Issue #30 - February 2005 A publication of Cooperative Development Institute www.cdi.coop
Features: In New Hampshire Farmers We Trust, CDI Partner Profile: Lynda Brushett
NE News: Boston Artists, Vermont Energy Pioneers
Legal Matters: Report from DC
Outside the Region: Home Care in Wisconsin
Bulletin Board: Tsunami Aid for Co-ops and More
Principles in Action: (6) Cooperation among Cooperatives
CDI Services: Contact us FMI at info@cooplife.coop or (413) 774-7599
Co-op Quiz! Take the Quiz! Eastern Worker Co-ops Gather in NH
Cooperative Development Institute (CDI) is the Northeast's non-profit center for cooperative development. Contact us if you'd like assistance starting up a new cooperative or strengthening an existing one: info@cdi.coop
Photo: Some of the current residents of Cold Pond Community Land Trust in New Hampshire. They are now working with neighboring farmers to market cooperatively as Cold Pond Community Farm CSA. See Feature below.
FEATURES
Restoring Farmland and Community in NH
In 1983, Steve and Barbara Davis began homesteading "44 depleted acres of hill farm" in Acworth, New Hampshire. With stints in the Peace Corps under their belts and degrees in Forest Management and Ceramic Arts respectively, they pitched in to clear land, build up the soil (they went organic from the get-go), construct farm buildings, and learn how to care for their livestock, equipment and land. As the farm grew, they kept hoping more people would join them in the effort to promote small farms.
Fast-forward almost two decades to 2000,and the formation of Cold Pond Community Land Trust. The Trust exists to encourage more families to go into farming, as well as to preserve a valuable piece of agricultural land and a traditional way of life. Residents own their buildings and lease land from the Trust, which is responsible for seeing that the land is managed sustainably. A board of residents, community members and people with special skills that benefit the organization runs the Trust.
A dramatic expansion
Craig Oshkello is a landscape architect and his wife Stacey is a nutritionist. They share parenting of their two young children, and they raise hens and market eggs. The family had first inquired about living at Cold Pond in December 2002, but there had been no openings.
A month later, they got a call from the Davises, with the news that 225 acres bordering the land trust was about to be sold off in a sealed bid offering. A non-profit that Craig Oshkello was (and is) connected with called Land for Good, joined with the Davis family and the Trust. They put in a bid of $300,000 to buy the land for the Trust.
There were two other bidders for the property, at least one of them planning to clear and subdivide the land for house lots. When the bids were opened, the Cold Pond group had beaten out the second bidder by only ten thousand dollars.
The group was glad to be able to rescue such valuable and vanishing farmland. Now all it had to do was come up with about $320,000 to close the deal. Because of Land for Good's relationship with Granite Bank in Peterborough, and the collateral value of the property, the Cold Pond group was able to secure a bank loan for half the costs. The Cooperative Fund of New England offered a term loan to facilitate this, and the Cold Pond group matched the amount with low-interest loans and outright contributions from individuals.
Living and farming cooperatively
Currently there are five households living on the land. Residents meet weekly to discuss common business; they also try to have at least one meal together every week. Some produce food to sell, but residents also earn income doing other things. One is a part-time librarian, one teaches yoga, one paints houses, one runs a non-profit land planning business, one is a nutritionist, and one is a museum curator. Barbara Davis has continued her lifelong love of ceramics and has her own pottery studio on the land trust.
The Davis family has also been active in Community Supported Agriculture (CSA) since 1997. The way CSA works, each season people sign up as members and pay a predetermined price to receive a share of a farm's produce. As the Cold Pond Community Land Trust grew, the CSA expanded too. Today, three land trust households and two other growers market themselves cooperatively as Cold Pond Community Farm.
After nearly 20 years spent developing a family farm, in less than half that time, working with others the Davises have realized their original vision of farming in community with others. They are collectively managing 270 acres of farm and forest land, they are co-owners of a business that produces food for themselves and area residents, and they are preserving a way of life that is part of the region's richest heritage.
