council and served in top positions at the U.S. Department of Agriculture’s Rural Development. Greg Irving is a Research Assistant at NCBA CLUSA.

FALL 2019 | 17 A Path to Shared Prosperity Insights from ESOPs reveal the potential of employee ownership

18 | THE COOPERATIVE BUSINESS JOURNAL < CLEAN Carwash is a worker-owned car wash cooperative in Los Angeles that prioritizes worker and environmental rights. Photo: Capital Impact Partners

By Janet Boguslaw and Lisa Schur ith growing wealth inequality in the U.S. and an increasingly fragmented relationship to the workplace driven by contingent and Wcontract work, it is critically important for individuals, families and communities that the rewards of work take center stage. >> A Path to Shared Prosperity Insights from ESOPs reveal the potential of employee ownership

FALL 2019 | 19 A Path to Shared Prosperity

The first national legislation to address worker cooperatives evens access to SBA loans, paving the way for more success stories like Opportunity Threads, an immigrant-owned textile co-op in North Carolina. Photo: Opportunity Threads

In 2015, the W.K. Kellogg Foundation engaged the company decisions and board elections are Institute for the Study of Employee Ownership and conducted on a one-person/one-vote basis, while Profit Sharing at the Rutgers University School of in the typical ESOP workers do not elect the board Management and Labor Relations to conduct a and major decisions are conducted on a one-share/ qualitative study examining the potential impacts one-vote basis (although ESOPs can be set up to of employee ownership for low- and moderate- give one vote to each employee). Another difference income employees and their families. Its purpose is that funding for cooperatives typically comes was to provide insight into the role of employee from cooperative member savings, while funding ownership in supporting employees’ asset/wealth for ESOPs is often borrowed from lenders, with the accumulation and related issues of financial security, ESOP trust promising to repay the loan out of future economic mobility, and family well-being. With a earnings. The cooperative model is most frequently large research team, we conducted interviews with used to start new businesses, while ESOPs are long-tenured employees having low- to moderate- generally used to buy out existing businesses (often incomes at companies with Employee Stock from retiring owners). Given that both models Ownership Plans (ESOPs). involve broad-based ownership, and some ESOPs try to involve workers in decisions in order to create ESOPs and worker cooperatives are similar in that a greater sense of ownership, important lessons both involve broad-based ownership of a firm by from our study of ESOPs have the potential to its workers. One difference is that in a cooperative, inform worker cooperatives.

20 | THE COOPERATIVE BUSINESS JOURNAL Our study1 focused on interviewing women and income categories. The individual earners we studied people of color. In this article, we want to highlight have much more total wealth through their ESOP and three of our findings on the relationship of employee 401(k) accounts than single male and single female ownership to workers’ total wealth nationally. The comparisons 1.) shar ed prosperity and wealth accumulation are especially striking for workers of color, who across race and gender categories, generally tend to have lower wealth levels across the U.S. For instance, black women in our study had 2.) in tergenerational transfers of wealth and an average of over 275 times the wealth of black wellbeing, and single women nationally. Still, in our study sample 3.) c ooperation, participation and skill building. of ESOPs, black women have about one-fourth the average wealth of black men, white women and The role of assets and ownership Latinx employees. All of these groups of employees Why is asset building important? The reality and lived have lower assets than do white men in our low- to experience of expanding wealth inequality in the U.S. moderate-income sample when considering both is well documented. Today, the top 10 percent of ESOP and 401(k) accounts, although they have higher households own more wealth than the bottom 90 average assets than single white men in the national percent combined. Assets are an alternative term for sample. Employee ownership does not eliminate wealth or the collective set of resources held, in both racial or gender wealth gaps, since ownership stakes tangible and intangible forms, which can be leveraged are typically based on income that reflects racial or invested for economic stability, security and well- and gender disparities. However, when compared being. Wealth is not built through income alone. It is to workers at traditional firms, women and people the product of equity built through home ownership. of color in employee-owned firms have significantly It is cash savings from earnings, profit sharing, gifts more assets. or inheritances, and holdings of stocks and bonds. It is ownership of vehicles, retirement accounts and businesses. It is education, job skills and experience, and access to opportunity. It is the product of good As shared capital organizations, health and healthcare, social networks and support, cooperatives and ESOPs can learn a lot and more. Since wealth consists of more than simply cash, income or stocks, we refer to all of these from each other and, together, can fight components of wealth as assets. The combination wealth inequality. of resources that constitute a household’s assets enable individuals and families to move from just making ends meet to managing life’s challenges and A crucial point is that employee ownership wealth being able to plan and invest in the future. does not substitute for lower wages or other forms of wealth. The most recent research on this issue Shared prosperity and wealth accumulation comes from Nancy Wiefek at the National Center across race and gender categories for Employee Ownership’s study of the U.S. National We compared the wealth of the individual workers Longitudinal Survey. This work provides evidence in our sample to the wealth of single workers in that young ESOP workers have 92 percent higher national samples. This is an appropriate comparison median wealth than their non-ESOP working peers. because the data from our study are about Importantly, it finds the ratio of household income individual workers’ 401(k) and ESOP accounts, thus to poverty levels is higher for young ESOP workers we compare individual workers (our sample) with both overall and among single women, single women individual workers (national sample) in the same of color, workers with children age eight or under,

1 Janet Boguslaw and Lisa Schur co-authored the report: Building the Assets of Low and Moderate Income Workers and Their Families: The Role of Employee Ownership. Institute for the Study of Employee Ownership and Profit Sharing. Rutgers Univer- sity School of Management and Labor Relations. March 2019 https://smlr.rutgers.edu/sites/default/files/rutgerskelloggreport_ april2019.pdf FALL 2019 | 21 A Path to Shared Prosperity

Employee-owned since 1971, The Cheese Board Collective is part of the Arizmendi Association of Cooperatives. Photo: Around the World Documentary Series

and those with less than $25,000 in wages. Young represent resources that are not income dependent. ESOP workers also tend to have separate additional Among employees who reached the age or years of diversified 401(k) retirement plans. And, the median tenure at the firm when they became eligible to either wage income of low-income women (earning less borrow or draw upon their ESOP accounts, a number than $30,000) in employee owned companies was say this enabled them to spend on their families $21,000 compared to $17,000 among low-income while still retaining resources for retirement security. women who were not employee owners. They used ESOP accounts to pay for children’s college tuition, weddings and down payments on homes. Intergenerational transfers of wealth Others say that they are planning, once retired, to and well-being use the ESOP for these purposes. Many report that ESOPs offer the opportunity for making they will be secure in retirement and will not have to intergenerational investments, creating opportunities draw on their children’s resources for security and for parents to help their children while still living, well-being. Several of the interviewees talk about as well as potentially through the inheritance of their hope that they will have some resources to ESOP values after death. They are also a form of pass on to their children or grandchildren when they life insurance, as a few workers we interviewed die. Parental ESOP wealth transfers to children while noted. If they should die before they retire, the ESOP living increase young and adult children’s security, value will be transferred to their families. Several investments and next-generation opportunities. mentioned the sense of security this provided them. ESOP accounts can also be drawn upon to reduce Cooperation, participation and skill building debt or cover unexpected economic shocks, as they Employee ownership can help foster positive

