Growing Co-op Community Foundations

By David Thompson

What if an article in Cooperative Grocer a decade from now began with the following?

During the past ten years, Cooperative Community Funds throughout the United States have built an ongoing endowment of $20,000,000 to help nonprofits in their local communities. Last year, these Cooperative Community Funds donated over $1,000,000 to support local nonprofits.

If only 30 U.S. food co-ops were to replicate what has been achieved by North Coast Cooperatives, that statement would indeed come true. In 1990, North Coast (NCC) established a Cooperative Community Foundation with the principal as an endowment and the interest donated to community groups. The fund started with high hopes and a modest contribution from members of $220. At NCC, members who reach their equity share then have a 2 percent checkoff at the register, including an option for the Cooperative Community Foundation. (For more on NCC's system, see below as well as CG #82, May-June 1999.)

North Coast Co-op System Boosts Member Investments, Contributions

By John Corbett

North Coast Co-op (NCC) created a Co-op Community Foundation back in 1990. Contributions to this fund accelerated after NCC streamlined the membership program for our two stores in Arcata and Eureka. Since then, co-op membership and contributions have increased tremendously.

Simplicity and community, along with essential POS software, are the keys to our system. After purchasing an initial $25 share, co-op members begin receiving a 2% discount on all purchases, which the POS entry automatically credits toward investment in co-op shares until the member reaches Fair Share status or $200. Then, the member can "save it now, save for the future, or save for the community."

Since instituting this program, strong gains have been seen in all three areas of membership rolls, member investment in the co-op, and community contributions. In the store, a list designating specific community groups eligible to receive a contribution is posted near the checkout. With the participation of fewer than 2000 of our members, we will generate $50,000 this year for the Co-op Community Foundation.

As with the 2% paid to reach Fair Share status, much of the NCC checkoff system is paperless. Members can have all discounts contributed to the foundation. After signing up, they go through the checkout just as other member shoppers do. When their member number is entered at the register, their contribution is processed automatically.

Beyond the dollars, this program generates immense amounts of good will for the cooperative. NCC surveys show that people now join the co-op to be part of the community.

Once the discount is no longer automatically invested in the co-op, Fair Share members have three options:
* receive a discount at the register on their purchases;
* invest it in C shares (and earn 6.5% interest through 2000);
* invest it in the Co-op Community Foundation.

   John Corbett is the CEO at North Coast Co-op.

Having started with that $220 and carefully managed the growth of the fund, ten years later the Cooperative Community Foundation will have the following outstanding results:

*The fund balance by the end of 2000 will be over $700,000.
*Annual contributions will total about $80,000.
*The contributions come from hundreds of co-op members and thousands of transactions (averaging $.25 at the register).
*Total donations projected as of FY 1999-2000 = $33,000.
*From this, about 80 community groups will receive donations ranging from $100 to $3000.

The success of such a program at North Coast Co-op (NCC) could not go unnoticed. Beginning in 1995, the Twin Pines Co-op Foundation (TPCF) met with NCC General Manager John Corbett to learn how TPCF might replicate their community foundation model. Twin Pines is a California based tax-exempt organization which remains as a legacy from the golden age of California cooperatives (1930s-1980s). With assets of $600,000, TPCF had been looking for additional ways in which to serve the community needs of its member food cooperatives. The Cooperative Community Fund idea met all our goals.

By 1998 the TPCF board of directors set aside $100,000 in matching funds to create other Community Cooperative Funds. Now there are Community Cooperative Funds at Briarpatch Cooperative Market, Coopportunity, Davis Food Co-op, and North Coast Cooperatives, with an aggregate total of $100,000. Also considering joing are the Isla Vista Food Co-op and Sacramento Natural Foods Co-op.

Matching funds from the Twin Pines Co-op Foundation

At the recent CCMA conference in Boston, John Corbett and I presented a workshop on Cooperative Community Funds. We had a full room of co-op leaders with excellent questions. At the workshop TPCF announced that it will extend the Cooperative Community Foundation program to make a total of $25,000 in matches available to five other food coops across the country.

Co-ops wishing to apply for one of the five $5,000 matches should send an email to the address below. The deadline for a simple one-page application is August 15. We will also consider expanding this offer to other co-ops in the future.

