DREXEL POLICY NOTES Volume 1 Number 2 Winter 2014

drexel.edu/publicpolicy The Center for Public Policy is a think tank located within Drexel’s College of Arts and Sciences. It serves as an interdisciplinary hub for Drexel faculty from a number of colleges and schools who do policy-oriented research, and as an interface between those faculty and relevant government agencies and nonprofit organizations, especially those in the Philadelphia region. The Center also offers Drexel’s MS in Public Policy degree. Urban Cooperatives and 1

Economic Development DREXEL POLICY NOTES

Richardson Dilworth

In 2011 Congressman Chaka Fattah Center for Cooperatives, and introduced HR 3677, the National Haverford College’s Center for Peace Cooperative Development Act, into and Global Citizenship, collaborated the United States House of to sponsor and host a conference at Representatives, the purpose of Drexel, the purpose of which was to which was to establish, under the examine in detail and compare auspices of the US Department of individual cooperatives from two very Housing and Urban Development, a different cities, Philadelphia and program that would, as the bill states, Madison, in an attempt to begin to “create jobs and increase economic understand the relationships between development in underserved areas by co-ops and their urban contexts. promoting cooperative development in such areas.” At the conference, 23 presenters discussed case studies they had Fattah’s bill might be considered a written, covering 21 cooperatives. proposal to create an urban Revised versions of the case studies, counterpart to the US Department of along with other material, will be Agriculture’s Rural Business- available in the form of an edited Cooperative Service. And though it book from the University of never moved beyond the House, the Wisconsin-Extension Publications National Cooperative Development (learningstore.uwex. edu), most likely Act is part of an ongoing in Spring 2015. The book is conversation. The United Nations discussed in more detail in the first declared 2012 the International Year article in this issue of Drexel Policy of Cooperatives, and following the Notes. The second article draws from UN, Drexel’s Center for Public Policy, one of the chapters in the book, in the University of Wisconsin’s which Craig Borowiak from Haverford compares the spatial dynamics of and examines the potential of cooperatives in both Madison and cooperatives to serve as catalysts for Philadelphia. The final article, by cooperation among stakeholders on myself and Andrew Zitcer from Drexel, neighborhood commercial corridors. focuses specifically on Philadelphia,

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Richardson Dilworth is Director of the Center for Public Policy and Associate Professor of Political Science at Drexel University. Exploring Cooperatives: Economic Democracy and Community Development in Wisconsin and Pennsylvania