22 | THE COOPERATIVE BUSINESS JOURNAL workplace relations and build employee skills. A study that reviewed results from 102 samples with over 56,000 firms found that there is a small but strongly OUR REPORT IS BASED ON significant link between employee ownership and INTERVIEWS WITH 92 LOW- TO better economic performance on average.2 The MODERATE-INCOME EMPLOYEES. interviews provided a number of examples of how the ESOPs can create an ownership culture that 72% had been at their company for at least 15 years encourages cooperation among employees. One woman said, “Things changed when the company 62% were women became employee-owned. There is more of a sense 48% were people of color of community,” while another said she feels “more secure at an employee-owned company… There is 26% were women of color less conflict between employees… Management and had not graduated high school co-workers care about me, not just as an employee, 8% but as a person.” 50% had graduated high school or received a GED

Several employees gave specific examples of how 32% had some college, vocational school or an the ESOP changed their views and behavior, such as associate’s degree a woman who said she told other workers not to be 8% had a bachelor’s degree “so quick to FedEx everything” and another who said that people are more careful with company money $165,000 was the median ESOP account value “because it’s our ESOP dollars.” (ranging from $15,000 to $6 million) The 21 companies included National survey data show that employee owners 9 in manufacturing, are more likely than other workers to receive 5 in engineering, company-sponsored training—close to two-thirds 2 in healthcare, with the rest scattered across (66 percent) of employee owners received company several industries. All of the companies training in the past year compared to less than are ESOPs. half (46 percent) of non-employee-owners, based on analysis of the 2014 and 2018 General Social Surveys. While ESOP companies vary, many of them provide opportunities for participation and training, such as financial education for understanding the coming year. “I started here as a very shy person,” ESOP model and company finances along with open one employee said. But participation in leadership book management. training, running meetings, attendance at ESOP conferences and the opportunity to be heard have One good example is a company that integrates given her the confidence to voice her views and lead work structure with workforce development. In this others—skills she says are useful in her professional company, employee-owners at all levels are included and personal life. in training and education programs for career advancement. Attendance at ESOP conferences is One worker put that spillover effect this way: “What rotated to give everyone an opportunity to learn I learned [at work] made it easier for me [to navigate from them, and all employees are included in the daily life]—I felt more comfortable talking to my annual business planning cycle when plants are kids’ teachers, coaching my kids’ baseball team, shut down for a few days so that employees can dealing with the other parents, and just being more help develop priorities and operational plans for the comfortable in my neighborhood.”

2 O’Boyle, E. H., Patel, P. C., & Gonzalez‐Mulé, E. (2016). Employee ownership and firm performance: a meta‐analysis. Human Re- source Management Journal, 26(4), 425-448.

FALL 2019 | 23 A Path to Shared Prosperity

Translating findings into action the opportunities for employee ownership We learned a lot about strategies ESOPs can use conversions that will benefit low- and moderate- to build assets for their low- to moderate-income income earners. It could also be used to provide workforce. While there is much more still to learn, workforce education and training for ownership. we can begin to provide some direction. Our report details a number of key insights and possible • The Preferred Status Certification would allow suggestions about how to enhance the asset building women-owned, veteran-owned and minority- opportunities from ESOPs from the point of view owned ESOPs to retain their preferred status of different stakeholders. Several strategies can be certification because they are majority owned particularly effective in building the assets of the by an ESOP trust. Instead of viewing the trust low- to moderate-income workforce. These include as a legal entity and disqualifying an ESOP- the following: owned company, certifying agencies could instead consider the identities of the ESOP • Provide financial literacy training and make linkages participants in whose interest the trust owns to personal family budgets This helps inform those shares. This can help broaden access to employees about the ESOP business model asset building opportunities. while helping transfer their new financial skills and knowledge to other contexts that may Finally, there are ways that other stakeholders— bolster personal asset development. those self-identified and those we want to engage in this work—can support low- and moderate-income • Provide tuition support for both degree and non- asset building through ESOPs. In our full report we degree courses Pay for tuition upfront and talk about several stakeholders, but here will focus on provide mentoring and support for success two, philanthropy and community advocates: within the workplace. Engage more senior staff to coach or tutor employees for up to 2-3 • Philanthropy Large national philanthropies, hours per week in subject areas on company along with their local family and community time. When needed, allow flexible scheduling counterparts, can play an important role in three so employees can take classes or prepare for ways. First, they can spread knowledge about exams. This saves personal budget assets and ESOPs to employers and community players. builds human capital. They can make opportunities for employee ownership more broadly visible and understood • Adopt a more progressive ESOP share structure within communities where there remain existing that ensures the lowest-paid employees receive privately-held companies—particularly in a larger percentage of income share of ESOP those communities where the firms employ value each year, consistent with pension law. significant numbers of women and/or people This is one way to overcome some of the wealth of color. Second, philanthropy might consider inequality gap that continues even within ESOPs the development of an ESOP investment fund when share value is tied to income or earnings. through a combination of philanthropic actors, or through a program-related investment Public policy can also play an important role in model. The goal would be to increase the ease advancing asset building through ESOPs. A variety and accessibility of ESOP conversions from of federal, state and local policies are designed to retiring business owners. Third, foundations encourage employee ownership. Two of these are: can contribute to an education and training fund to help ESOPs structure the transition of • The Main Street Employee Ownership Act of 2018 their organizations in participatory ways, and to directs the Small Business Administration to support new ownership training. support employee ownership in a variety of ways including loans, loan guarantees and • Community Advocates Increasingly, community technical assistance. This can help expand players are involved in finding ways to stem the

