US co-ops apex NCBA CLUSA makes a push for Principle 6

‘Co-ops and credit unions should work together to press the advantages of their reputation as “honesty providers”’

NCBA CLUSA, the national sector body for co-ops in the USA, has been exploring ways to drive Principle 6 – co-operation among co-ops – in a series of weekly newsletters.

The online posts include a rallying call to the movement from one of its leading figures in the US, Mike Mercer, who wants to see more investment by co-operatives to help other co-ops through start-ups and scale-ups.

Mr Mercer – former CEO of Georgia Credit Union Affiliates who has chaired the boards of the Credit Union National Association (CUNA), American Association of Credit Union Leagues and National Cooperative Bank (NCB) – says this will help to address the difficulty co-ops have in raising capital, often cited as a key barrer to the growth of the movement.

Mike Mercer

“The great irony of the ‘co-operative moment’ is that co-operators invest their money in the corporations that they admonish for being extractive, the government that they regard as being too political, and the real estate that they advocate members should share,” he wrote.

Mr Mercer identified at a number of solutions – from making more use of the investment potential of co-op members to developing pools of “patient capital”, where investors are prepared to wait longer for returns on their money.

“Other groups like Zebras Unite and Seed Commons are taking a systemic approach to organising, assisting and funding for co-ops,” he added. “These and other initiatives … are working with players from across the co-op space to design solutions to the co-op capital challenge. 

“NCBA CLUSA and the National Cooperative Bank are convening discussions soon that will bring together some of the capital innovators with leaders from the established co-op sectors to explore the possibility of setting up a national co-op capital mechanism that brings co-ops together across the sectors to help solve for the co-op capital challenge.”

He added: “Most co-operators believe in but are not really investors in co-ops. Beyond membership shares and membership fees, there isn’t any easy way to become a financial investor in a co-op.”

A lack of knowledge between different silos of the co-op movement hampers this sort of investment, he added. “What would compel a member/leader of a food co-op, let’s say, to become an investor in a childcare co-op? What does a credit union exec know about a worker co-op?”

There are other problems too. “Enabling instruments and structures are still in the early innovation stage. Laws and regulations could be more helpful.”

His proposed solution is intermediation. “The co-op system could benefit from a well-resourced capital sourcing facility. And such a facility should enable cooperators and the co-ops that they guide (especially the large ones) to become investors in new co-op development and early-stage co-op scale-up.”

Citing Vancity CU and VSECU as credit unions willing to invest in co-ops, Mr Mercer argued: “The co-op system should become more of a circular economic engine. Risk can be managed collaboratively, and return should be generous, paid out over time from successful co-op operations. A co-op capital sourcing facility would be a major evidence of co-operative identity and a significant cross-sector exercise of Principle 6.”

In another edition of the newsletter, Mr Mercer reminds the movement that the Rochdale Pioneers “learned quickly that an ecosystem of cooperative enterprises could help members more than simply staying focused on making good flour”.

He argued that improved collaboration between the co-op and credit union sectors, would help to “address jobs, health, elder care, childcare, housing, and the other challenges that impact the financial wellbeing of members”.

Co-ops and credit unions should work together to press the advantages of their reputation as “honesty providers”, he wrote.

“Commitment to opportunity, fairness and inclusivity extends beyond the walls of the credit union,” he added. The member begins to look more like a person in search of a better life – and a little less like a customer measured on a product penetration scale.

He said NCBA CLUSA is working on an initiative to help co-ops “identify the ways that a nation full of honesty providers can work together to elevate the value created for co-op members.

“This project is now known as the Principle 6 Initiative, which you’ll hear more about in the months ahead.”