Craig Borowiak, Richardson Dilworth, and Anne Reynolds

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Exploring Cooperatives: Economic Cooperatives come in many forms DREXEL POLICY NOTES Democracy and Community and sizes and operate in many Development in Wisconsin and different industries. What all Pennsylvania is a forthcoming edited cooperatives ostensibly have in book of case studies that compares common is that they are owned and and analyzes cooperative enterprises, democratically controlled by their primarily in Madison and Philadelphia. members. According to the Our study was initiated by officials in International Cooperative Alliance, a the Philadelphia Commerce cooperative is “an autonomous Department’s Office of Neighborhood association of persons united Economic Development, who were voluntarily to meet their common interested in exploring the potential economic, social, and cultural needs role of cooperatives as engines of and aspirations through a jointly- economic development and growth, owned and democratically-controlled particularly in neighborhoods that enterprise.” were underserved by both employment and retail opportunities. Cooperatives are also businesses, Our goal was to develop questions and as such they face financial regarding the elements within pressures regarding access to capital cooperatives that enable them to and the company’s “bottom line,” as succeed, the elements within cities well as operations-related pressures that might make them fertile ground regarding good management, good for cooperative development, and the labor, and access to markets. The elements of cooperatives that case studies in this volume reveal contribute to socioeconomic different ways that cooperatives reflect development. cooperative principles, whether in their embrace of openness and democratic This essay will briefly introduce each participation or their service to the of the cooperatives studied in the wider community. The cases also book, and offer speculation as to reveal some of the ways that co- what we can learn by comparing operatives negotiate tension between cooperatives across economic cooperative values and the needs of sectors and across cities and states. running a competitive business. The cases also reveal the importance There is a long history in the U.S. of of geographical context. Madison food producer cooperatives, and we and Philadelphia differ in many ways, include studies of two of these, including population and Organic Valley and Lancaster Farm socioeconomic makeup. As a Fresh. Both are outside the relatively rare business form, boundaries of a city, though cooperatives in the United States Organic Valley is much more rural. emerged within strong regional It is also larger, and these patterns. Both Wisconsin and differences inform our examination. Pennsylvania were home to historic clusters of cooperatives in a variety of The worker-owned cooperatives we industries, including insurance, dairy consider stretch across a broad and utilities. Private and public array of industries – they include an institutions arose to support engineering and manufacturing cooperative development, and these firm, a taxi and transportation institutions continue to play an company, and a coffee roaster in 4 important role in both regions. Madison; as well as an architectural salvage and Among our case studies are renovation company, elderly and examinations of two large, successful disabled homecare, and a childcare grocery cooperatives, Weavers Way provider in Philadelphia. Among in Philadelphia and Willy Street in other aspects, the narratives Madison, which consider how the highlight the impact of cooperative enterprises have dealt with the employee ownership. changing role of food cooperatives in The difference between the two the market as organic and local foods energy cooperatives we examine, have gone mainstream, as well as Riverland Energy in Arcadia, the challenges of maintaining a Wisconsin, and The Energy DREXEL POLICY NOTES cooperative identity as membership Cooperative, in Philadelphia, grows and neighborhoods gentrify, represents the sharpest distinction the governance models the between rural and urban in the cooperatives use, and the factors collection. But this is not the only contributing to their significant difference between the entrepreneurialism. Case studies of organizations. Age and regulatory two smaller grocery cooperatives, environment both also impact the Mariposa and Regent Market, offer way the cooperatives work. interesting observations about issues Trumark and Summit, the two credit of democratic self-governance and unions in our case studies, social inclusion. are among the larger organizations of their kind in their respective The volume also includes studies of cities. We consider their origins, two grocery cooperatives that failed evolution, member participation and – Ecology in Philadelphia and Mifflin governance. Street in Madison – and considers the reasons for and context of their The cooperatives in this volume failures. Two emergent Philadelphia represent a diverse group of small cooperatives we discuss, the South businesses, operating in highly Philly Food Co-op and Kensington competitive markets in both urban Community Food Co-op, will perhaps and rural environments. Although be able to draw some lessons from we’ve documented two failures, most the other cooperatives under of these enterprises have succeeded consideration. (and often thrived) for decades. As member-owned businesses, they have have benefitted from many of the provided services and/or goods to their same informal networks and local owners, offered stable local jobs, and expertise. invested in the continued growth and development of their businesses. In Cooperatives share the important both Pennsylvania and Wisconsin, cooperative principles of member these cooperative businesses ownership and democratic developed without significant decision-making, and successful governmental assistance, especially at cooperatives must balance a the local level. Although there is continual interplay between their evidence of a more supportive economic and social elements. environment for cooperatives in This group of case studies gives Madison, much of this support came us valuable insights into the from informal assistance from other internal mechanisms and external cooperatives, the presence of environments that help to sustain knowledgeable professionals, and a cooperatives and enable them to relatively high ratio of cooperative contribute to the socioeconomic 5 membership among the Madison health of their communities. population. Philadelphia cooperatives DREXEL POLICY NOTES

Craig Borowiak is Associate Professor of Political Science at Haverford College. Richardson Dilworth is Director of the Center for Public Policy and Associate Professor of Political Science at Drexel University. Anne Reynolds is Faculty Associate and Assistant Director of the University of Wisconsin Center for Cooperatives. This article is a shortened version of the introductory chapter to the edited book, Exploring Cooperatives: Economic Democracy and Community Development in Pennsylvania and Wisconsin, planned for publication by the University of Wisconsin-Extension Publications, in Spring 2015 (learningstore.uwex.edu). Mapping the Social Demographics of Cooperatives in Philadelphia and Madison