CDI PARTNER PROFILE
Lynda Brushett
"The Power of the Many"
CLL: How did you get involved with cooperatives, and with CDI?
LB: My first glimpse into 'the Tao of co-ops' came when I was working with low-income families in small rural New Hampshire communities as a VISTA volunteer during the 'War on Poverty'. As I worked together with these folks to form food-buying clubs and centers to take care of kids while parents were at work, it became very evident that the rewards of creating a cooperative business were much more than economic. You could really see that people gained a sense of pride in accomplishment and that ownership that was transforming. I went on to help farmers organize farmers markets, marketing cooperatives and explore alternative niche markets and value-added enterprises in the Northeast. So I'd been a private Community Economic Development consultant for more than 20 years before I came to CDI as a session leader for the CooperationWorks! professional development-training program.
CLL: What does the cooperative model have to offer to Community Economic Development?
LB: When people are putting their lives together to accomplish a common goal, something very profound happens. The process is empowering. I know it's an overused word, but I honestly think that's what happens. People realize the power of the many. There are so many problems in communities that people have an opportunity to solve together. People have really good ideas, and in a cooperative, they're able to be entrepreneurs in many fields.
Cooperation is a clear part of our rural culture. People today have the idea that farms are the last bastions of total independence, but as part of a project that looked into the agricultural history of New England, I discovered that where farm families could share, they did. People in rural places were, and still are, very collaborative. That's what we need to build on.
When we're working with people who want to form group businesses, much of the effort has to do with helping individuals work together. The good news is you almost always have a better product if a group has kicked around an idea and thought it through than if it's just one person doing all the thinking. You've got to have a good process as well as a good idea to be successful.
CLL: What else needs to happen to advance cooperative enterprise in the Northeast?
LB: One of the things we're trying to do at CDI is become a clearinghouse [of information and referrals]. Because the co-op business structure is not well known, it is not part of people's experience. That makes all of our work more difficult. We have a lot of outreach to do. People need to become more aware of cooperative business. Traditional mainstream education often doesn't bring cooperatives forward as an entrepreneurial structure, even in business schools. I talk to many people in the small business development world who really don't understand cooperatives at all. They think they're non-profit organizations, instead of 'not for profit' which is not the same thing. So they're thinking of a co-op as "not a real business."
Everyone working in cooperative development and co-ops themselves have the responsibility to be talking about co-ops as a viable business model. And like any business model you have to apply sound business planning to the idea and the organization. It's not just cooperation. It's cooperation as a business. It may not work for every need that comes along. But if a need is shared by a group of people and requires a business solution, people should look at it. If successful, they will not only solve their problem, but they will own the solution as well. And how wonderful is that?
NORTHEAST NEWS
VT's Washington Electric Co-op Sizzles
Washington Electric Cooperative (WEC) in north-central Vermont recently renewed its contract to purchase electricity generated from methane gas at a 75-acre landfill in Connecticut. Three years ago, WEC negotiated the methane contract with Bio Energy Partners of New Milford, Connecticut as a way of replacing electricity the co-op had been purchasing from Vermont Yankee nuclear power plant.
The New Milford landfill has been closed for dumping trash since 1995, so WEC knew the trash-to-methane generated electricity would run out at some point. So in addition to renewing that contract for just one year, the co-op is building its own methane generation plant at a landfill in Coventry, Vermont. When the generator goes online this spring, reports the co-op's newsletter in December, 2004, "power from methane will account for roughly 40 percent of WEC's portfolio through the remainder of 2005. Not bad!"
We agree. Washington Electric Co-op has consistently shown its ability to remain a viable consumer-owned business in perhaps the toughest industry in the world, the electric power industry. It's been led by an innovative and creative board and management who relentlessly search for better ways to serve members. Its employees are dedicated, and its membership is loyal. Perhaps this is in part because, as General Manager Avram Patt writes in the October 2004 newsletter, "it strikes me that WEC members have the opportunity to be about the most informed utility customers anywhere."