24 | THE COOPERATIVE BUSINESS JOURNAL tide of industry and job loss in communities. The more they proactively approach business owners and educate residents about the opportunities Work can and should ensure economic ESOPs present, the more likely that asset and social stability and greater building opportunities will be retained or grow opportunities and well-being for families. in their community. Community advocates may include employees, but it also means that Community Development Corporations (CDCs), or depleting low-income flows. Cooperatives are Community Development Financial Institutions increasingly working to identify ways to preserve the (CDFIs), Community Action Programs (CAPs), assets of their potential members along similar lines. agencies, chambers of commerce, regional and Both business models provide greater job stability economic development offices, and other local and security to the workforce, and most examples actors can become engaged. Labor unions and of both provide greater opportunities for education workers centers, too, are recognizing employee and training targeted toward employee advancement ownership as a path for enhancing worker and leadership than non-capital share enterprises. empowerment and job security. Similar to the Cooperatives by structure can help reduce racial and roles of philanthropy noted above, community ethnic wealth gaps more effectively than ESOPs, players need to build awareness of employee unless the latter are able to adjust the compensation ownership, and begin proactively educating formula, while both advance intergenerational their communities to develop an early warning transfers of wealth. system of businesses that may be likely to transition due to aging owners or other markers. It is critical to note, in summary, that new structures They can also begin a process of new ownership of work and relations to the workplace do not training preparedness, similar to homeownership preclude the opportunity for everyone to build wealth counseling, so that working people in through work. Brick and mortar as well as gig-based communities are made aware of the steps and businesses, service work and production can adopt finances of such a transition. In this way both the cooperative or ESOP business model. Work can workers and businesses can act more proactively and should ensure economic and social stability and to retain the assets of the community. greater opportunities and well-being for families. When work “works” for all employees, we have A new frontier stronger, more stable, more secure and financially Our study provides a successful proof of concept and thriving communities. opens up a new frontier for fighting wealth inequality through employee ownership. It demonstrates that Janet Boguslaw is Senior Lecturer and Senior Scientist, each of the key stakeholders—employees through Institute on Assets and Social Policy, Heller School for education and investment, managers through Social Policy and Management, Brandeis University. organizational practices at the site of work, and the She is also a Louis O. Kelso Fellow & Wawa Inc. Fellow, private and public sector through policy that affects Institute for the Study of Employee Ownership and investments and performance—together can Profit Sharing at the Rutgers School of Management produce productive and efficient workplaces while and Labor Relations, Rutgers University. simultaneously building the asset wealth of low- and moderate-income earners. Lisa Schur is Professor and Chair, Department of Labor Studies and Employment Relations and the Cooperatives and ESOPs as shared capital Program for Disability Research at Rutgers School of organizations can learn a lot from each other and, Management and Labor Relations, Rutgers University. together, can fight wealth inequality. ESOPs provide She is also an Executive Fellow at The Institute for an important path for workers—especially those the Study of Employee Ownership and Profit Sharing who are low-income and low-skilled—to become at the Rutgers School of Management and Labor owners without drawing on their own limited savings Relations, Rutgers University.

FALL 2019 | 25 POWER IN PURPOSE Cooperatives and the Sustainable Development Goals

By Karen Miner and Sonja Novkovic

ransformation toward a sustainable society, economy and natural environment is an urgent need within the U.S. and Taround the globe. In our globalized society, acting local does not limit our impact to our own backyards. In some cases, cascading impact can be negative, but it can also be positive. The power in the purpose of cooperatives is the potential to have transformative local-to-global impact on the most pressing issues that affect all of us—in direct or indirect ways.

26 | THE COOPERATIVE BUSINESS JOURNAL The United Nation’s Sustainable Development Goals are a powerful tool cooperatives can use to demonstrate their power in purpose. Graphic: United Nations

FALL 2019 | 27 Power in Purpose

The United Nations Sustainable Development Goals The consensus is that all stakeholders— (SDGs) require changes to business as usual, and governments, private sector and civil society while they are an excellent fit with the cooperative organizations—need to contribute equally to business model, existing cooperatives have not the SDGs.4 While businesses are recognized to transformed sufficiently to meet these calls to action. be the source of economic growth, employment If all corners of the cooperative sector were to use and innovation, they are often at the root of the SDG framework as a call to action, there is deep environmental degradation and social inequity when potential to create meaningful impact. Failing to they are driven purely by profit. Critics therefore show leadership in this area is a missed opportunity debate whether businesses can truly contribute to that will ultimately contribute to the continued the transformation of the global economy and society degradation to social, economic and environmental unless they first transform their business5 and deploy systems within our communities. a different economic paradigm to replace neoliberal systems and policies.6 To that end, this paper offers The development process for the SDGs was a discussion about contribution toward SDGs by initiated at the UN Conference on Sustainable cooperatives as a distinct business form with dual Development (Rio+20) in Rio de Janeiro, Brazil in socio-economic purpose. 2012.1 “Transforming Our World: The 2030 Agenda for Sustainable Development” was adopted in 2015 Transformative change through a resolution at the UN General Assembly Sustainable Development Goal stakeholders in New York.2 This 2030 Agenda established the 17 acknowledge that marginal policy changes will not SDGs and related 169 targets. The aim of the SDGs is be enough for meaningful global impact; rather, what to address the most pressing contemporary issues of is needed to reach the targets are transformative economic, social and environmental development— long term changes.7 The UN’s efforts to deploy new poverty, hunger, health, education, jobs, inequality approaches to development—in particular to engage and climate change, among others. the potential agents of transformative change— include the promotion and scaling up of the Social While the previous Millennium Development and Solidarity Economy (SSE). Goals (MDGs) and the SDGs both contain specific objectives, targets and indicators to track progress, “The forms of economic activity that make up the SSE the SDGs are more ambitious and include developing generally acknowledge and apply a set of principles, and developed countries in both the process of norms and practices that seem particularly conducive consultation and targets. It is a global effort to to meeting peoples’ basic needs and promoting address global issues through partnerships and environmental protection, decent work, the equitable transformative action. The 17 interconnected goals distribution of resources and profits, and democratic address systemic issues facing the planet.3 Five fields forms of governance. Such attributes stand in sharp (called the “5 P’s”) of critical importance recognized contrast to ‘business as usual,’” the UN’s Peter by the signatories of the SDGs are People, Planet, Utting wrote in “Mainstreaming Social and Solidarity Prosperity, Peace and Partnerships. Economy: Opportunities and Risks for Policy Change.”

1 The SDGs build upon the Millennium Development Goals (MDGs), in place between 2000-2015. 2 A comprehensive timeline can be found here: https://sustainabledevelopment.un.org/sdgs 3 https://www.un.org/sustainabledevelopment/sustainable-development-goals/ 4 UN global compact White paper 2014 5 R. Scheyvens, G. Banks and E. Hughes 2016 The Private Sector and the SDGs: The Need to Move Beyond ‘Business as Usual’. Sustainable Development 24: 371–382 6 E. Kumi,,A. Arhin and T. Yeboah 2014 Can post-2015 sustainable development goals survive neoliberalism? A critical examination of the sustainable development–neoliberalism nexus in developing countries. Environment, d development and sustainability 16,3: 539–554 7 Van Vuuren, et al 2014. Pathways to achieve a set of ambitious global sustainability objectives by 2050: explorations using the IMAGE integrated assessment model. Technol. Forecast. Soc. ; UNRISD 2016

