From Occupation to Co-operation

Co-op Think Tank organizes to expand member-owned movement

Cooperation Texas' Carlos Perez de Alejo meets with Dahlia Green Cleaning Services co-op members (clockwise from lower right) Eva Marroquin, Brenda Jiménez, Maria Munóz, and Patricia Zavala.
Cooperation Texas' Carlos Perez de Alejo meets with Dahlia Green Cleaning Services co-op members (clockwise from lower right) Eva Marroquin, Brenda Jiménez, Maria Munóz, and Patricia Zavala. (Photo by Jana Birchum)

They called it "breaking up with your bank."

At the height of the Occupy movement in 2011, more than 700,000 people nationwide moved their savings from institutions like Bank of America to credit unions. Besides offering more competitive rates, credit unions are in principle democratically governed, owned by their customers. The one-person-one-vote egalitarianism and cooperative structure of credit unions appeals to people tired of banks structuring loans and imposing fees to profit distant shareholders, as well as to those who objected to the role of major national banks in creating the conditions that led to the nationwide recession.

A group of Austinites is proposing to sustain that cooperative spirit and expand it to other sectors of the economy. "With Occupy Wall Street," says Mark Wochner, a board member at both Wheatsville Food Co-op and Black Star Co-op Pub and Brewery, "people were asking for an alternative model that was focused on the individual, the community, and being good for the environment. For hardcore co-op people, it's like, 'We're right here.'"

The "hardcore co-op people" constitute the Austin Co-op Think Tank, which this weekend is hosting the Austin Cooperative Summit, a conference focused on developing co-ops in Central Texas. Conference organizer Kim Penna, who works at College Houses, says the project involves both regional strategic planning and public education about co-ops. "Co-ops are a proven answer to the questions that people were asking during Occupy," she says. "'Why don't we have more of a voice? Why are outside forces dictating the jobs we can get?' Co-ops answer those problems. If there isn't a job for you, you can create a worker co-op and create a job – take back your voice."

The co-op is an economic enterprise democratically run by members or employees. Members own and govern the co-op, with each person who makes a basic, defined contribution having one share and one vote. While national co-ops exist – REI, Ocean Spray, Blue Diamond nuts – most co-ops, by nature, are local businesses.

"The members are not people who live 2,000 miles away who have the investment as part of their pension fund," Wochner says. "They are people who shop at the co-op or people who work there. The wealth either goes to people that work there, or it's reinvested in the community or the co-op, or given to the members."

The primarily local, democratic nature of co-ops makes them an appealing alternative to Wall Street capitalism. Jim Jones, a lifelong co-op activist who worked in Austin in the late Seventies and early Eighties, puts it this way: "Instead of trying to pressure the government or employer to do something differently, you simply say, 'We'll try to do it ourselves.'"

The Think Tank isn't Austin's first cooperative brain trust. Austin's first housing co-ops were formed during the Depression, and by the Seventies, they had become an integral part of campus-area culture. In 1977, the co-op community hosted a national cooperatives conference, and afterward, members of the different local co-ops wanted to keep meeting and maintain momentum. They formed the Austin Co-op Link, which produced educational events until it dissolved almost 20 years later, when individual co-ops facing financial hardship had to focus on their own survival.

The Link is one aspect of Austin's co-op history featured in a film documentary in progress produced by Jones, who worked in housing co-ops and helped found Wheatsville. (A short preview will be shown at the summit.)

Like the post-Occupy present, the Sev­enties were a time of social upheaval and questioning established systems. "You typically see spikes in cooperative activity and in labor activity around periods of crises," says Carlos Perez de Alejo of Cooperation Texas, which helps organize worker co-ops. "People are recognizing that business as usual is not working and are more open to what an alternative might look like."

Practical Hurdles

But if co-ops address so many economic and political problems, why aren't there more of them?

For starters: money.

Most businesses begin with capital drawn from major investors or lenders, pulled from savings, borrowed from friends or family, or raised through stock offerings. People who want to start co-ops – particularly worker co-ops – often don't have access to these resources, and co-ops can't sell stock.

Traditional lenders are often leery of the co-op model because its egalitarianism is seen as risky. Most banks are used to dealing with a single owner of a business to negotiate and secure a loan and aren't comfortable working with a co-op's multiple owners.

Cooperatively structured credit unions would seem to be the logical solution, but hurdles exist there, too. The same policies that make credit unions more stable than conventional banks limit the loans they can make. They mostly lend only from their own deposits, and they're limited to lending 12.25% of their assets to commercial enterprises, narrowing the opportunities for financing co-ops.

Some local co-ops have solved the capital problem creatively: Red Rabbit Cooperative Bakery started its operation with $10,000 raised through a Kickstarter campaign. Black Star Co-op spent several years collecting investing members at beer socials before Wheatsville invested the last $50,000.

A new business also needs legal services and accounting, but co-ops' options are again restricted by service providers' unfamiliarity with the co-op model. Business attorneys who don't understand how to start a co-op, for example, might encourage entrepreneurs to form a limited liability corporation instead.

