Exploring new ways of funding and co-operative development

One year on from the first Ways Forward conference, co-operators met in Manchester to discuss best practices in co-operative development from the UK and overseas. Already on its third event, the conference aimed to gather momentum for new ways of funding and organising co-operative development.

A key problem is the suspension a year ago of the Co-operative Enterprise Hub, at the time the main mechanism for co-operative development. Outlining alternative solutions, Jo Bird of Co-operative Business Consultants, highlighted how the UK movement could learn from co-operatives overseas.

“Many countries have tax incentives for existing co-operatives to fund new co-ops,” she said.

“A percentage of profit significantly helps to create a thriving co-operative sector.”

Many co-operative federations have a membership requirement that a percentage of profit goes to co-op development. “No profit, no contribution,” added Ms Bird.

She explained how in Argentina a 5% levy applies to co-ops to support the development of other co-operatives. This is also the case in Italy, where Legacoop members contribute 3% of their profit to fund development.

“Mondragon expects its co-op members to contribute 10% of profit towards mutual solidarity,” she said. “Alex Bird [social enterprise and co-operative business support consultant at Wales Co-operative Centre] is proposing a similar model in the UK. Housing co-ops are talking about lending to each other to buy co-op properties. The Worker Coop solidarity fund, which is up and running, is asking for a contribution of £1 per week per member.”

Ms Bird added that such initiatives should come from UK co-operators themselves, rather than an apex body. Currently, there is no obligation for co-ops in the UK to support the wider movement or provide any resources to help set up other co-operatives.

Also speaking at the event, Gabriela Buffa, youth representative on the International Co-operative Alliance’s board, described how co-ops helped Argentina’s recovery in the aftermath of the country’s 1998-2001 economic depression.

Argentina now has over 30,000 co-operatives across public services, banking, communication, retail and industry. Following the financial crisis, many companies were taken over by workers, and these co-operatives now provide jobs for 13,000 people. The takeover of bankrupt companies under the co-operative model has continued after the crisis. Ms Buffa said that over the past three years, employees have saved more than 60 such companies by setting up worker co-operatives.

Roberto Cardinale from Generazioni, the youth national network of Legacoop in Italy, talked about co-operative development projects in his country, including Coopfond. This is a mutual fund, with co-ops affiliated to Legacoop contributing 3% of their profit in order to promote the sector’s presence in the national economy, help established co-ops and form others. Legacoop represents more than 15,000 member co-operatives with €56.5bn (£42.6bn) in turnover and 8.5 million members.

The fund was set up in 1992 as a joint-stock company entirely owned by Legacoop.

Another pioneering initiative developed by the organisation is CoopStartup, which aims to increase co-operation among co-operatives. As part of this project, Legacoop launched an online platform that provides advice and guidance for starting up co-operatives. CoopStartup promotes a number of activities, including Farmability, a call for proposals for new co-ops in the agricultural sector.

Elisa Terrasi, development and studies officer at CECOP – CICOPA Europe also talked about the increase in the number of worker, artisan and industrial co-ops across the world. Gaining access to finance remains a big obstacle, she said, adding that “obtaining loans for    co-ops in our sector is still difficult”.

She added that it was important to strengthen financial services within the co-op movement. CECOP-CICOPA is the International Co-operative Alliance’s sectoral organisation for European co-operatives and worker-owned enterprises active in industry and services.

In collaboration with the International Health Organisation Co-operative, CICOPA (the International Organsiation of Industrial and Service Cooperatives) has recently launched an online platform that showcases how co-operatives can respond to social needs. The website, socialneedscooperativeanswers.coop features case studies of co-operatives from across the world providing social services.

Peter Couchman, chief executive of the Plunkett Foundation, told the conference that the movement needs to adopt a new approach to inspire a new wave of co-operatives.

“Too much of the co-operative movement today is focused only on addressing its own problems and analysing its own needs, whereas it should be looking to help others use co-operation to solve their own problems,” he said.

“It’s not enough to speak to people we already know are looking to set up co-operatives. We need to inspire a new wave of co-operatives among people and groups for whom co-operation is a new solution.

“We as a movement are at a crossroads. We can continue down the ‘business as usual’ road and be seen as less and less relevant in the modern world. Or we can choose now to take a different path, one that inspires each other to strive to help more communities see the potential of co-operation in all aspects of their lives, from saving their football club and local pub to how they buy food and access finance. Now is the time for us as a movement to retake the path of inspiration.”

Mr Couchman announced that the Plunkett Foundation would be launching a campaign to encourage more rural communities to use co-operative solutions to the challenges they face. Plunkett will allocate one-seventh of its reserves – £200,000 – to inspire more rural communities to take up the co-operative option.

Youth starting co-ops

As well as helping to start up new co-operatives, delegates at Ways Forward 3 agreed the ability to attract young people will be crucial to the movement’s future.

Referring to the challenges faced by young people wishing to start up co-operatives, Gabriela Buffa said the co-operative movement needed to think together about how to help young people interested in the co-operative enterprise model. Teaching co-operation in schools can also help, she said, adding that this was the case in Argentina.

“Over the last 10-15 years we have been learning a lot. Co-operative workers are really organised and now when a factory or business closes they help each other – the co-op movement is there to help workers to continue production,” she said, adding that this knowledge and experience could be shared  with Europe.

Co-operation among co-ops is  one of the seven co-operative principles, reminded Klaus Niederländer, director of Cooperatives Europe, the regional organisation of the International  Co-operative Alliance.

The cultural divide between old and new co-operatives, old and young people, and old and new sectors can be a challenge, he said. Mr Niederländer thinks co-operatives can make the most of each other’s resources to take the movement into the next century.

“Use the experience of the old and the dynamism of young and we’ll have a vibrant co-op movement,” he said.

Mr Niederländer highlighted that concern for community did not simply refer to a co-operative’s local community, but also to the wider European and global communities. “We need this joint collaboration to be able to solve the challenges of today,” he added.

In a separate workshop, Phil Frampton, member of FC United and consultant at CBC, explained how tensions between long-term “change the world” vision and the “meeting the needs now” vision can cause tensions between younger members and older ones.

Italy is already pioneering a scheme where co-operators with many years of experience in the sector are helping young entrepreneurs one day a week.

“People working in co-ops are workaholics,” said Roberto Cardinale. “This initiative enables them to offer co-operative support and guidance to young people.”