28 | THE COOPERATIVE BUSINESS JOURNAL Cooperative enterprises form the core of the social similar processes or structures),11 thus curbing their economy.8 Although all types of cooperatives are full potential for social transformation. included in the SSE concept, we argue elsewhere9 that all cooperatives are not made equal: some (Type 1) Isomorphic tendencies are more pronounced in are created to serve as agents for social and economic larger, more mature cooperatives, especially as transformation and pursue explicit social, economic the conditions for their initial need are no longer a and/or environmental objectives; while others (Type driving force—e.g. those of socio-economic injustice 2) are motivated purely by increasing economic value or market failures. For example, cooperatives that to their members. For those in the latter category, a formed as a response to a lack of access to goods paradigm shift is needed to embrace the full potential or services may find themselves in competition of the cooperative business model and contribute to with other types of enterprises years after their the pressing issues of our time. establishment.12 In order to serve their members in these new market conditions, cooperatives need All cooperatives are associations of members; as to stay in touch with member and community such, they fall under the umbrella of democratically needs and find purpose in protecting member governed and member-owned and -controlled vulnerabilities. Deep forms of member participation, enterprises.10 Utting’s assertion—that the SSE is engagement and social innovation are key elements about “reasserting social control over the economy of success in these efforts. by giving primacy to social and often environmental objectives above profits, emphasizing the place of The SDG framework, targets and indicators can serve ethics in economic activity and rethinking economic as a tool to reinvigorate the difference cooperatives practice in terms of democratic self-management make in their communities. Cooperatives not only and active citizenship”—applies to all cooperatives contribute to SDGs, but also serve as a vehicle to that abide by the International Cooperative Alliance’s achieve many of the goals. Historical examples Statement of Cooperative Identity. abound: from the war-ravaged Emilia Romagna region in Italy that is currently one of the most Cooperatives have the potential to instigate developed regions in Europe to the Kerala state in transformative change as they rest on a different India, Kumasi region in Ghana, Mondragon region in (not-for-profit and people-centered) logic. Anchored Spain, and Parana state in Brazil. With human dignity in local communities, they operationalize ethical as their driving force, cooperatives have provided values such as self-help, equity and solidarity. well-paying jobs, reduced income inequality, lifted They address the structural causes of inequality people out of poverty, secured access to finance and social injustice, which are the root causes of and energy sources, and provided healthcare and contemporary development issues, rather than just education. Access to cooperative finance is a critical treat the symptoms. However, like the SSE more element in the ability of cooperative networks to generally, cooperatives are exposed to institutional contribute to the sustainable development of entire barriers and isomorphism (the tendency of regions. The role of credit unions should therefore not institutions that face similar conditions to develop be understated.

8 Social economy typically includes democratic organizations - cooperatives, mutuals and associations. The Solidarity economy represents a wider network of like-minded entities set up to transform the economy, including governments and NGOs besides the social economy actors. See Utting 2016 Mainstreaming Social and Solidarity Economy: Opportunities and Risks for Policy Change 9 Novkovic S. 2018 The impact of cooperatives: Transformative, or just business? The Cooperative Business Journal, Fall issue, Sep- tember, NCBA Washington DC. 10 It is less evident that members in cooperatives set up for financial gain pursue social change, although such change may be an outcome of the mode of governance. This is particularly true if applying cooperative values, such as equity, equality and solidarity, in the organizational design. 11 DiMaggio and Powell 1984 The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American sociological review 48 (2): 147-160.; Utting 2018 Achieving the Sustainable Development Goals through Social and Solidarity Economy: Incremental versus Transformative Change. UNRISD 12 Examples include credit unions, rural electric cooperatives, or organic food cooperatives.

FALL 2019 | 29 Power in Purpose

It is easy to become overwhelmed by the magnitude However, we are seeing intense regulatory and of the Sustainable Development Goals. Efforts have competitive pressures on credit unions. These been made, specific to cooperatives, to shed light on isomorphic pressures lead to weaker credit unions some of the areas where cooperatives can focus their that may underperform in the delivery of community, impact. For example, the International Cooperative economic and environmental impact. Alliance (ICA) launched Co-ops for 2030 in July 2016. Using the SDGs as a basis, the Co-ops for 2030 To linger on the credit union model, the SDGs are campaign determined four action areas viewed as a lens through which impact can be understood, most relevant to the cooperative model: eradicating implemented and measured. SDGs are specific issues poverty, improving access to basic goods and that bring to light unmet needs and illustrate how services, protecting the environment, and building impact is created and measured. a more sustainable food system. For cooperatives in the food and agricultural sector, the Food and To illustrate this point, we draw attention to the Agriculture Organization of the United Nations (FAO) Credit Union Development Education (DE) Program provides even more guidance. that has been running in the U.S. since 1982.14 This program is also active in Canada, the Caribbean, This narrowing of focus into four key areas can give Africa, Europe and Asia. The program’s purpose the impression that these are the only areas of work and curriculum is framed by “development issues” for cooperatives, but this list is not exhaustive: one language, and each arm is focused on the needs for can always revisit the 17 SDGs to determine other development in the host countries or regions. priority areas. It is not difficult to develop frameworks to guide specific sectors. As an example, a credit The Canadian version of the program (CanadaDE) union leadership program has done just that.13 is hosted at Saint Mary’s University and attracts an international audience typically comprised of staff Credit unions as agents of community and participants from the U.S., Canada, the Caribbean development and Africa. The program curriculum starts with a Credit unions are income-pooling institutions. foundation built on the cooperative enterprise model Under isomorphic pressures in mature financial with an overlay of the SDGs. The use of the SDGs markets, they are often perceived to be financial caters to credit unions, illustrating the fit across four service providers like any other. Their historical role has been to pool community income, pool risks and invest in the real economy, therefore serving as vehicles for community development. As cooperatives, credit unions can play an important role in Certified Credit Union Development Educators (CUDEs) gather in Tampa, Florida to celebrate the localizing the SDG 35th anniversary of the Credit Union Development Education (DE) Program. Photo: National Credit implementation. Union Foundation

13 CanadaDE is an intensive leadership program, modeled after the U.S. Credit Union Development Education (DE) program active since 1982. The U.S. program is housed within the National Credit Union Foundation (NCFU). The CanadaDE program has fully integrated the UN SDGs throughout its curriculum. 14 https://www.ncuf.coop/how-we-help/de/credit-union-development-education-program.cmsx

30 | THE COOPERATIVE BUSINESS JOURNAL pillars—equitable access; economic empowerment; over the past five years. Under the CEO’s leadership, healthy environment, strong communities; and the credit union has shifted toward a values-based participation and inclusion. When studied, one is hard financial cooperative.16 This transformation was pressed to identify an SDG for which the cooperative initiated and continues to be fueled by a belief in the model is not a good fit, and the use of these four power of cooperative education (Principle #5) and pillars (while different from the ICA action areas) deep implementation of that education resonates with cooperative financial institutions. at all levels of the organization. Furthermore, while some may be given greater focus, none of the SDGs are excluded in the DE program. Prior to the launch of the childcare co-op, Leading Edge Credit Union was Use of the SDGs links easily to tangible, operational the only cooperative in town. This new examples. For example, in credit unions, financial cooperative now provides daycare literacy is an imperative to manage a credit union’s services to 40 families (including risk profile but also to counter low levels of financial low-income families) and employs 11 literacy, high personal debt and bankruptcy. This has a people. When compared to the SDGs, direct link to SDG 4 (quality education) as well as SDG impacts can be demonstrated clearly 8 (decent work and economic growth). Indirect links across six goal areas: no poverty, good to other SDGs can be identified, as financial security has cascading benefits tied to poverty, hunger, health and well-being.

While the DE leadership program was designed for delivery to the credit union sector, the content fits all cooperative sectors. The program’s purpose of achieving a just and equitable social, economic and environmental systems is the model that we must all be working within to maximize the development potential of cooperative enterprise.

