What can charities learn from co-ops? And co-ops from charities?

Like two different football clubs in one great city, for years charities and co-operatives would have relatively little to do with each other.

Can we learn from each other?

For the charity sector, co-ops are business clubs focused on private gain – values-based, open and entrepreneurial. That is seen as in contrast with a wider public purpose – indeed charity law tends to test public benefit negatively, through the absence of private benefit.

For the co-operative sector, philanthropy is about the public works of private people – generous with their time and money, prosperous, often establishment. That is seen as in contrast with the working class roots of the self-help movement – participatory and emerging out of need.

Each probably think the other is in some way the status quo – charities representing a more traditional, paternalistic approach to service delivery, co-operatives being part of markets that still leave people in need.

In reality, each has always aimed higher, at transforming society through values.

Close your eyes and image you are in society 100 years ago. Open your eyes and you would find little democracy, few employment rights, no votes for women and widespread racism. These most significant changes to our lives have been led by civil society, both charitable and co-operative. Politics rides and shapes the waves. But it rarely, in terms of state action, changes the tide. At our best, we both do that.

I have been involved in both these parts of civil society all my life. I work at Co-ops UK now and in July, I will take up a new role as CEO of Pilotlight, a social enterprise that provides support for small charities in partnership with business.

At our best, we are the free organisation of individuals around issues of need and of passion. This is what generates and regenerates the values that holds society together and takes it forward. When Harvey Weinstein describes himself as a dinosaur, there is an underlying truth. Technology changes, fashions change and you have to keep up. But values change, if you don’t fit, you will be found out.

I joined as an individual member of The Co-op when I left school. I was elected to the board of a national charity when I was twenty three.

In the 1990s, when I was Chief Executive of the charity, the New Economics Foundation, we launched a programme called Values-Based Organisation. Led by Simon Zadek, a profound thinker, the challenge as we saw it was that the reference points for learning in civil society were the wrong ones. Management thinking at the time was all and only about business structure and business strategy in the private sector.

Interestingly, one of the tools we helped to develop through this programme – social auditing – became in time part of triple bottom line accounting, reimported as learning into the world of business through the lens of corporate social responsibility.

So, where are the current intersections and opportunities for co-ops and charities to learn from each other?

Intersection 1: Open Membership

Co-operatives are all about membership. Co-ops are businesses owned by those involved in the business, called members to distinguish them from the more distant investors that own shareholder companies.

Co-ops themselves can be formed under any corporate form, so it is not unlike the diverse legal mix open to charities. You just have to set the articles or rules for open membership, in line with international co-operative principles.

A huge swathe of charities too are based on membership. In the disability field, over many years, membership has been a practical tool in the move away from a tradition of paternalism, acting ‘for’ people with disabilities, to a culture of participation, in which action is led by people with disabilities.

In England and Wales, the Charity Commission estimates that are around 80,000 charities that have a membership structure. There will be uncounted thousands more in the low-flying heroes of the UK’s community sector, often unincorporated associations where participation is based on a presumption of equality. Think too of churches, trade unions, sports clubs, building societies and membership associations…

So, how many members of this form are there in the UK?

My estimate has been a minimum of 91 million members: more members than people in the UK, because enough of us are members many times over. But still, this is a dramatic number. It is ten times the number of individual shareholders in the UK. Can we imagine the television news, where member ups and downs were treated with the same profile and respect as stocks and shares?

But it varies, of course. There are many forms of association. Some are one-way models only. Having a loyalty card for a coffee chain gives you no voice. Being a friend of a museum gives you no vote.

Good membership is a two-way relationship between an individual and an institution, with purpose at its heart (see for example research of the New Citizenship Project).

But membership is changing:

  • Grassroots, participatory membership has been pushed out by a shift towards consolidation in the charity sector. Scale can erode membership as norms of expertise and professionalism override those of participation and accountability.
  • Conversely, there has been a rise in membership models over the last twenty years around key public services in the cause of ‘co-production’ – mental health trusts are a rather good example, acute health trusts a rather poor one.

What membership can do well is to answer the question ‘who are you accountable to?’.

For housing associations for example, the answer to this accountability test has never been sure and simple. It is a successful field but a world to itself, never quite sure whether its reference points are to charity, to co-operatives or to business. Social housing has grown to scale, but rarely has it been a confident voice for its tenants, let alone a platform for their self-organising.

The accountability test is also one that charities with no members to speak of can also struggle with. At its heart, perhaps, this is a tension between stakeholder models, where accountability comes through participation, and wider causes, where no-one can fully represent the purpose at hand. If your concerns go beyond people, for example – faith, the natural environment, other species – then accountability to people may never be enough.