Craig Borowiak

Madison and Philadelphia differ in than in Madison. This should come land area, population size, median as no surprise. Philadelphia is a 6 income, and general demographic large post-industrial city with greater composition. Their cooperative diversity, deeper poverty, and a sectors also differ. Madison, for longer history of racial conflict and example, has a relatively large segregation. It is a city of contrasts number of purchasing cooperatives where stark racial, ethnic and class and agricultural cooperatives, divisions coincide with stark whereas Philadelphia has a dispro- geographic divisions between portionately high number of credit neighborhoods. Madison, by unions. Although this aggregate data contrast, is both a university town is useful for establishing general and a capital city with a larger middle comparisons, it tells us nothing about class and income levels that are how cooperatives relate to demo- more evenly distributed across the DREXEL POLICY NOTES graphic patterns within cities. We city. Racial and ethnic minorities know, for example, that both Philadel- constitute a much smaller phia and Madison have a relatively percentage of Madison’s overall high percentage of people living in population and are less concentrated poverty. The basic aggregate in discrete neighborhoods. The statistics do not tell us, however, if contrasts between different racial poor populations are concentrated in and ethnic neighborhoods are particular areas of the city or if consequently not as prominent at cooperatives are located near those the Census block group level. populations. Similarly, aggregate statistics reveal Philadelphia as a The relevance of spatial demographic more ethnically and racially diverse patterns for the geography of city than Madison, but, taken alone, cooperatives is far more evident in the those data do not illuminate anything case of Philadelphia than Madison. about patterns of integration among More specifically, highly concentrated different groups within the cities’ African American, Asian, and Latino geographies or about how neighborhoods in Philadelphia tend to cooperative sectors relate to racial have fewer cooperatives than in and ethnic divisions. White and mixed neighborhoods. This is especially the case if we separate The separations between different out small credit unions. Cooperatives demographic groups are, in general, are also virtually absent from far more pronounced in Philadelphia neighborhoods with the deepest poverty, most of which of such occlusions, a spatial approach to are predominantly African American or analyzing cooperatives risks under- Latino. These observations should not, representing the overall size of the however, be taken to imply that cooperative sector while overemphasizing cooperatives thereby cluster only in the importance of those organizations predominantly White neighborhoods that do have a distinct physical location. with high incomes. On the contrary, GIS mapping reveals patterns of A spatial analysis can also be misleading cooperatives clustering within buffer because a cooperative’s physical zones between rich and poor, and address is not necessarily an accurate between White, African American, and measure of the cooperative’s impact on Latino neighborhoods. a neighborhood. Just because it is Given the relatively muted role of located in a neighborhood does not demographic factors in the spatial necessarily mean that that the organization of Madison generally, it is cooperative’s members, consumers, and much more difficult to discern any workers come from, or have strong ties significant demographic patterns in the to, that community. Some cooperatives 7 way cooperatives cluster within the are locally-oriented. Others operate at city’s urban geography. city-wide, regional, and/or national levels. DREXEL POLICY NOTES

Unlike in Philadelphia, cooperatives Ultimately, a spatial analysis of can be found in the poorest cooperatives is more useful for raising neighborhoods as well as in questions about geographic patterns neighborhoods where racial and ethnic than for answering them. By drawing minorities are most concentrated. More attention to the social geographic noticeable than the demographic patterns of cooperative sectors it helps patterns underlying cooperative to set contexts and to open up new location is the way cooperatives cluster questions about why cooperatives are heavily in the downtown area where where they are and how they do and do commercial activity is especially not reach into the neighborhoods most concentrated and along the few major in need. Philadelphia and Madison, transportation routes into and out of the along with the cooperatives that city. populate those cities, have their own particular histories and contexts. For Missing from this spatial analysis are this reason spatial analysis needs to be cooperatives that don’t have physical complemented with more case-specific locations. Some cooperatives, for studies, such as the qualitative studies example, are run in a decentralized found in Exploring Cooperatives. manner out of individual members’ homes and with Post Office boxes as mailing addresses. Others do not yet have physical locations. As a result

Craig Borowiak is Associate Professor of Political Science at Haverford College. This article is a shortened version of one that will appear in the edited book, Exploring Cooperatives: Economic Democracy and Community Development in Pennsylvania and Wisconsin, planned for publication by the University of Wisconsin-Extension Publications, in Spring 2015 (learningstore.uwex.edu). Food Cooperatives and Commercial Corridors