The following examples illustrate this deep connection between the cooperative purpose and the A recent focus on Cooperative Principle #6 has led the Leading Edge Credit SDGs that the DE program unpacks. Union to help establish Newfoundland’s second co-op: The Growing our Future Childcare Co-operative. Photo: Leading Edge Credit Union Cooperation among cooperatives Like all other cooperatives, credit unions subscribe to the 7 Cooperative Principles, including Principle health and well-being, quality education, decent #6, “Cooperation Among Cooperatives,” but these work and economic growth, sustainable cities alliances do not come naturally to all credit unions. and communities, and gender equality. In rural One notable example of a cooperative initiated by communities like Newfoundland, the benefits of a a credit union is the Growing Our Future Childcare new daycare cannot be overstated. Growing Our Co-operative in Newfoundland, Canada.15 This Future Childcare Co-operative is building community cooperative’s creation story is the direct result of cohesion, supporting future generations, and fueling deliberate changes within Leading Edge Credit Union the region’s economic development.

15 Growing Our Future Childcare Co-operative Video - https://youtu.be/uDIl6dWFYhg 16 Cory Munden (CEO) has been with Leading Edge Credit Union for 20 years. In 2014, he started his Master of Management, Co-operatives and Credit Unions (Saint Mary’s University). And, in 2017, he graduated from the CanadaDE program, along with his Board Chair. Since then, Cory has gone on to complete the International Credit Union Development Education (I-CUDE) designation, awarded by the World Council of Credit Unions.

FALL 2019 | 31 Power in Purpose

Union, National Cooperative Bank, Verity Credit Union and Vermont State Employees Credit Union.18 The triple bottom line (people, planet and profits) and real economy focus of the GABV makes its framework a strong proxy for the SDGs.

Vancity Credit Union—a Canadian member of the GABV—makes the connection between impact and the SDGs explicit in their annual report. This approach is a quantitative illustration of impact. “Vancity’s values-based banking model is aligned with the United Nations’ Sustainable Development Goals to end poverty, protect the planet and ensure prosperity for all by 2030,” their 2018 Annual Report states. Based on methodology developed by the Global Alliance for Banking on Values, the accompanying table shows how the credit union’s assets support each of those goals.

Furthermore, Vancity has determined that their work aligns most closely to seven of the SDGs. Not all of the impact is about the asset base of the credit union. Instead, it also points to the fundamental people- centered aspect of the cooperative enterprise model through such examples as commitments to living wage, diversity and inclusion.

Closer to Washington, DC, Carla Decker, president and CEO of DC Credit Union, is also a champion of the SDGs. In part, this is a result of her longstanding involvement in the DE programs in the U.S., the Caribbean and Canada.

“Our mission of financial inclusion may not be self-attributed as an effort to further the SDGs, An excerpt from Vancity Credit Union’s Annual Report. Graphic: Vancity but you will see the direct impacts,” Decker said— Credit Union especially in goals #1 No Poverty, #5 Decent Work Impact in purpose & Economic Growth, #10 Reduced Inequalities, Established in 2009, the Global Alliance for Banking #11 Sustainable Cities and Communities, and on Values (GABV) is a network of values-based banks #17 Partnerships. Contributions are also being committed to “using finance to deliver sustainable made to #4 Quality Education, #12 Responsible economic, social and environmental development.”17 Consumption and Production, and #16 Peace, With such a focus, the work of this network is closely Justice and Strong Institutions. aligned with the SDG framework and cooperative financial institutions. In the U.S., four of the nine Decker’s responses on SDG contributions are a members are cooperatives: Missoula Federal Credit result of a deep connection with the cooperative

17 www.gabv.org 18 Member list as of May 2019 - http://www.gabv.org/wp-content/uploads/List-of-the-GABV-Member-Banks-1.pdf 32 | THE COOPERATIVE BUSINESS JOURNAL business model. A case study on DC Credit Union written by Margaret Lund as part of the ABCs of Cooperative Impact project19 and immediately following this article, is a testament to the deep alignment both within that project’s areas of impact, but also cooperative values and principles. Therefore, linking that impact to the SDGs is a natural extension. DC Credit Union illustrates the importance of going deep and being authentic in all aspects of how a cooperative is governed and managed over the long-term.

Power in purpose Cooperatives are self-help organizations that address their members’ needs, making them a natural vehicle for sustainable development. They address market access, scale up production, provide decent jobs, create community-owned renewable energy and more—in part due to their democratic governance. It is imperative that cooperatives stay in touch with their members’ changing needs. They must also address external conditions such as climate change, demographic shifts and migration. The UN Sustainable Development Goals are a powerful tool cooperatives can use to demonstrate their power in purpose.

Sonja Novkovic is a Professor of Economics and Academic Director of the International Centre for Co-operative Management at Saint Mary’s University in Halifax, Canada. She is a member of NCBA CLUSA’s Council of Cooperative Economists and a regular contributor to the Cooperative Business Journal. Karen Miner is the Managing Director of the International Centre for Co-operative Management, where she works with cooperative and credit union professionals from around the world.

19 ABCs of Cooperative Impact measures impact across these areas: access, business sustainability, community commitment, democratic governance and empowerment, equity, diversity and inclusion, Vancity’s work aligns most closely to seven of the Sustainable Development Goals. Graphic: Vancity financial security and advancement for workers, and Credit Union growth. https://ncbaclusa.coop/resources/abcs-of- cooperative-impact/ FALL 2019 | 33 Power in Purpose CASE STUDY DC Credit Union, Washington, DC

By Margaret Lund

“People over products is what makes us different,” the DC Credit Union website proudly and succinctly proclaims, along with the belief—unorthodox in many American financial circles—that “financial equity is a right, not a privilege.” DC Credit Union’s ACCESO addresses the otherwise unmet financial needs of Latino immigrants in the District with a multi-cultural, multi- This admirable and innovative financial institution lingual community branch. Photo: DC Credit Union began in the same way as many local credit unions, with an employer-based field of membership. Founded credit union serving the Mount Pleasant neighborhood in 1954 to serve employees of the District of of Washington, DC. With its strong balance sheet and Columbia, DC Credit Union has since expanded to stable history, DC Credit Union had the wherewithal to include residents of several core DC neighborhoods, make the move, but credit union leaders were initially and members of a variety of community-based unsure of the mission fit. On the surface, the two organizations. With $63 million in assets and 11,000 institutions did not appear to have much in common: members, DC Credit Union is still on the small side for a DC Credit Union has an employer-based field of credit union, but it packs a big punch. membership, not a geographic one, and its membership was primarily African American, not Hispanic. The DC Credit union is a U.S. Department of Treasury credit union had few Spanish-speaking staff, and no certified Community Development Financial Institution specialized services for immigrants. Many of the new (CDFI), one of only two such credit unions in the credit union members would be undocumented, while District, and also a recognized Minority Depository DCCU’s existing membership included many in law Institution (MDI). DC Credit Union has always had a enforcement. The two seemed worlds apart. focus on serving the financial needs of its primarily African American base of low- and middle-income Yet a visionary group of credit union board members saw public sector workers, including the basic “bread and something more. They saw a future of growth beyond butter” services familiar to all employer-based credit the limitations of a finite field of District employees unions, such as checking accounts, car loans, CDs and and, more importantly, they saw an affinity between specialized savings accounts for holidays, education two groups of minority District residents, along with a and other needs. Over the past 20 years, however, the common need for a variety of more inclusive financial credit union has expanded its vision to include a broad products and services that was not being met by range of community-based products and services, and conventional financial institutions. Their vision attracted embraced an increasingly diverse field of membership. In others to the board who were able to look beyond what the process, they have become a leader and exemplar of was, to what could be. The two groups shared the same creative and inclusive finance. space, and had many common experiences, so why not work together? The merger was a success, and DC This expansion of focus and activities began modestly Credit Union has never looked back. enough, when the credit union was contacted by its regulatory agency, the NCUA, to see if it could possibly Washington, DC is beautiful city of green spaces and take over the charter of a small, struggling, Latino-based cultural jewels. But this attractive exterior masks a

