With its focus on community needs, the co-op is the original social enterprise. Today patient capital from the Cooperative Fund of New England is helping co-ops involved in housing, food delivery, health care, financial services, and agricultural marketing to build for the future.Nonprofit organizations

Erbin Crowell

English

Research Papers in Economics

24    Fall 2008
by Erbin Crowell
The Cooperative Fund of New England
Getty Images  FUNDING 
New England’s Co-operative MovementCommunities & Banking    25
Muhammad Yunus, Nobel Prize-winner and 
founder of Bangladesh’s Grameen Bank, re-
cently proposed the establishment of “social 
businesses” as a response to global poverty. 
Yunus said such enterprises would have a mis-
sion of bettering people’s lives and would re-
lieve pressure on governments and nonprof-
its through sustainable economic solutions to 
human needs. In this model, investors would 
contribute start-up funds not for a monetary 
return but for a social purpose. 
When  Yunus  spoke,  the  media  took 
notice, but few people were aware that there 
was already such a model serving millions of 
people worldwide.
The model is the “co-operative,” and 
its primary purpose is to address commu-
nity needs  —often in areas that have been 
ignored by mainstream businesses. Co-ops 
provide people with groceries, housing, and 
health care. They help farmers market prod-
ucts. They provide loans, savings accounts, 
and other financial services where the need 
is  greatest.  The  International  Co-opera-
tive Alliance (ICA) estimates that there are 
more than 800,000 co-ops worldwide serv-
ing over 730 million members and includ-
ing everything from small buying clubs to 
Fortune 500 companies.1 The ICA’s annu-
al list of the world’s largest co-operatives—
the Global 300—has included such familiar 
names as Ocean Spray, REI (Recreational 
Equipment Inc.), and the Associated Press. 
The ICA list helps quantify the movement’s 
contribution to a more democratic, sustain-
able, and accountable global economy.2 Al-
though many co-ops have scaled up to serve 
their members more efficiently and effec-
tively, most co-operatives are found at the 
grassroots  level,  where  they  address  local 
needs on a local basis.
But  whether  they  do  international 
banking  or  microlending,  comprehensive 
health care or day care, food production, 
distribution, or retailing, what most defines 
a co-operative is being owned and demo-
cratically  controlled  by  the  same  people 
who use its services.
The Roots of Co-operation
People  have  always  worked  together  to 
achieve economic and social goals, but the 
modern  co-operative  movement  probably 
began  in  1844  in  the  northern  England 
town  of  Rochdale. That  year,  a  group  of 
weavers and other workers who were con-
cerned about poor working conditions, low 
pay, and expensive, low-quality food, pooled 
their resources to open a grocery. The store 
was owned and controlled by the commu-
nity people who shopped there. The goals 
and principles established by the “Rochdale 
Pioneers” formed the basis of the co-opera-
tive movement.
Today co-operatives are on every conti-
nent and in every major industry. The defi-
nition of a co-op has been updated by the 
International Co-operative Alliance to de-
scribe “an autonomous association of per-
sons united voluntarily to meet their com-
mon economic, social, and cultural needs 
and aspirations through a jointly owned and 
democratically controlled enterprise.” And 
although co-ops are not all alike, they share 
the principles of voluntary and open mem-
bership, democratic member control, mem-
ber economic participation, autonomy and 
independence, education programs, co-op-
eration among co-operatives, and concern 
for the community. 
Co-ops  vary  in  structure  and  scale, 
but in most cases they are groups that have 
come together to address a common need 
or to serve a common mission. Members in-
vest at least a voting share in their co-oper-
ative and govern the enterprise on the ba-
sis of one member, one vote (in contrast to 
corporations and some worker-owned busi-
nesses in which votes are allocated accord-
ing to the number of shares held). Mem-
bers usually elect a board of directors, which 
hires management to operate the business. 
Additionally, co-ops may pool their efforts 
and resources by forming federations of co-
operatives. 
This simple model—common in com-
munities  that  have  been  traditionally  un-
derserved—has empowered many people of 
modest means. In the United States, for ex-
ample, rural electric and telephone co-ops 
have helped provide services to remote com-
munities. Credit unions offer checking ac-
counts, loans, and other financial services to 
members. And producer co-ops have trans-
formed isolated family farmers into major 
actors in agriculture and have helped many 
move into markets such as organic foods.
Ways to Fund Co-operation
The  Cooperative  Development  Insti-
tute, which serves co-op enterprises in the 
Northeast, reports that New England and 
New  York  together  have  roughly  10,000 
co-ops with 10 million members. The busi-
nesses are as varied as Vermont-based Cabot 
Creamery Co-operative, founded in 1919, 
and the worker-owned copy shop Collective 
Copies, founded in 1983.3 Because they are 
rooted in their communities, all co-ops con-
tribute to the local economy. Co-operatives 
also work together across sectors and na-
tional boundaries to form what may be de-
scribed as the “co-operative economy.”
Because  co-ops  often  face  challenges 
obtaining sufficient resources for growth, a 
Willimantic Food Co-op has grown steadily since the 1970s and recently moved into space formerly occupied 
by a supermarket. Photograph: Erbin Crowell FUNDING 
New England’s Co-operative Movement26    Fall 2008
group of activists founded the Cooperative 
Fund of New England (CFNE) in 1975. 