Andrew Zitcer and Richardson Dilworth

Grocery stores are increasingly seen components, and sometimes not. If a 8 as anchors of urban retail districts, cooperative does not find its ecological with independent stores and chains “niche” in a corridor, its chances of alike developing flexible footprints and serving that corridor productively are merchandize mixes to meet the needs diminished. of diverse customers. We argue that retail food cooperatives have the Collective action dilemmas refer to potential to go beyond the role situations where incentives are of retail anchor and support the structured such that individuals, development of neighborhood anticipating that others will cheat on a commercial corridors. Given their voluntary agreement, refuse unique organizational structures and themselves to participate, and thus social missions, cooperatives might any potential collective benefits are not

DREXEL POLICY NOTES potentially act as catalysts for greater reached. Grocery cooperatives and collective action among other corridor corridor associations are two very stakeholders. We examine the types different examples of formal of collective action dilemmas faced by organizational structures designed to corridor stakeholders, and why overcome collective action dilemmas cooperatives might be uniquely and thus incentivize collective action. capable of resolving some of these Cooperatives are structures designed dilemmas, through four Philadelphia to pool the buying power, and case studies: The case of Weavers sometimes the labor, of individuals, to Way Co-op in (1) Mount Airy Village, create a retail enterprise that, in its (2) Chestnut Hill, and (3) West Oak operations, also satisfies a larger social Lane, and (4) the case of Mariposa good – procedural democratic Food Co-op on Baltimore Avenue. We participation in commercial activities – conclude that the potential for grocery that traditional commercial enterprises, cooperatives to act as catalysts for incentivized through a profit structure broader collective action depends on and governed by boards of directors, the unique developmental role that the ostensibly do not provide. cooperative has played in a corridor. Neighborhood commercial corridors The chief collective action dilemmas are complex social and organizational faced by grocery cooperatives are: ecologies, of which grocery (1) organizing initial members to create cooperatives are sometimes integral the cooperative; (2) maintaining a membership that is active, but which constrained, and as a result, the does not obstruct grocery operations; membership often self-selects for and (3) maintaining a balance between people who want to participate in democratic participation among the the cooperative experience. members, and the actual operations of the grocery. In some instances, the By contrast, there are typically no democratic membership structure is obvious individual benefits provided applied as well to the staff, who by neighborhood corridor themselves practice worker self- associations. Members only management. experience benefits if more potential customers are drawn to the corridor In contrast to grocery cooperatives, because of events or marketing. And many corridor associations are in many instances, there are actually volunteer organizations designed to disincentives for business and provide collective benefits, primarily to property owners. Increased traffic the merchants, along a commercial along the corridor can attract new 9 corridor – typically including additional businesses, thus increasing street cleaning, tree plantings and competition for existing businesses. street furniture such as benches and Events that bring in street vendors DREXEL POLICY NOTES street lights, additional security (“safety often create more competition for the ambassadors”), and marketing, through retailers, and divert traffic from the events such as street festivals, street sidewalks, where the retailers are banners, websites, and corridor-wide located, to the street, where the sales promotions. Unlike membership in vendors are located. Moreover, simply cooperatives, in which the members are forming a business association or individuals and customers, the business improvement district is membership in corridor associations is hampered by retailers who conceive typically business and property owners. of one another as competitors, and There are three major types of corridor who are thus inclined not to share associations: (1) voluntary associations information with one another or of business owners; (2) community otherwise cooperate. development corporations that In short, neighborhood commercial take a role in corridor development and corridors face more significant hurdles management, and (3) business to achieving collective action than do improvement districts, which are formal cooperatives. The question we ask in organizations that charge assessments this research is whether the collective to property owners to provide corridor benefits provided by cooperatives improvements. might also help realize collective benefits along corridors where the Collective benefits are typically cooperatives are located. Groceries provided more easily when they are are, after all, retail businesses, but provided in conjunction with individual cooperative groceries are unique for benefits. Thus, for instance, the larger being retail businesses with a broader social good of democratic participation social mission. Do cooperative social in cooperatives is provided through the missions help the corridors in which individual benefit of membership the cooperatives are located? Co-ops, discounts and the unique products that for instance, might serve convening can be purchased at a grocery functions, since they usually have cooperative. In addition, a grocery meeting space and are good at cooperative is not geographically facilitating interaction among diverse stakeholders. Co-ops might also be financially feasible to continue in its more likely to buy from other retailers Oak Lane location, and turned the along the corridor, as part of a “buy storefront over to OARC. In the four local” commitment. years Weavers Way spent in the West Oak Lane location, the co-op The first grocery cooperative we attempted to “reboot” the store several examine is Weavers Way Co-op, times with different merchandizing which has locations in the West mixes and staff. None of the Mount Airy and Chestnut Hill approaches that it tried worked, and neighborhoods of Philadelphia. The the co-op ended up carrying the store co-op’s leadership extends to its work financially through an expensive in cooperative startup development, annual subsidy. urban farming, and community development. In 2013 it grossed Mariposa was founded in 1971, in a over $20 million and it employs tiny storefront on Baltimore Avenue approximately 150 people. While the in West Philadelphia. For most of its 10 main commercial corridor running existence, Mariposa was a vegetarian through Mount Airy is Germantown store, specializing in bulk orders, Avenue, the original Weaver’s Way whole