34 | THE COOPERATIVE BUSINESS JOURNAL wide gap in income disparities and pockets of deep members by name, and can help to access opportunities poverty. DC also has a high degree of “unbanked” like free tax preparations services, or navigate the residents, with a rate that is 20 percent above the unfamiliar world of finance. national average. DC Credit Union has responded with a focus on financial access, and on basic services that are Recognizing that their membership also may not have designed to bring those who are marginalized into the significant assets to collateralize a loan, DCCU also financial mainstream. offers a range of creative unsecured loans for situations and needs that are common for members. Part of the Some differences are simple, including having branches democratic and empowering nature of cooperatives is with hours designed with working people in mind, and a that they meet their members where they are at, and fully bi-lingual staff in the Mount Pleasant branch. Others provide the right kind of tools to help people to bring are more complex. Like many progressive credit unions, themselves to a different place. For qualified DCCU DC Credit Union offers accounts that do not require social members seeking citizenship, this might mean an security numbers to provide non-citizens with a safe and unsecured “citizenship” loan to help front the costs of convenient place to keep and build assets. They have legal services for immigrants working with approved found this approach is not only useful for immigrants, partner nonprofits. For a faith-based neighborhood but also for the District’s young people, some of whom civic club, it might mean a small loan to cover seasonal do not have a responsible adult in their lives to act as expenses before revenue can be raised. For a prospective custodian for their accounts as minors, as required homeowner, it might mean unsecured funds for down by most financial institutions. Working with the DC payment costs or a loan to consolidate existing credit into government, DCCU offers all participants in the District’s a more manageable structure. Building upon relationships youth summer employment program automatic direct and the existing civic infrastructure of the community deposit into their own non-custodial account, coupled through the city, religious institutions and local nonprofits, with education in basic budgeting and other useful skills. DC Credit Union is able to offer these unsecured loans While many banks push credit cards on young people without undue financial risk to the institution. regardless of their ability to manage debt, DC Credit Union is much more circumspect, emphasizing core By focusing on commonalities rather than savings and building lifetime financial skills over credit for differences, DC Credit Union has built a powerful this vulnerable population. model for simultaneously pursuing both growth and inclusivity. Through the addition of other small A key factor in economic disparities in our country minority-focused credit unions over the years, DCCU is not only differences in income between racial has embraced a diverse membership base and groups, but the profound and growing differences helped to create a stable and prosperous foundation in wealth. According to data compiled by the Urban for all to pursue their needs and aspirations, Institute, the median family wealth for a white family whether shared among many or distinctive to a in 2016 was over $170,000—a rate ten times more particular segment of the group. Alone, small credit than the modest $17,409 average for African American unions often struggle to provide even the most families and eight times more than the $20,920 median basic array of financial products. Joined together in a for Hispanic families.1 To promote racial equity in this visionary, creative and responsive institution like DC vital sphere, DC Credit Union focuses products and Credit Union, however, vulnerable populations can services on strategies that build family assets. This change their circumstances, build on opportunities includes products such as affordable mortgages and and create their own tailored tools and resources small business loans, but also a host of supportive through the power of their common cooperative educational tools and resources, including guides and action. “Life throws challenges at each of us” the DC classes on topics like how to rebuild credit, save for a Credit union website reminds its members. But “we major purchase, and protect yourself from fraud. Just as believe that where you start shouldn’t determine importantly, it includes a dedicated staff that often know where you end up.”

1 The Urban Institute, http://apps.urban.org/features/wealth-inequality-charts/ accessed December 11, 2018.

FALL 2019 | 35 A REVOLUTION Electric co-op technology innovations are reinventing rural America

36 | THE COOPERATIVE BUSINESS JOURNAL By Russell Tucker, Joseph Goodenbery and Michael Leitman1

echnology innovation and deployment are essential to rural America. In agriculture, manufacturing and commerce, it raises productivity and enhances the competitiveness of rural businesses. Technology innovation and deployment also helps ensure an affordable and reliable electricity supply to Tsupport the rural economy. From large centralized electric generating stations to community solar arrays and battery storage, many electric cooperatives are providing the technology investments and operational expertise to power rural America and, in turn, create economic benefits locally and throughout the economy.

1 This article is part of a continuing series about electric co-ops and their positive impacts. See “Electric Co-ops Powered America: What’s the Next Energy Revolution?” Cooperative Business Journal, Fall 2017 and “The Digital Divide: Electric Co-ops Can Provide Last- Mile Broadband to Rural America,” Cooperative Business Journal, Fall 2018. Photo: NRECA Photo:

FALL 2019 | 37 A Solar Revolution

Meeting the evolving needs of consumers generating supply was difficult to secure. New In the mid-to-late 1930s, the electric cooperative supplies from federal facilities were limited and movement gained traction as members of rural neighboring utilities often would not commit to communities formed more than 500 electric co-ops. selling electric power to meet the growing electricity They served sparsely populated areas that were requirements of electric cooperatives. While some co- deemed unprofitable to reach by other utilities. ops had small generators to meet their emergency In these early years, co-op members often took needs, these were inefficient and expensive to it upon themselves to perform the challenging operate. The solution lay in larger, state-of-the-art tasks of setting poles, running lines and connecting steam-powered electric generating plants, which neighbors to the grid. Their efforts paved the way for achieved low operating costs through improved deployment of lighting for work and study after dark, economies of scale. But these plants were costly, and electric pumps to provide running water, and washing their electric output far exceeded the requirements of machines that “made washday almost fun.”1 any single distribution co-op.