"Co-ops require the same kind of assistance 'regular' businesses get – financial services, legal services, marketing, technical assistance, training, and education," says Perez de Alejo. He cites the success of the Mondragon cooperatives in the Basque region of Spain and a network of co-ops in the Emilia Romagna region of northern Italy. In both places, there are support organizations whose primary purpose is to develop cooperatives. "That's the kind of infrastructure we need to think about building here in Austin and Texas, if we're serious about taking things to scale and moving them forward for the long term," he says.

The Think Tank hopes to use this weekend's summit in part to reach other service providers who'd like to work with co-ops. Some members dream of one day seeing legal and accounting co-ops that offer their services to others in the co-op community.

What Goes Around ...

In April 2010, Kelsey Balcaitis, a youth financial education coordinator at A+ Fed­eral Credit Union, organized a workshop to help employees understand the cooperative model, inviting representatives from Wheats­ville and Black Star. "We talked about values and principles a lot – how do our owners see us, what are the individual challenges we face," recalls Rose Marie Klee, president of Wheatsville's board. "We realized at some point that this was not the only conversation we should have."

Black Star Co-op opening event, November 2009
Black Star Co-op opening event, November 2009 (Photo by John Anderson)

The group continued to meet and add members, eventually calling itself the Austin Co-op Think Tank. In August 2011 it held a retreat to brainstorm a five-year plan for helping co-ops "go mainstream" in Austin. One step toward that goal is getting the Austin community to see all the different co-ops – housing, producer, consumer, worker, utility – as connected. "If you have very successful independent co-ops that everybody thinks of separately," Jones says, "you'll never get that sense of it being more than a business. If you start thinking of it as a way of doing things – rather than a particular place of business – then it has the potential for becoming mainstream."

To that end, the Think Tank developed a mentorship program that paired co-op newbies with seasoned professionals. Piggy­back­ing on the United Nations' naming of 2012 the International Year of Cooper­at­ives, the group worked with the City Council to amplify the proclamation locally.

So far, much of the value of the Think Tank has been in building relationships among people in different co-ops. Because of connections made at Think Tank meetings, Wheatsville lent its boardroom to College Houses for a training program, and the Inter-Cooperative Council financed a fire sprinkler system in its older houses through University Federal Credit Union.

Wheatsville sells Red Rabbit doughnuts; Black Star uses Red Rabbit bread. The ICC housing co-ops have been Wheatsville's biggest customers for years. Think Tank members would like to see these networks expand; what about a cooperative cleaning or pest control or laundry service that could be used by Wheatsville, Black Star, and other co-ops?

"I think we're underambitious in this country," says Brian Donovan, the general administrator of the ICC. He points to the International Co-operative Alliance's goal to make co-ops the fastest-growing business model by 2020. He'd like to see more co-ops in day care, housing, energy – services where consumers need stability.

"People with a lot of capital in Wall Street can make money whether the stocks go up or down," Donovan says. "The only time they're not making money is when it's stable – so the vested interest is in instability. But in the co-op, stability is the goal. When things go bad in a co-op, you make adjustments to survive – you don't fold and declare bankruptcy or sell to a competitor. So I think we could provide these long-term services for ourselves, instead of having profit-motivated or instability-motivated, investor-owned companies running them."

The collaboration among Austin's coops – whether they brew beer, sell groceries, print T-shirts, or provide housing – are what Jones thinks will propel the local cooperative economy forward. He describes the current scene as a "golden age" for Austin, akin to the Seventies. "In both instances there was a social system that was open-ended and allowed people to become involved easily. If you look at who's involved in the Think Tank, it's not all the managers or staff or presidents of the board – it's whoever's interested. It lets people get involved without running for a board or getting hired."

For Perez de Alejo, that open social system allows existing co-ops to find common ground that will be essential for expansion to occur. "Typically, different types of co-ops operate in their silos and don't communicate much with one another," he says. "With the Think Tank, we're beginning that conversation and trying to figure out where we can lock arms and think about the future together."


A+ Federal Credit Union

Amplify Federal Credit Union

Artists Screen Printing Co-op

Black Star Co-op Pub and Brewery

College Houses Cooperatives

Cooperation Texas

Gaia Host Collective

Inter-Cooperative Council, Inc.

KOOP Radio

North American Students of Cooperation

Red Rabbit Cooperative Bakery

Sasona Cooperative

Sunflower Co-op

From Occupation to Co-operation

Treasure City Thrift

University Federal Credit Union

Vuka Co-op

Wheatsville Food Co-op

Whitehall Co-op

Austin Cooperative Summit

Friday-Saturday, Jan. 25-26

Registration: $25, or $50 for co-op employees for more information or to register

Friday (7-10pm)


"What Is a Co-op?" panel, featuring local co-ops

Preview of Jim Jones' documentary

Saturday (8am-6:30pm)

Keynote addresses: Jim Hightower and Michael Beall, president of the National Cooperative Business Association

Sessions including:

Co-op 101

A History of Austin's Cooperative Efforts

Stronger Together: Exploring Co-ops in Austin

The Road Ahead: Solutions to Expanding the Cooperative Legacy

From the Ground Up: Steps to Starting a Cooperative

Political Advocacy: Speaking Up for Cooperation

Regional Strategic Planning: Our Vision of the Austin Cooperative Community

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