Acting in trust without the complexities of wider accountability (beyond law and regulation that is) can be a way to entrench an enduring purpose over time. But I suspect that it can be harder to ensure that there is periodic renewal.

Charity is associated in the public mind with the call for new money. Yet there are billions of pounds of charitable assets that lie dead and dormant rather than being used to challenge and change society: beautiful paintings; wonderful halls in city centres; legacy foundations administered by banks and accountants. I am told that one penny in every pound traded on the stock exchange is on behalf of the charitable sector.

Yet of course, when it comes to accountability, mutual membership – particularly passive, mass consumer membership – doesn’t always do better. The old saying about building society managers was that their job was easy – borrow at 1 per cent, lend at 2 and be at golf by 3. This was before the shock of demutualisation…

The challenge of accountability and renewal is why governance matters.

Intersection 2: Participatory Governance

In both the charity and co-operative sectors, there have been high profile governance failures and scandals. And there are similar efforts in both to drive up quality.

Co-ops UK hosts a Co-operative Governance Expert Reference Panel. We operate a governance code updated from the start of this year and produce a range of governance support tools, from how to design democratic process where you need Boards with a balance of expertise, gender equality, work on conflict, values and culture, training and development as well as a range of templates for the use of Boards.

Our view of good governance is summarised in a Co-operative Governance Wheel that I helped to introduce. It is a one page reference point for good practice.

One of the great innovations in the co-op sector recent years, thanks in part to solicitors such as Anthony Collins, has been the development of a robust model of what we might call a ‘multi-stakeholder’ governance. If you are a worker co-operative, what about the customers? If you are customer-owned co-op, what about the workers? The multi-stakeholder model, still one member, one vote but within weighted constituencies, operates as a 360 degree co-operative.

In Wales, one of the leading social care charities, Cartrefi Cymru, has converted to a multi-stakeholder charitable co-op, because giving a voice to users, people with learning disabilities, carers and to staff can give them back their dignity. As Adrian Roper, Chief Executive of Cartrefi Cymru says, decrying the marketisation of care based on competition and a race to the bottom:

“if you feel that behaving like rats in a sack is a deeply inappropriate and resource-wasting way for social care providers to act, and you see no evidence that charitable status is any guard against rat-like behaviour, then co-operative principle 6 (co-operation amongst co-operatives) calls to your soul.”

In Italy, this model – multi-stakeholder social co-operatives providing care, health and employment services – has grown from 650 in 1985 to seven thousand today, with 244,000 staff and 35,000 volunteers.

Even so, where you have the self-selecting governance model of many charities – trustees of today choose the trustees of tomorrow – that doesn’t mean that they are necessarily cut off from wider stakeholders. LSE Professor Howard Glennister once suggested that the distinctive nature of voluntary organisations is their ambiguity – meaning that people can play different roles, including as trustees.

Naturally, this includes volunteers. In the most professionalised charities, the trustees are the only true volunteers left. But more widely, as some excellent recent NCVO research shows, volunteering still plays a foundational role in the participatory life of the nation. Seven in ten people have volunteered at some point in their lives.

Combining voluntary and paid efforts is an art and some, like the National Trust, do it brilliantly. At the intersection of co-ops and charities is the Plunkett Foundation. This is a specialist charity, 100 years old this year, that supports rural co-ops. Typically, these combine paid and volunteer staff in the context of a commercial business, with around 800,000 volunteer hours each year.

There are close to 350 community shops across the UK, supported by Plunkett, serving 1,400 remote rural communities. The long-run survival rate for these – part of a wider array of over 9,000 community businesses according to Power to Change – is outstanding given that all but a few were shops threatened with outright closure when local people took them on. After thirty years, only five per cent are not still running today.

Part of that success can be put down to the commitment of those involved, which is not just their time but also their money.

Intersection 3: Social Investment

Alongside membership and governance, the third area of intersection between charities and co-operatives is money. Here, the point of learning is not about traditional forms of giving but new ones, blending the motivation of donors and investors in a genuine form of social investment.

Here the community benefit society model has been a ‘game changer’ in that it is a model that encourages communities of people to come together to support charitable projects, through their time and fiscal investment, on a democratic one-member one vote basis. This uses traditional co-operative models of equity capital raising from members in a new setting, called ‘community shares’. Over the last decade, around 150,000 people have co-invested over £150 million in over 500 community businesses through this approach.