And that, he explains, is because of the abundance of well-written articles in the co-op's newsletter. WEC Co-op Currents is an exemplary co-op publication. It informs members and prepares them for voting on important issues: in the past two years these have included votes on replacing substations, amending the bylaws, developing the Coventry methane facility, and regular board elections. The newsletter is currently running an excellent series on rural electrification and the birth of Rural Electric Cooperatives. It introduces new co-op products and services to members, and offers special deals, such as one-third off the price of a day pass to Mad River Glen ski area, also a co-op (see CL Leader #29). It connects members in a way that builds trust. Hats off to WEC for a great read and for its leadership, as an electric utility and as a co-op.
FMI: www.washingtonelectric.coop
Fenway Studios: 100 Years Young
In 1904, a fire destroyed the residences, studios and work of some of Boston's best-known artists. With strong support from business and civic leaders, they bounced back. One year later, in 1905, Fenway Studios opened. The building was designed so that all 46 studios would have north light, universally considered the best natural light for artists. Interiors were inspired by 19th century Parisian ateliers with 12-foot high windows, 14-foot high ceilings, and even fireplaces in some studios.
But by the 1970s, many shares of the original trust had passed to heirs who weren't as interested in keeping the building up or paying taxes, and it was put up for sale. With help from a real-estate developer, some resident artists went to the landlord and made an offer. It was readily accepted, but the group couldn't get a mortgage from any bank in Boston. The developer suggested they form a cooperative, and after some research they agreed. They formed a co-op and elected a board of directors. The 46 studios were priced based on the size of the space. Regardless of how big a space was, each member had just one vote in co-op policy decisions and elections. They hired a management company and contracted for some much needed improvements to the building.
In 1998, the co-op was declared a National Historic Landmark. This was part of a successful strategy to keep a developer from blocking their northern light with a 41-story apartment building. But later the same year, however, serious structural issues were discovered in the façade of the building. Emergency repairs were tagged at $1.6 million. Co-op members' rents shot up 32 percent.
Again the co-op organized and sought wider support for a treasured building and a priceless workplace. Friends of Fenway Studios was founded, a non-profit organization open to anyone who wishes to help preserve this landmark. This group in turn created the Century Fund to help restore the building, which celebrates its 100th birthday this year. Cooperative Fund of New England negotiated a loan so renovations could get started on the façade. The Fund aims to raise $1 million for bricks and mortar and another $1 million for additional capital needs. To see photos of the building, make a donation, or for more information: www.friendsoffenwaystudios.org and www.cooperativefund.org
LEGAL MATTERS: Capitol Hill Update
Ed. note: It's been our pleasure to have attorney Patrick Deluhery contribute regular articles to this section of CL Leader, most recently the excellent four-part series on capitalizing cooperatives. We hope to publish many more of Pat's pearls. Once in awhile, however, we like to take a look at what's shaping up in Washington, DC. What policy is being decided on that may affect one or more sectors of the co-op economy? Recently, Art Jaeger who edits Cooperative Business Journal responded to CLL's inquiries about hot policy topics with the following. For more, see the Dec. 2004 CBJ at www.ncba.coop.
Last November, the International Accounting Standards Board (IASB) made an important ruling that could affect the capacity of cooperatives to use member shares as equity. Unlike the US Financial Accounting Standards Board's (FASB) controversial 'FAS 150' ruling in 2003--since put on hold--the IASB decision recognizes member shares as equity, regardless of whether the board can refuse to redeem those shares.
As Mary Griffin, for nine years on the legislative staff of Common Cause and now leading NCBA's Finance and Tax Council, pointed out in the CBJ December, 2004 article, "[The IASB ruling] shores up our position because FASB is so interested in converging with IASB…It’s a signal to FASB.” FAS 150, subsequently put on hold, declared that 'mandatorily redeemable' shares in a co-op should be classified as a liability, even when the board retains the right to refuse redemption.
