A model of support for new food co-op development
When new wave food co-ops were popping up around the country in the 1970s, it wasn’t unlike kids getting together to put on a show. Someone knew of a space, the equipment and people were rounded up, and the groceries were brought in for sale. Like the kid shows, the new wave food co-op movement was driven by great passion and involvement and lacked equally balanced planning and forethought.
“In hindsight it was a model not always geared for success,” said Kevin Edberg, Executive Director of Cooperative Development Services (CDS). “All those startups were individual efforts. Every one of them went through creating a co-op for the first time. There was little gathering or sharing of information.” That reality led to the dearth of startups in later years.
More recently, cooperators decided to create a food co-op development ideal that was much more methodical, based on tried and true development principles and on sharing and strategic cooperative partnerships. A model was put forth to address the necessary ingredients for successful co-op development: community participation and social and economic empowerment, along with providing essential technical assistance.
National Co-op Bank (NCB), CDS, and the National Cooperative Grocers Association (NCGA) collaborated on the creation of the Food Co-op 500 Program. “We can’t give a co-op to communities. They have to build their own,” said Marilyn Scholl of CDS. “But we can help.”
Four cornerstones in three stages
Food Co-op 500’s development model is based upon four cornerstones of a project—vision, talent, capital, and systems—that occur during three expansion stages—organizing, feasibility/planning, and implementing. (See illustration.) Four Cornerstones in Three Stages summarizes the successful attributes of a viable project. Preparation includes engaging support systems and identifying decision points along the way.
…and Meet in the Middle
Meet in the Middle is a way to conceptualize organizing current resources that allows a community to help itself while tapping into existing co-op groups that can support its local endeavor. In the same way that you can’t “give” a community a co-op, the Food Co-op 500 program aims at more than opening new stores; it’s also a process of uniting local and national co-op communities.
For startups, Meet in the Middle means accessing the resources that already exist within the cooperative network. For veteran co-ops, Meet in the Middle can provide an avenue for giving meaningful support to the growth of our movement.
The idea behind Meet in the Middle is that as individual start-ups come forth, they will be greeted by and inspired by the existing food
- The system will suggest a roadmap for development that communicates clearly and effectively with the leaders of the community groups.
- The system will communicate and require measurable markers for the groups to achieve in order to get specific elements of support from the system.
In other words, if a group organizing a food co-op can demonstrate at various stages its market feasibility, member support, organizational capacity, a feasible business/financial plan, and a feasible design/site—then the food co-op system will provide the support the group needs at the appropriate time. Such support will include matching seed capital, templates for bylaws and membership programs, matching sprout capital, a technical assistance package to support business planning and organizational development, long-term financing, store operating systems, and primary vendor support.
For example, a community desires to have a natural foods co-op, and as they move out of the organizing stage and into the feasibility stage, they have a vision for a 6,000-square-foot store that has 4,000 square feet of retail. Meet in the Middle might say that IF the local co-op by the end of the feasibility/planning stage has at least 500 members and at least $300,000 raised from members in loans and equity and meets market, organizational readiness, financial, and design feasibility criteria, then the existing food co-op system will provide a set of qualified candidates for general manager and a complete set of store operating systems. The numbers will vary and could be higher depending on the size and scope of the planned store, but as you can see, we (the existing food co-op community) have a ways to go to be able to meet new co-op groups “in the middle.” Just as they have their work cut out for them in organizing their communities and resources, so have we! “We came to this process with the belief that a co-op built independently will not be as successful as one that has the support of the co-op community,” said Scholl. Each organization along the way plays a pivotal role in contributing to a project’s success.
Recent working session
This past November, cooperators from around the country from a variety of organizations and different types of experience (people from cooperative development centers, consultants, financial advisors, and people from communities who have opened or are opening new food co-ops) met in Minneapolis to identify how we might work together to better leverage our resources for the common good. The goal was to assess the conceptual models Four Cornerstones in Three Stages and Meet in the Middle and to take what we believe we know to further build a sustainable support system that provides practical resources to individual co-op efforts.