A 501(c)3 nonprofit, CFNE is a certified 
community development financial institu-
tion (CDFI) that transforms the resources 
of social investors (individuals, socially re-
sponsible investment firms, religious orga-
nizations, or other co-ops) into loans and 
other assistance to co-operative businesses, 
democratic worker-owned enterprises, and 
community-based nonprofits. 
Launched  with  just  $25,000,  CFNE 
has raised over $14 million in investment, 
making more than 400 loans to new or ex-
panding co-operatives and community orga-
nizations. Among its borrowers are the Wil-
limantic Food Co-op in Connecticut, Deep 
Root  Organic  Cooperative  in  Vermont, 
Massachusetts-based Equal Exchange, and 
Oak Street Housing Co-op in Bath, Maine.
Willimantic Food Co-op
Willimantic Food Co-op started small as a 
1970s buying club for families seeking organ-
ic and unprocessed foods. Today it has com-
pleted its third expansion move, taking over 
space formerly occupied by a supermarket. 
With more than 4,500 members and about 
$3 million in sales in 2007, the co-op has 
been named “Regional Business of the Year” 
by the Willimantic Chamber of Commerce.
Deep Root Organic Cooperative 
The globalized marketplace presents chal-
lenges  to  New  England’s  family  farmers. 
Deep Root Organic Cooperative helps them 
compete by providing marketing and dis-
tribution for members’ organic vegetables. 
Today their products are found in produce 
departments of co-op groceries such as Wil-
limantic Food Co-op and in conventional 
natural foods stores. 
Equal Exchange
One of the pioneers in the market for or-
ganic  and  fairly  traded  products  is  Equal 
Exchange. Founded in 1985 to create stron-
ger  relationships  between  consumers  and 
family  farmers  in  the  developing  world, 
Equal  Exchange  is  a  worker  co-operative 
with more than 100 employees in Minneso-
ta, Wisconsin, Oregon, and Massachusetts. 
The  co-op  markets  coffee,  tea,  chocolate, 
and other products grown by small farmer 
co-ops worldwide. In 2007 it surpassed $29 
million in sales.
Oak Street Housing Co-op 
Oak  Street  Housing  Co-op  demonstrates 
another way co-ops make a difference. The 
city of Bath established Oak Street, a five-
member co-op (a residence with five units), 
to  provide  housing  for  low-income  resi-
dents. President Ron Leady contends that it 
offers more than the usual co-operative ben-
efits and “has made me a better person.”
Supporting the Next 
Wave of Co-operation
A barrier to launching a co-op, sustaining 
co-op  growth,  or  converting  to  the  co-op 
model is the lack of access to equity capital 
that fits the member-control model. Like any 
other business, co-operatives often need eq-
uity capital—for market studies, architecture 
and engineering work, organizational costs, 
training,  and  legal  fees.  Many  opportuni-
ties involve high entry costs, too, and co-ops 
sometimes need help establishing a working-
capital or cash-flow cushion. Additional eq-
uity also can help businesses leverage debt 
from lenders, banks, vendors, or landlords. 
Co-op  members  often  lack  enough 
collective  wealth  for  a  desired  initiative. 
In  standard  venture  capital  arrangements, 
businesses issue stock to outside investors, 
and it’s increasingly common for success-
ful socially or environmentally responsible 
businesses to sell a controlling interest to a 
larger corporation. But that generally means 
giving up board seats and allowing outsiders 
an active hand in management, which sub-
verts the principle of member control. Also 
at odds with co-op thinking is the typical 
venture capital investor’s emphasis on short-
term gain over long-term asset building. 
In response to co-ops’ need for patient 
capital, CFNE established the Cooperative 
Capital Fund in 2007.4 Its goal is to augment 
CFNE’s current loan services by providing 
new capitalization options that perform like 
equity without changing a co-op’s member-
owned and -controlled uniqueness. CFNE 
also has begun working with the Coopera-
tive Development Institute to provide co-ops 
with the training, technical assistance, and 
support they need to keep improving service 
to members and communities.
Strengthening Co-op 
Entrepreneurship
Co-operatives have long helped people to 
help themselves and strengthen their com-
munities. Now, as social responsibility and 
green business become the current watch-
words, the co-op model is generating inten-
sified attention. But in order for co-ops to 
grow and thrive, they need access to finan-
cial and technical support that emphasizes 
the values and benefits of co-operation rath-
er than conventional business priorities. In 
fact, they may need a new word—a word 
that describes the entrepreneurship of ordi-
nary  people building grassroots  economic 
institutions that help individuals find com-
mon solutions to collective challenges. 
Perhaps the new buzzword should be 
“co-opreneurship.”
Erbin Crowell is president of the Cooperative 
Fund of New England and a co-op develop-
ment specialist with the Cooperative Devel-
opment  Institute,  based  in  South  Deerfield, 
Massachusetts. He also serves on the board of 
directors of the National Co-operative Business 
Association in Washington, DC.
Endnotes
See http://www.ica.coop/coop.
1 
See http://www.global300.coop.
2 
See http://www.cdi.coop.
3 
See http://www.coopfund.coop.
4 
This Communities & Banking article is copyrighted 
by the Federal Reserve Bank of Boston. The views 
expressed are not necessarily those of the Bank or 
the Federal Reserve System. Copies of articles may 
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Funding New England's cooperative movement

http://www.bostonfed.org/commdev/c&b/2008/fall/Crowell_Cooperative_Fund_New_England.pdf

Funding New England's cooperative movement

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