TPCF has agreed to staff the nonprofit activity, reporting and coordination. TPCF will generate printed templates and leaflet copy to be modified by the local co-op. While TPCF provides basic guidelines, each co-op will choose how to build its local fund. We designed the program to make it simple for members to contribute.

Why use Twin Pines Cooperative Foundation rather than do it yourself?

In the long run it will be economically smarter and tax advantageous to run donations through a tax-exempt nonprofit rather than through part of your business. By creating an endowment within a tax-exempt nonprofit, we build our capacity for contributions in a tax-free manner. Over time the co-op can reduce donations as a business expense.

By working through TPCF, you allow members to donate to the program and receive a direct tax benefit.

By having the Cooperative Community Funds work together through TPCF, we can coordinate requests to wholesalers, suppliers, manufacturers, and foundations. We can also share fund-raising ideas that lift everyone's boat.

Besides the TPCF matching funds, the CCF program provides an attractive logo and supportive materials for replication by each participating cooperative.

North Coast Co-op has crafted an amazing success that they want to see replicated across the country. TPCF is glad to support this replication and invites other food co-ops to join us in this effort. The additional story below tells how the Davis Food Co-op started a new fund that soon attracted supported support from numerous local cooperatives and lenders.

For more information contact, Cathy Mulcahy, TPCF Executive Director, at [email protected]. Or drop us a line at Twin Pines Co-op Foundation, PMB 1844, 216 F. Street, Davis, CA 95616.

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Davis Food Co-op Helps Build a Cooperative Development Fund

The origin of the Davis Cooperative Development Fund was a commitment the Davis Food Co-op (DFC) made to the City of Davis in 1985. DFC obtained over $45,000 in block grant funds at a time when the co-op's future seemed bleak and we could not pay back either principal or interest. Although the funds were a grant, DFC promised that if the co-op were to recover, we would repay the wider community.

DFC did thrive, and in 1995 we donated $10,000 to start the Davis Cooperative Development Fund. This amount was matched by $5,000 from the Twin Pines Cooperative Foundation. Other sizable contributions have come from the First Northern Bank, Yolo Federal Credit Union, Davis Campus Cooperatives, Cooperative Center Federal Credit Union, First American Title, and a forthcoming contribution of $15,000 from Davis Mutual Housing Association. By the end of 2000 the fund balance will be about $50,000. In 2000 we made our first loan of $5,000 to De Colores (a fair trade worker cooperative) and a commitment of $30,000 to the Davis Campus Cooperatives (a new 84-bed student housing cooperative).

To build the Davis Cooperative Development Fund through regular contributions, we created the Co-op Deposit Group, billed as "Cooperative Deposit = Cooperative Development," a partnership with two local institutions: First Northern Bank and Yolo Federal Credit Union. We encourage all the 30 local cooperatives and other community groups to deposit their funds at the two partnering institutions. Using the aggregate total of the group's accounts, First Northern Bank makes an annual payment to the Davis Cooperative Development Fund of 1% of the checking accounts and a .25% payment on CD accounts. The first year's total from the participating Co-op Deposit Group members will be about $5,000.

Due to our close working relationship with First Northern Bank, they now give housing co-ops first preference for awards from the Federal Home Loan Bank Board's Affordable Housing Program. First Northern's applications gained subsidy grants of $250,000 for Davis Campus cooperatives and $250,000 for Davis Mutual Housing Associaiton. Imagine that, moving our funds to a local bank gained us $500,000 in loans at 0% interest - the entire loan is forgivable in fifteen years if we provide affordable housing.

Yolo Federal Credit Union makes a payment of 1% on the aggregate of all deposits over $10,000 as of September 30 each year. The year 2000 payment is expected to be over $1,000. At this time the credit union prefers not to take business accounts, so its volume will come from savings accounts and CDs.

Because the Davis Cooperative Development Fund loans are at a lower interest rate and take a lower or no lien, they will be a great help to Davis co-ops and to co-op development. Our efforts have meant that the Co-op Deposit Group has over $1,000,000 deposited locally, which is available to build our wider community.

See other articles from this issue: #089 July - August - 2000