“We’re not just a financial institution, we’re working together to build a community,” John Holdsclaw, the executive vice president of strategic initiatives at the National Cooperative Bank in Washington told the UKSCS conference. Held virtually on 1- 3 October, the conference explored ‘The politics, policies and practices of co-operative movements’.
Mr Holdsclaw has been at the bank for 19 years. The institution was created by the National Consumer Cooperative Bank Act of 1978 to address the financial needs of an underserved market. It provides banking products and services to co-operatives and their members including grocery wholesaler co-ops, food co-ops, purchasing co-ops, credit unions or housing co-ops.
In accordance with the NCB’s mandate, 35% of all its disbursements have to be in low and moderate-income communities. Over the years, NCB has invested in a range of projects, including clean energy, small businesses and affordable housing, expanding access to healthy food and affordable health care.
In 2019 alone the bank committed US$352m to initiatives serving low to moderate-income communities and new co-op development, working with housing co-ops, food co-ops and credit unions.
“Co-ops have a rich history in the US in regards to being part of many movements,” explained Mr Holdsclaw. He went on to touch on the important role co-ops such as the Progressive Club in Johns Island had played in thee civil rights movement in the USA. Set up in 1948 by two African-American Island residents, Esau Jenkins and Joe Williams, the club’s programmes included a day care centre, a co-op grocery store and recreational programs. Yet its most well-known contribution was setting up citizenship schools in 1957 to help African Americans pass the literacy tests that were common at the time as a qualification for voting. The Progressive Club’s grocery store was operated profitably by the organisation until 1975. The building’s structure was severely damaged by Hurricane Hugo in 1989 and not being insured, the organisation was not able to repair the substantial damages nor was it successful in obtaining disaster relief funds to make repairs.
“If we had more Progressive Clubs today, there wouldn’t be as many problems today,” said Mr Holdsclaw.
Back in the 1960s food co-ops were not eligible for loan guaranteed programmes ran by the Small Business Administration. In 2019 NCB testified before the US Congress asking for changes to the SBA’s rules. Following lobbying from the movement led by the National Co-operative Business Association, co-operatives were deemed eligible for the SBA’s Paycheck Protection Program, which provides low-interest loans of up to US$10m to enable businesses and organisations to keep their workers on the payroll during Covid-19.
While substantial wins have been achieved since the days of the Progressive Club, black and Latinx communities remain at an economic disadvantage. Mr Holdsclaw explained how the Covid-19 crisis was disproportionately affecting these communities.
Existing disparities meant that businesses were disproportionately affected by the Covid-19 pandemic. Black and Latinx communities are three times more likely to contract Covid-19 as white communities. Furthermore, 40% of essential workers, the majority of whom are people of colour, rely on public assistance while 20% live in poverty.
In spite of these figures, only one in 10 black and latinx small business owners applying for PPP loans were able to get them.
What is the co-op community doing to address these disparities?
Community development Financial Institutions, many of which are credit unions are also eligible for the PPP. They serve 10m residents of low-income urban, rural and reservation based communities across the US and are represented by federation Inclusiv.
If traditional banks were more concerned with helping their larger clients, CDFI credit unions were able to support communities that may not otherwise have obtained loans through the PPP programme. Overall 90 CDFI lenders, 23 of them ran by people of colour, allocated 16,892 PPP loans worth a total of $1m.
In June Inclusiv also launched a Resilience Grant Fund through which it allocated US$655,000 in grants to minority-designated credit unions and other cooperatives to support their resilience in response to the COVID-19 pandemic.
Through PP funding, NCB also gave out 234 loans, the majority of which went to co-ops and co-op organisations such as ACE Hardware. The loans received by co-ops helped to preserve 93,000 jobs across the US.
Leading a movement for change is part of the co-operative identity, argued Mr Holdsclaw, who is also the chair of the CDFI Coalition Board, an advocacy body that promotes the work of community development financial institutions (CDFIs), of which Inclusiv is a member.
“It’s Co-ops’ job to become advocates as well, not just provide services. It’s a call to action,” he said.
With 29,000 co-ops across different industries operating in the USA, there is no doubt the sector can be a catalyst for change. New co-operative legislation might help pave the way for the sector’s expansion. A California legislative proposal called the Cooperative Economy Act could introduce worker ownership into the gig economy next year. There has also been talk about a US Congress Comprehensive Co-op Bill although no specific details have been released as of yet.