Equity like this is what most social ventures need – patient over time, asset-locked equity capital that can be crowd-funded from your supporters. It is not a pushing of expensive short-term debt, which is sadly what a fair amount of social investment passes for.

As a member, you don’t see capital gains and your money is at risk, but you can be paid interest on your investment and you benefit as a member from the success of the society – whether it is Equal Care Co-op, developing social care solutions, or Awel Aman Tawe, spreading solar power across Wales.

Again there are hybrids. The charitable community benefit society model has been used widely by communities that are looking to conserve heritage assets. This week, we have launched an offer of £600,000 of equity match funding for community businesses running heritage projects. This is through the Community Shares Booster programme, set up in partnership with Locality and Power to Change and now the Architectural Heritage Fund.

Creating or converting to a charitable community benefit society is becoming a real choice for a wide range of initiatives including local examples here where I work in Manchester: Projekts MCR, Ancoats Dispensary and Stretford Public Hall.

Conclusion – learning fast

Civil society is a big values-based tent and within it, there is ample scope to work with each other and scope to learn from each other. Our core traditions still stand apart from the dominant ideologies both of state-led and of market-led power. So I suggest that:

  • Charities can learn from the best of co-operatives how to make a virtue of accountability via open membership.
  • Co-operatives can learn from the best of charities how to make a virtue of purpose via open participation.
  • The best of both are champions of an increased voice for users, communities, workers and volunteers.
  • More widely, we have both something to teach the wider world of business, as well as something to learn.

And this is our shared condition. In a world of need, risk and opportunity, we all have to learn fast if we are to succeed.

Egg Mayonnaise and other adventures over ten years at Co-operatives UK

I always find it hard to say goodbye, which is why my last few months at Co-operatives UK are going to be an emotional one for me.

Having worked all my life in the social economy, I am leaving to join a social enterprise, Pilotlight, in July. The mission of Pilotlight and its network of business and individual members is to help more charities help more people more effectively. In short, it is a multiplier for social justice (I’ll write more on this in time, of course).

I remain a co-operator. We are a cause and not a post and we are multi-generational, arguably indeed the UK and the world’s longest running social movement. And in the humanity that connects the co-op sector, you can find a strong sense of humour…

And when you are called Mayo, you are called to be made fun of. So I have enjoyed many moments of quirky connection over the ten happy years I have worked at Co-ops UK.

Presenting last week at the Board of Scotmid, Scotland’s leading independent retailer, CEO John Brodie reminded me of when he’d pointed out an Egg Mayo sandwich on a store visit with him and thanked me for naming it.

Of course, plenty of ‘no mayo’ photos too… Colleagues in 2017 sent me the front cover of The Grocer, the retailers essential weekly read, which declared ‘Mayo overtakes ketchup to become UK’s favourite‘.

In terms of places, I spent time in the Plaza del Mayo in Buenos Aires when visiting the Argentine co-operative sector. I have never visited County Mayo, but I have been promised a welcome from credit unions when I do.

With international contact, sometimes the sense of humour can get lost in translation but sometimes it is in the translation.

Visiting the Czech Republic, I was introduced to person after person described as co-operative ‘undertakers’, dozens of them, and only after the event did I find out that the correct translation would have been ‘entrepreneurs’.

Andreas, my counterpart in Bonn contacted me, tongue in German cheek, when I’d shared that I was leaving Co-ops UK and Co-ops Europe to say “This is a significant loss for both bodies. It is too bad and I strongly deplore your decision.”

With Simel from the International Labour Organisation, we have taken photos and selfies in various co-op locations, including Malta and Paris.

It has been hard work and so much fun.

Inner city heritage

“No-one will comprehend the mine of national wealth that is the children of Deptford.”

Started in Flood Street, South London above a skittle alley in December 1844, a propitious month, the Deptford Ragged School was started to serve the children of the area, between creek and river. The police reported it too dangerous an area to patrol, the “lowest of the low.”

This was thirty years before the state started to offer education to all children.

The original institution was one of a number known as ragged schools – serving children in rags and connected through the efforts of the Victorian reformer Lord Shaftesbury. It offered teaching and a wide range of other social activities for the community of all ages, from day trips to the hilly fields of Brockley through to a ‘slate club’ for local adults, as a mutual insurance pool in case of sickness.

By 1862, there were 160 children coming each day, 64 in the evening and 140 on Sundays. This was the ‘mine of national wealth’.

I’ve spent the evening with a volunteer archivist at the building, now the Bear Church in Deptford, London, hearing about the lives of local children over time. Katharine Alston has a PhD in museum education and is taking the stories that she finds, along with her volunteer team, largely churchgoers as were the founders, to the school close by today.