grains, produce and dairy. Until Co-op, founded in 1973, is located on 2012, all shoppers had to be member- a far smaller corridor on Carpenters owners of the co-op, and all member- Lane. While this corridor is small, it owners had a work requirement. But has a remarkably vibrant retail mix, beginning in the late 1990s, the co-op including an art gallery, yoga studio, experienced significant membership salvage company, bookstore, café, growth driven by increasing interest in and two dry cleaners, all located on local and organic food, mistrust of just two blocks in the middle of what large corporate retailers, and the is otherwise an almost purely gentrification of Mariposa’s DREXEL POLICY NOTES residential neighborhood. neighborhood. The co-op expanded staff, professionalized operations, and In 2010, after a market study relocated to a larger storefront, where recommending expansion, Weavers shoppers had no membership or work Way decided that enough of its requirements. It currently grosses $5 existing membership and potential million annually, and employs future growth was based in the approximately 50 people. It is operated relatively affluent neighborhood of by a staff collective, with oversight Chestnut Hill. In May 2010, Weavers from a group of managers derived Way Chestnut Hill opened on from the larger collective. Both Germantown Avenue in a former Weavers Way and Mariposa were grocery store site, with sales that founded in the early 1970s as exceeded all projections. grassroots buying clubs that then moved into storefronts. They both In 2007, the Ogontz Avenue started in their present commercial Revitalization Corporation (OARC), corridor locations; neither were a local community development transplants. Both ended mandatory corporation, asked Weavers Way membership in the 2010s, and in both to open and operate a small store in cases that led to an increase in sales West Oak Lane, a majority African and employment opportunities. Yet the American neighborhood with a two cooperatives are organizationally median income a third lower than that quite different. Weavers Way has two in West Mount Airy. In 2011 Weavers stores, and has announced its intent to Way decided that it was not build a new third store bigger than either two it currently has. Mariposa has and property owner on the corridor. a more decentralized management Weavers Way expects to survive the structure than Weavers Way. Finally, competition, but projects a 20% decline Weavers Way publishes the Shuttle, in business. which serves as a newspaper not only the co-op membership, but to the larger In West Oak Lane, Weavers Way was Mount Airy community. confronted by two major challenges. First, contemporary co-ops, because of In Mount Airy, Weavers Way has rather the premium goods they carry and the impressively helped to define and relatively high wages and benefits brand a very small corridor, which is packages they offer employees, now known as “Mount Airy Village.” typically do not compete well on lower Weavers Way is by far the dominant income corridors. Second, and perhaps retailer in this corridor, with more than more significant, Weavers Way did not one storefront. Perhaps the leadership achieve sufficient community buy-in role Weavers Way plays has to do with (though it had a devoted core following Carpenter’s Lane falling out the in the neighborhood), relying instead 11 jurisdictions of any business on OARC. In short, unlike Mount Airy improvement districts or community Village, on Germantown Avenue and DREXEL POLICY NOTES development corporations, and no West Oak Lane, Weavers Way was just major anchor institutions such as major another retailer. In neither case did it universities. We believe that Weavers play a developmental or convening role Way’s leadership here is largely due to in building the corridor. In West Oak the geographically confined nature of Lane, on a smaller corridor, it might the corridor and the fact that it serves a have helped the co-op survive over largely class homogeneous residential time with sufficiently patient capital. area. In contrast to Weavers Way on Weavers Way has had more limited Carpenter Lane, Mariposa is not an success engaging with the corridor anchor of Baltimore Avenue, even communities on Germantown Avenue though there is no other grocery on the and in West Oak Lane. The co-op has corridor. Baltimore Avenue is somewhat been more successful financially on unique for being located next to three Germantown Ave, most likely due to universities, two of which are very large, the higher incomes of Chestnut Hill and for being within the University City residents. There is already a well- District, which provides services such developed ecology of organizations on as cleaning and security. There is a Germantown Avenue, including a business association, though its business association, a foundation that membership is relatively small. operates several parking lots, and a Mariposa’s position in the corridor business improvement district. There appears to be strong, and the co-op has was less work for Weavers Way to do expressed a dedication to building as a new entrant to a mature corridor neighborhood buy-in and buying from to help develop it. Recently, Weavers local businesses. It has begun to hold Way courted conflict by encouraging workshops on gentrification, race, and its members and readers of the Shuttle food justice that draw large crowds from to oppose the entry of an upscale among the co-op’s neighbors. Yet supermarket competitor on Mariposa’s complex internal Germantown Avenue owned by management structure and weak board Bowman Properties, a large developer governance may set up obstacles to the co-op focusing on any significant in ways that grocers often do not have development activities beyond its own an incentive to be. The cooperative aisles. principles, which date back to the origins of the movement in the north of England It bears emphasizing that the grocery during the industrial revolution, directly business is a notoriously difficult one stipulate that co-ops have a concern for in which to achieve and sustain their broader community. Doing good in success. The industry has a one the neighborhoods will support percent profit margin; hence the additional local buy-in to the cooperative significant consolidation and effort. As we see in the examples of economies of scale that are frequently Weavers Way in Mount Airy Village and found in the sector. And cooperatives to some extent with Mariposa Co-op as place themselves at a (calculated) it evolves, co-ops can help to locate and financial disadvantage by hiring foster the energy that it takes to sustain positions such as outreach and a corridor. But there are places where education personnel, as well as co-ops can do more, as with Weavers 12 through paying high wages. But these Way in West Oak Lane, which may differences are precisely what support the corridor’s development as positions co-ops to be effective well as the success of the co-op. anchors of neighborhood commercial corridors. They are externally focused DREXEL POLICY NOTES