“We have an emerging system with a strong development model for sharing and testing new projects,” said Kevin Edberg of the Four Cornerstones in Three Stages prototype. At the working session there was widespread affirmation that it appears to be an effective development model and can serve as a widely accepted tool in the real-world creation of new food co-ops. The group also worked on determining how to move forward with creating a support system for Meet in the Middle networks.
We considered an overview of how such a network could come together and how to build it. Creating a development model and approving it as the working standard by development professionals is an important first step. Components of the support system were identified and included the following:
- A developmental model agreed to as the working standard by development professionals, periodically reviewed/refined (vision, systems)
- Promoting cooperation as a solution for community needs (systems)
- Creating a system to initiate startups into Food Co-op 500 (systems, talent)
- Identifying trained “frontline” developers (talent)
- Identifying specialized technical assistance providers (talent)
- Amassing capital tools beyond local equity (capital)
- Delivering organization and business operations system support (systems)
- Advocating for food co-ops in national public policy (talent, capital, systems)
- Regenerating the system (vision, systems)
Food Co-op 500 staff will utilize Meet in the Middle to create a work plan and budget for developing tools to be provided by the support system. To maximize system resources and benefit to emerging co-ops, a list of criteria to evaluate priorities was articulated:
- Offers wide applicability (of a tool)—
large number of groups will use it
- Ranks as most critical to success of the development model—helps educate groups on Four Cornerstones in Three Stages and Meet in the Middle.
- Provides ease of use/accessibility
- Addresses most common mistakes
- Facilitates group development
Working session participants compiled a list of tools to recommend as priorities for development. A few of those include: reconciling any differences that exist between the manual, “How to Start a Food Co-op” and the Four Cornerstones in Three Stages model; producing a video to assist in organizing efforts; encouraging regional “start-up groups” network; seeking early “mentoring” support from existing co-ops; and identifying“best practices” to facilitate group development.
What’s next? Continue the conversation that has begun and carry it into action. This includes the creation of a three- to five-year strategic plan; agreement on definitions of success for new co-op development, both individual and as a system; and continual engagement and communication with development partners, community groups, and other stakeholders.
Pilot projects take off
Food Co-op 500 is still in the pilot stage, yet a significant influx of resources has already led to exciting milestones. This past year, Food Co-op 500 contracted with CDS for a food co-op development specialist. Stuart Reid, previously the manager of Just Food Co-op, will work with Richard Dines, Food Co-op 500 Program Manager at NCB, to form and implement an organizational work plan. Additionally, a number of start-up loans and grants have been awarded (see sidebar).
The Food Co-op 500 Task Force created two funds in 2005 to provide start-up capital: the Seed Fund provides $10,000 matching grants, and the Sprout Fund provides loans of up to $25,000. NCB and the Blooming Prairie Foundation provided these resources. Sixteen start-ups have been awarded money and are at different stages within the food co-op development pipeline. The program is already close to seeing the opening of its first new food co-ops. Now it’s possible to see more clearly Meet in the Middle concepts in action.
Fiddleheads Natural Foods Cooperative is set to open an 8,000-square-foot food store in spring 2007 in New London, Conn., a small harbor city on the eastern seaboard. The co-op received a loan from Food Co-op 500’s Sprout Fund as well as two United States Department of Agriculture grants that helped with feasibility and business planning.
As a requirement of receiving funds from Food Co-op 500, all recipients must submit monthly and quarterly reports on their activities as well as convene with a monitoring group. The Food Co-op 500 monitoring group is made up of finance professionals, retail general managers, and development specialists from various cooperative organizations. They respond to grant and loan recipients on their progress and help guide them with suggestions and recommendations. Amy Sarcia, Fiddleheads’ board president, said, “We were able to take advantage of their support for what to do with the money. It was equally helpful as the money we got for the loan.”
One of the specific challenges of a startup is educating a community about the cooperative business model, and that people need to invest in it. “It’s a joint effort and community effort,” Sarcia said. Food Co-op 500 helped Sarcia pave the way in her community to greater understanding of food co-ops by bringing her “into the fold” and introducing her to fellow cooperators and further technical resources. “Food Co-op 500 made a world of difference. It saved us in so many ways,” she said.