Cooperatives innovatively responded to this challenge by extending the electric cooperative model More than 450 electric distribution upstream to electric generation. Electric distribution co-ops include solar energy in their cooperatives across the rural landscape collectively supply mix, either directly or in banded together to create “federated” electric generation and transmission co-ops (G&Ts). These partnership with their generation new organizations supplied wholesale power to and transmission co-op. Electric their distribution co-op members, with boards of cooperatives lead the utility sector in directors made up of representatives from each of these members.3 This scaling-up allowed the G&Ts community solar, with more than 200 and their members to plan and finance state-of- distribution co-ops offering consumer the-art power plants and also facilitated power members access to solar energy purchase negotiations. through a community solar program. This business model where geographically dispersed electric distribution co-ops received power largely from centralized generating plants Over time, through innovation and technology created new challenges. Electricity line losses are deployment, electric cooperatives became specialists substantial when transmitting electricity over long at providing reliable and affordable power to low- distances at low voltages, making long distance population service areas across rural America. Today, transmission impractical. The solution was the 8312 electric distribution cooperatives provide service deployment of high voltage electric transmission. to one in eight Americans over 2.6 million miles of G&Ts constructed electric transmission and electric distribution lines. interconnected these systems with those owned by other utilities and federal agencies across broad Initially, rural electrification involved purchasing geographic spans. They also interconnected with electric generating supplies from facilities owned neighboring power companies and entered into by the federal government or neighboring utilities. pooling arrangements that improved the reliability However, as new electric cooperatives were formed of their own operations while similarly benefiting and electricity demand growth soared, new electric metropolitan areas of the country.4

1 “Rural Lines: The Story of Cooperative Rural Electrification,” U.S. Rural Electrification Administration, 1972, p 22. 2 This includes rural public and mutual utilities that are members of NRECA. 3 “Rural Lines: The Story of Cooperative Rural Electrification,” p. 25. 4 “Rural Lines: The Story of Cooperative Rural Electrification,” p. 27.

38 | THE COOPERATIVE BUSINESS JOURNAL EARLY SOLAR ADOPTERS PAVE THE WAY The experiences of 17 electric cooperatives provide guidance for the co-op network; more than 400 co-ops now have a solar energy option.

Cooperatives participating in SUNDA (2013) Cooperatives with solar oerings for consumer members (2018)

Source: NRECA

Seventeen early adapters participated in the Solar Utility Network Deployment Acceleration (SUNDA) project to demonstrate the potential for solar in rural America. Graphic: NRECA

Today, 62 G&T cooperatives provide wholesale offerings and made possible by a decline in the cost power to distribution co-ops by generating of installed solar. electricity at their own facilities or by purchasing power on behalf of their distribution members. In 2013, as part of the U.S. Department of Energy Collectively, G&Ts have made substantial (DOE)’s SunShot Initiative, the National Rural Electric investments in more than 65,000 megawatts of Cooperative Association (NRECA) launched the Solar electric generating capacity, generating about 5 Utility Network Deployment Acceleration (SUNDA) percent of the nation’s electricity across nearly project in collaboration with electric co-ops and 71,000 miles of transmission lines. other partners to demonstrate the potential for solar in rural America.5 The project was structured A solar revolution in rural America as a knowledge accelerator for co-ops, utilizing an Twentieth century technology motivated investments iterative and learning-by-doing process to develop in large-scale centralized generating stations and photovoltaic (PV) engineering designs, streamlined high voltage transmission to meet the increasing business models, and effective financing and tax electricity needs of rural America. However, structures. The experiences of 17 electric co- today electricity demand growth is increasingly ops in the SUNDA program provided guidance to being met through investments in renewable make solar projects more prudent and accelerate generating resources often sited within the low- development across the cooperative network. Today, voltage distribution grid. Many of America’s electric more than 450 electric distribution co-ops provide cooperatives are expanding the nation’s solar power solar offerings to their members, either directly or in footprint, motivated by a desire to enhance member partnership with their G&T. satisfaction by meeting increased demand for solar

5 DOE provided $3.6 million in research grants, matched by a $1.2 million cost share for NRECA, the National Rural Utility Cooperative Finance Corporation, Federated Rural Electric Insurance Exchange, PowerSecure Solar LLC, and 17 participating electric cooperatives.

FALL 2019 | 39 A Solar Revolution

offering a community solar program directly or in cooperation with their G&T.

The economic impact of investment in technology innovation and deployment Energy technology innovation and deployment is capital intensive and the electric industry is regarded as the most capital-intensive U.S. industry.6 Electric co-ops have deployed substantial capital in meeting the electricity requirements of rural America. In 2017, net utility plant across both distribution and G&T cooperatives totaled more than $133 billion, an average of $6,650 per consumer-member.7

The financial management associated with these investments—combined with ensuring safe, affordable and reliable electric operations— pose important fiduciary responsibilities for a cooperative’s leadership. More than 7,000 members from local communities serve on their electric cooperative boards. Director education and training programs, experience and stability on the board, and appropriate director compensation are critical to assuring the dependable operations that have allowed electric co-ops to become central to Community solar programs allow all interested consumer-members to participate in the social fabric of the communities they serve. solar energy, including renters and low- and moderate-income consumers who might not otherwise have access. Graphic: NRECA Technology innovation and deployment also requires a capable and technically skilled workforce. Electric An important innovation from the SUNDA project co-ops fulfill their mission through the direct was the development of community solar programs, employment of more than 68,000 people. The job which offer all interested consumer-members classification with the largest number of co-op an option to participate in solar energy, including employees is electric lineworkers. These jobs involve renters and low- and moderate-income consumers extensive safety training and project-management who might not otherwise have access. The skills. Lineworker wages average about $35 per community solar model aligns well with the co-op hour plus health and retirement benefits. Moreover, business model. It allows individual households co-ops directly support the employment of more to purchase or lease solar panels or to purchase than 97,000 contractors who provide various a share of the output of a solar photovoltaic services including vegetation management and project. Larger projects benefit from economies construction services.8 of scale in construction and co-ops can size and price their programs to fit member demand. Direct co-op jobs, spending and investments create Today, cooperatives lead the utility sector in the positive economic effects, which ripple throughout penetration of community solar with more than the economy as materials are purchased from 200 distribution co-ops across more than 30 states suppliers and as employees of co-ops and their

6 Powering America: The Economic and Workforce Contributions of the U.S. Electric Industry, M.J. Bradley & Associates, 2017, p.6. 7 Net utility plant refers to the non-depreciated fixed assets of the co-ops. Total distribution cooperative and G&T cooperative net utility plant investment ($133 billion) divided by the number of consumer-members (20 million). 8 See “The Economic Impact of America’s Electric Cooperatives,” FTI Consulting, March 2019. 40 | THE COOPERATIVE BUSINESS JOURNAL The Spartan Solar Array in Cadillac, Michigan. Photo: NRECA suppliers spend their income.9 NRECA and the National Rural Utilities Cooperative Finance Corporation recently commissioned a study of the economic value of electric cooperatives across their communities, regions and the country. Considering the full range of effects, America’s electric cooperatives annually contribute $88 billion in value added gross domestic product (GDP) across the U.S. economy; $40 billion in labor income; $22 billion in federal, state and local tax revenues; and support an average of nearly 612,000 U.S. jobs each year.10

Russell Tucker is Chief Economist at the National Rural Electric Cooperative Association (NRECA), where he provides economic analysis to help America’s Electric Cooperatives adapt and thrive in today’s challenging environment. Electric cooperatives nationwide are creating economic benefits for rural America. Graphic: NRECA Joseph Goodenbery is Lead Economist at NRECA, where he provides economic modeling and analysis of issues that impact of Economics and Business and monitors NRECA’s electric cooperatives. Michael Leitman is Senior Analyst members’ increasing portfolio of renewable investments.