Andrew Zitcer is Assistant Teaching Professor in Drexel University’s Westphal College of Media Arts and Design, and an affiliate of Drexel’s Center for Public Policy. Richardson Dilworth is Director of the Center for Public Policy and Associate Professor of Political Science at Drexel University. Center for Public Policy College of Arts and Sciences Drexel University

Dean, College of Arts and Sciences Donna Murasko

Director, Center for Public Policy Richardson Dilworth

Drexel Policy Notes Editor Irene Cho

Center for Public Policy Affiliate Faculty

Hon. Brendan Boyle Pennsylvania House of Representatives

Jacqueline Burke Center for Public Policy, Drexel University

Rebecca Clothey School of Education, Drexel University

Richardson Dilworth Center for Public Policy and Department of History and Politics, Drexel University

Jeffrey Hornstein Office of the Controlle , City of Philadelphia

Christian Hunold Department of History and Politics, Drexel University

Bruce Levine School of Education, Drexel University

Franco Montalto Department of Civil, Architectural, and Environmental Engineering, Drexel University

Patrick Morgan Office of the Deputy Mayor for Environmental and Community Resources, City of Philadelphia

Stephen Mullin Econsult Solutions, Inc.

Shari Shapiro Calliops Communications, LLC

Hon. Joseph Torsella Center for Public Policy, Drexel University

Kristene Unsworth College of Computing and Information, Drexel University

Andrew Zitcer Westphal College of Media Arts and Design, Drexel University 3600 Market Street, 7th Floor Philadelphia, PA 19104