NCBA’s Finance and Tax Council has been working on the issue since early 2004, and has urged FASB to adopt the IASB position on member shares. A decision is expected later this year. In the meantime, the two boards have been working to harmonize their accounting standards. FASB has decided to replace FAS 150 with a standard that relies on whether there is an ownership relationship established by the member shares. Co-op shares that establish ownership in the co-p would be considered equity regardless of whether they are mandatorily redeemable.
FASB now is in the process of defining exactly what an “ownership relationship” is. Mary Griffin and the Finance and Tax Council are following that process closely. Early signals suggest that the new standard will be workable for some cooperatives, but others may still face reclassification of member equity as debt. NCBA is working to ensure that doesn’t happen by helping FASB refine its current approach. Griffin and Rick Reed of the National Cooperative Bank now serve on FASB’s resource group for equity and liability. Among other things, that gives them early access to draft documents
“We think we are making headway. You could say from a year ago it’s a sea change,” said Griffin. “They are starting to understand that, whether you are big or small, cooperatives operate differently, that FASB standards do not always have an exact fit with the co-op structure, and that standards will have to be changed to address the interests of co-ops.”
OUTSIDE THE REGION
Home Care Workers
The home care worker-owned Cooperative Care in Waushara County, Wisconsin, had a distinct market advantage when it started in 2001. There was virtually no competition. Most urban and many semi-rural markets already have home care agencies. In Waushara County, this was not the case. Independent providers were matched to low-income clients but were not considered county employees. A third party handled payroll. The care providers were poorly paid with few benefits, not even workers' compensation. The county Director of Human Services realized that the care low-income elderly and disabled people were getting at home was coming at the expense of the home care workers. She had heard about Cooperative Home Care Associates in New York City, and got a grant to explore the co-op model.
A number of meetings and a lot of homework later, the result was Cooperative Care, with 70 members, most of them rural women with limited employment options. Yet they possess a valuable capacity to care for others in the most pragmatic and personal ways, and they have been trained in or are acquiring the professional home care skills. Some of them are caring for family members who would have to be institutionalized otherwise. Others care for the growing number of elderly who can't keep house like they used to but aren't ready to live in an institution (or to pay the roughly five times more money it costs than home care, on average). Now they are looking to expand into other areas: private pay clientele, respite care, hospice care, and companion care. Their success has attracted a lot of attention and support, in and outside of Wisconsin where co-op laws and other factors have contributed to that success.
Ed. note: CooperationWorks! the national network of co-op development centers CDI is a member of, will publish a guide to Home Healthcare Worker Cooperatives this winter. We'll keep you posted.
BULLETIN BOARD
Announcements
The Tsunami Cooperative Recovery Fund was launched by the Cooperative Development Foundation just two weeks after the disaster in South Asia struck. The fund will direct tax-deductible contributions to cooperatives in the region, and to co-op members most in need. The National Cooperative Bank made a $10,000 donation to the fund that will kick in when an equal amount is raised through individual and corporate contributions.
"We applaud the work of relief agencies to meet the immediate needs of those who survived the tsunami,” said CDF Board Chair Terry Lewis, a vice president at NCB. “But we’re focusing on longer-term needs, when the cameras are turned off and the media has moved on. The reconstruction will take years and member-owned cooperative businesses will be a key to that recovery…this is also about co-ops helping co-ops,” Lewis added. CDF is waiving all fees so 100 percent of donations can be used for recovery and reconstruction. Credit unions, coffee co-ops and other cooperative businesses--a source of jobs and improved living standards throughout the developing world--have been hit hard in Sri Lanka, Indonesia and other places where U.S. cooperative organizations have been active for decades. FMI and to make a donation: www.TsunamiRecovery.coop.
Congressman John Olver (MA) congratulated the Cooperative Development Institute at a press conference on January 24th when David Tuttle of the United States Department of Agriculture presented CDI with a check for $294,930 to continue helping cooperatives in the Northeast form and thrive. The event highlighted CDI's current work and its 10th anniversary. The grant will support innovative assistance to organizations throughout New England and New York, such as New England Family Dairy Farms, the Greenfield (MA) Regional Community Store, Co-opPlus of Western Massachusetts, Northeast Biodiesel Co-op and the River Valley Market, a consumer food cooperative in Northampton, MA.