Because of its experience with Food Co-op 500, Fiddleheads is inspired to give back to the co-op community that helped it grow. “Even in the midst of struggling to open our co-op, we want to make this easier for the next co-op and the co-op after that,” Sarcia said.
In Oxford, Ohio, in the midst of farm country, the Miami/Oxford Organic Network, or MOON Co-op, is envisioning a food co-op that will help support the area’s local and sustainable agriculture. The Network is a recipient of both a Sprout Fund loan and a Seed Fund grant and is working on budgeting, goals, and building membership in order to realize its storefront dream. It is currently organized as a buying club and plans to open a retail store in the second half of 2007.
“The customized expertise is really helpful, as well as the collective input from experienced co-ops. They know what it’s like to hit a plateau. We can learn from their mistakes and triumphs,” said Bernadette Unger, president of the MOON Co-op board of directors. As part of their process, the board visited Bloomingfoods Market and Deli in Bloomington, Ind. “They were incredibly gracious, took time to meet with us, and were very knowledgeable. It was such a positive experience; we’re hoping to make another trip,” Unger said.
Unger noted that they are well aware of the challenges of a start-up, but are excited about working them out with the support of Food Co-op 500. “Co-ops are the real thing. We’re about serving our members and our community. We’re so excited to have a business in our area that says that loud and proud.”
The key: existing food co-ops
At the beginning of the new food co-op organization process, community groups have found advice from consultants and fellow start-up
co-ops critical. As the start-ups get closer to opening storefronts and keeping them open, however, they see a need to shift toward learning from the experiences of established co-ops.
As all food cooperators look to a future of intensified competition, building greater purchasing power and achieving critical mass to maintain market share is vital for survival. In addition to supporting Food Co-op 500 with funds that helped hire a development specialist, National Cooperative Grocers Association (NCGA) is launching a complementary program for existing co-ops: specifically targeting struggling co-ops as well as assisting member stores with their own expansions.
The launch of this program, Support our Success (SoS) is one of the NCGA’s top priorities in the coming year. Dave Blackburn, director of purchasing, noted that 60 percent of NCGA members are in some stage of the expansion process. Blackburn sees the SoS efforts and the Food Co-op 500 activities as interconnected. “All of these programs are a way to get organized,” he said. “We can figure out through assessment and monitoring how to best help food co-ops.”
“Food Co-op 500 has come a long way in a short time. Having a loan fund is nice, but all along we’ve struggled with where’s the right conversation at the right time? Hiring a specialist is a big deal,” Blackburn said.
This is one of the key differences from hodge-podge start-up support efforts of the past and perhaps the most exciting and tangible breakthrough for existing co-ops that want to champion new food co-op development.
Food Co-op 500 is charged with creating a Meet in the Middle infrastructure that can effectively meet the needs of all stakeholders by building its capacity as the go-to clearinghouse for start-ups to get information and assistance. “This is a program of many co-op partners,” said Stuart Reid of CDS. “It’s important for everyone to be engaged in the process, and we can channel new co-op development into the Food Co-op 500 system. This goes beyond having a toolbox. It’s about putting in systems of support,” he added.
For existing co-ops, becoming a local mentor or strategic partner in new co-op development will be much easier with the strength of many groups being brought to the effort. “We will provide a way to help link people with resources without individuals having to spend all their time doing what’s already been done by someone else,” Reid said.
“All of these activities provide a lot of excitement and validation for what our members are doing,” said Blackburn of NCGA. “The fact that there’s a strong demand for new stores is very exciting… Existing co-ops can learn by teaching as well as looking at things in new ways.”
“It really brings people together,” said Dines about Food Co-op 500’s work. “It’s only been one year and we can report great progress. This is really cooking, and it’s exciting.”
Thanks to Patricia Cumbie, Marilyn Scholl and Bill Gessner for assistance with this article.
Denise Chevalier is a consultant with CDS Consulting Co-op, specializing in project management and new co-op development ([email protected]).