9 While direct economic effects are computed from direct co-op employment and expenditures, “indirect” effects are computed throughout the co-op’s industrial supply chain and the “induced” effects result from consumer expenditures by the employees of co-ops and their supplier firms. 10 “The Economic Impact of America’s Electric Cooperatives.” FALL 2019 | 41 A Solar Revolution

CASE STUDY Bringing the Benefits of Solar to Low-Income * Households Cherryland Electric By Eric P. Cody Cooperative Low-income households typically spend a disproportionate share of their monthly income on energy; many also lack the ability to invest in energy efficiency improvements and renewable energy systems. In May 2018, Cherryland Electric Cooperative—serving 35,000 members across six northwest Michigan counties—began participating in Cherryland Electric Cooperative serves 35,000 members across six northwest Michigan counties. Graphic: NRECA a low-income solar pilot program that seeks to reduce the energy costs for these households by combining weatherization and clean energy initiatives. “Filling an energy savings from weatherization range from 15 to unmet need for a segment of our membership that 40 percent and are essential to enable households to deserves the same treatment as any other member is gain more control over their energy spending. Overall one more step towards ‘walking’ our leadership ‘talk,’” expected savings from the solar credits are expected to says Cherryland General Manger Tony Anderson. increase total savings to participating households by as much as 70 percent. The program is designed to educate, influence and ultimately enable low-income households to actively Upfront program costs were $270,000. The Michigan manage and control their energy budgets. Under this Agency for Energy (MAE) provided $80,000, with innovative program, 50 low-income households receive Cherryland funding the remaining $190,000. These the benefit of electricity from nine solar panels from the funds were used to acquire the 15-year community Spartan Solar Array, a community solar project that is a solar panel leases for the program participants. The partnership between Cherryland’s G&T, Wolverine Power pilot is being delivered jointly by the cooperative and Cooperative, and its distribution member cooperatives. the Northwest Michigan Community Action Agency Cherryland applies a 10¢ credit for each kilowatt-hour (NMCAA). NMCAA provides the weatherization produced by the panels—the same amount offered programs and manages income qualification, while solar to all community solar participants. Typical annual bill participation and program tracking are managed by credits are expected to be around $350 per household Cherryland. Lost revenues to Cherryland are projected over the 15-year enrollment period. at $17,500 annually, but this will be partially offset by Cherryland’s reduced electricity purchases from its Weatherization is another important facet of the wholesale supplier. program. To be considered for the solar benefit, households must have had weatherization measures *This case study is an excerpt of Eric P. Cody, “Bringing the installed or an energy audit performed indicating that Benefits of Solar to Low-Income Households: The Case of no additional measures would be cost effective. Typical Cherryland Electric Cooperative, NRECA, June 2019.

42 | THE COOPERATIVE BUSINESS JOURNAL elevate your identity

Be part of the growing impact of the .coop domain in the global, digital economy

By Lance Wolak

ith its joint ownership of the .coop domain registry, NCBA CLUSA enables cooperatives to elevate their identity online Wand to participate and thrive in the digital economy. NCBA CLUSA’s support of cooperatives in the digital marketplace is part of its work to build a more inclusive economy—empowering people to have a greater say in their futures and more equitable access to economic opportunities.

The early days of .coop domains Launched in 2001, .coop was created as the exclusive domain for cooperatives and cooperative organizations that are guided by the 7 Cooperative Principles. DotCooperation, LLC became the manager of the .coop domain, and has defined and implemented Violetta Nafpaktiti, Managing Director of DotCoop Enterprises, the domain’s eligibility policies and the cooperative raises awareness of the .coop domain at last year’s Co-op IMPACT verification process. Conference. Photo: NCBA CLUSA

Early in its life, the domain registry began offering .coop channel in order to provide local support to cooperatives domains for registration through a small collection that reside in all parts of the world, across many time of domain name registrars (retail organizations) and zones, speaking many different languages, and using through its subsidiary retail business Domains.coop. many different currencies. While its closely-aligned Domains.coop registrar captured a large percentage of the early .coop domain Looking ahead with .coop registrations, it was clear to the domain registry The .coop domain is now available and supported DotCooperation that it needed to build a global registrar by over 45 domain name registrars, offering domain

FALL 2019 | 43 elevate your identity the alternative of using a generic .com domain name with an organization verification certificate (SSL OV). Grassroots cooperatives benefit greatly from their .coop verification status, raising public awareness of Did you know? their identify. Even a newly established cooperative with a .coop domain can leap ahead with its business, • Aciamericas.coop, first registered in June 2001, is the elevated by its identity as a verified cooperative. longest in use .coop domain. This domain name belongs to ACI Americas, the International Cooperative Alliance’s regional Using your .coop domain office in San Jose, Costa Rica. Cooperatives regularly choose a .coop domain name • NCBA CLUSA registered two .coop domains in July 2001, to headline their primary website. This gives them the making them the longest in use in North America. best choice of domain names to select from. A .coop domain name also immediately identifies them as a • Cooperatives located across 79 countries are using the .coop cooperative—whether their domain name is seen domain name to elevate their co-op identity. in advertising, business correspondence, or in web • There are more than 45 .coop domain name registrars searches. Cooperatives that may have initially built offering .coop domains and related web products, providing their website on a generic domain name can later add customer support services in the .coop global support network. a .coop domain name as an additional address for the same website.

In addition to your cooperative’s primary website, registration and traditional services like website there are many other uses for a .coop domain name: hosting, email hosting and more, along with customer support native to all regions of the world. • Use .coop domains for your other websites, For the cooperative community, these registrars also such as member newsletters, community offer easy-to-use website builders, e-commerce e-magazines, event websites, a partner portal, toolkits, online payment processing, secure network news blog, etc. connections, and more. • Use a .coop domain for email addresses to immediately identify you and your colleagues as DotCooperation continues to on-board additional members of a cooperative in your day-to-day registrars to bolster its global support network. As communications. the importance of participating in the digital economy has increased, the localized, expert resources for the • A new .coop domain name can be set up to .coop domain are now in place to support the global forward viewers to a specific section of your cooperative community. existing website, as a useful shortcut. Elevate your identity Become a verified cooperative with a .coop Every .coop domain name that you register and use domain name reinforces the public’s view that verified cooperatives The .coop domain is available exclusively to can be found online with this domain address. organizations that are guided by 7 Cooperative Become more visible to the public—start telling your Principles, as outlined by the International Cooperative story on a .coop website today. Visit identity.coop to Alliance. Your “verified” .coop domain reminds the learn more. world that your co-op is a bona fide member of the trusted global cooperative community. The .coop domain is managed by DotCooperation, The global network of .coop domain name registrars LLC, which is jointly owned by NCBA CLUSA and the offer the .coop domain name at a price far lower than International Cooperative Alliance.

44 | THE COOPERATIVE BUSINESS JOURNAL Will you be there? October 10–11, 2020 2 Days 20,000 Attendees 40+ Exhibitors

www.coopfestival.coop National Cooperative Business Association CLUSA International | Fall 2019

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