Northcountry Cooperative Foundation has released Using the Cooperative Model to Provide Basic Community Services in Rural Areas: A Feasibility Study. The report includes six case studies—The Mercantile (WY), Got Socks (MT), Just Local Food and Antigo Cheese Company (WI), and Western Area City County Cooperative (WACCO) in Northwestern Minnesota. It finds the model a viable one for community economic development, and also notes replicable features critical to success. For a copy of the study contact Angela Dawson at (612) 767-2121.
CO-OP PRINCIPLES IN ACTION
(6) Cooperation Among Cooperatives: Maine's Credit Unions
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, state, regional, national, and international structures.
What principle is more natural to cooperatives than to associate with one another, and to organize with other co-ops to serve their members better? No sector of the cooperative economy has done that better than credit unions. Throughout the Northeast, where the first credit union in the U.S. opened in 1909, individual credit unions have sprung up and formed state associations. These in turn collaborate with national organizations to keep credit unions strong, providing state-of-the-art products and services, educating members and responding to their demands. In recent years they have actively built solidarity in the face of ongoing attacks from the banking industry at local, state and federal levels.
Unlike banks, credit unions do not have a top priority of maximizing profits for shareholders. Their priority is to provide the best financial services available, at the least cost, to the depositor-owners. But providing those services isn't always simple. Credit unions are one of the most regulated of all co-op sectors. "The restrictions credit unions have on them, banks would never deal with," says Jon Paradise of Maine Credit Union League.
"Right now we have a $50,000 cap on lending to member businesses," says Paradise. "That's what, two vehicles? One sand and gravel truck?" While there has been progress with small business legislation that would benefit co-ops, more changes will be needed, he says.
Paradise reiterates the tiered structure of the credit union system, but notes there are really four tiers, not three. The national organizations service the state credit union leagues and associations, who serve the individual credit unions, who serve the individual member-owners. In Maine, where credit unions have the fifth strongest market penetration in the nation and the strongest in the region, the League has delineated eight chapters around the state.
Managers and CEOs share strategies and discuss new ideas. Different credit unions in the same community may share a branch to improve services and cut costs. "You won't see that happening with two different banks in the same town," says Paradise. FMI: www.cuna.org and www.ncua.org
Each month we tell stories that embody one of the Seven Co-op Principles or two of the Ten Co-op Values approved by the International Cooperative Alliance www.ica.coop/ica/. We are eager to hear YOUR suggestions!
CDI SERVICES
FMI: (413) 774-7599 or info@cooplife.coop.
The Cooperative Life Leader is produced as a service to the regional community by the Cooperative Development Institute, which is dedicated to developing and strengthening cooperative enterprise in the Northeast. CDI staff and consultants provide comprehensive support services, including the following:
* Customer service training
* Annual evaluations (manager, board, co-op)
* Business and strategic planning
* Executive search
* Board and management development
* Membership development
* Cooperative start-ups
* Fundraising
* Legal and personnel issues
* Public policy advocacy
CO-OP QUIZ 30: What are the issues for cooperatives that led to the recent flurry of activity re. USDA 'Section 515' housing policy?
Answer to Q29: In 2004, the Cooperative Fund of New England made 29 loans bringing its total since inception to 316. This represents disbursements of $1.83 million in '04 and $10.38 million in all. Also in 2004, the Fund received $1.39 million in individual and institutional investments. (For a prospectus or more info: www.cooperativefund.org)
CONTACT COOPERATIVE LEADER
Send your news and comments to lbroussard@cooplife.coop. To subscribe, unsubscribe, or for FMI on a program or event contact us at info@cdi.coop. Please feel free to forward this newsletter to your colleagues.
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Cooperative Leader Staff
Lynda Brushett, Senior Editor, brushett@metrocast.net
Jane Livingston, Principal Writer and Editor, mejane@gwi.com
Laurie Siggillino Broussard, Production Manager, lbroussard@cdi.coop