My wonderful friend Jani Llewelyn was a nursery school teacher at this school and it was thanks to her many years ago that a charitable trust was started to support education in Deptford and far away in Mozambique, the Merry Trust. When Jani, still young, was given a short time to live, her pension was commuted and entrepreneurially she bought her council flat, a stones throw away, and left them in her will for reinvestment in the community. The education work of the Deptford Ragged School Archive is funded today by her spirited activism.

Not all were model pupils, then or now, but often spirited. One nineteenth century report Katharine shows me is of a child who “came into school and rushed up the chimney and after rubbing his hair well in the soot, suddenly descended and, dancing round the room, shook the soot all over it.

But it served.

By 1886, 7th Earl of Shaftesbury commented that “there is no institution in England more worthy of support than the Deptford Ragged School.”

Values – the most overlooked quality of the world’s most successful organisations

Around the world, 85,000 credit unions in 118 countries improve the lives and communities of 274 million members.

So here is a question: what is the most overlooked quality of the world’s most successful credit unions?

The answer is their values.

They are not overlooked because values are seen as unimportant in credit unions. Quite the opposite is true; it is the values that typically explain why people are involved.

Values are neglected in many credit unions precisely because they are assumed and taken for granted, rather than nurtured and put to work.

It is as if a gifted up and coming footballer were encouraged to train and focus on their image rights and sponsorship deals, rather than their free kicks, their passing and their goals.

I have written a guide to values for credit unions published this week by the Centre for Community Finance, a European research centre inspired by the work of the Filene Institute in North America.

I am pleased to acknowledge how much I have learned in recent years from fellow members of the UK Values Alliance – originators of the World Values Day. There is something special, something deeply collaborative about the people who work as coaches and organisational development facilitators on values and culture.

Mark Hayes – an appreciation

That you can not simply buy fair trade products but also invest in fair trade producers is down to the life and work of Mark Hayes, who passed away just before Christmas 2019.

Mark was the founder of the fair trade financial co-operative Shared Interest, which provides trade credit and finance to producer co-operatives overseas. A distinguished economist, he was also a noted commentator on the work of John Maynard Keynes, completing a book on the work of Keynes which was launched at Robinson College in Cambridge on December 5th 2019.

Starting work in 1978 with the Industrial and Commercial Finance Corporation (renamed as 3i in 1984), Mark developed his skills as a banker. In 1987, together with Robert Oakeshott, the father of the Employee Ownership Association, he visited the Mondragón network of co-operatives in Basque Spain, a trip that helped to point him towards alternative economic options.

A few years later, Mark and family made the move up to Newcastle to start a new partnership with Traidcraft, looking to establish a finance arm for the fair trade pioneer. The direct link with Traidcraft fell through but Mark could see a way to move ahead with a new entity, what became Shared Interest. As he would tell the story to me, “it came to me that what we needed was not a bank but a financial co-operative, bringing people into an ongoing relationship based on values.

Starting in 1990, Shared Interest was run out of a spare bedroom in the house of Mark and Andrea, his wife, both working to make it more than a dream. What made the difference was a stroke of luck, although it could also be called providence – Mark was a man of faith throughout his life (and latterly holding the St Hilda Chair in Catholic Social Thought and Practice at Durham University, from 2014-2016).

Mark had undergone the exams required to become an authorised investment adviser under the financial regulations of the time, with his certification, under Nimloth Corporate Finance, covering his work for Shared Interest. He happened to sit in on a meeting in Edinburgh of the Scottish Churches Action for World Development, which highlighted that the way that the churches were raising funds for their own overseas investment activity was not lawful under those same regulations. What they needed was an authorised adviser and the solution was Shared Interest.

Shared Interest’s first office – a Newcastle bedroom with original sign still on the door

Registered as a society in March 1990, Shared Interest went on to attract £750,000 in share capital from 600 members in the first year. In 1991, Mark oversaw the first loans to fair trade businesses, channelling these in subsequent years through the allied networks overseas of the Ecumenical Development Co-operative Society, Oikocredit.

The vision wasn’t necessarily limited to fair trade – there was a wider vision at the start of the scope for finance to play a role in global justice. But fair trade has proved an effective market in which to make a difference.

The need for finance in fair trade starts with the needs of producer co-ops for working capital. To grow the beans that will become the chocolate bars or coffee packs sold in the UK takes time. To process and transport the produce takes time. Finance from lenders such as Shared Interest can cover the costs of all of this, repaid once the revenues come in from sales.

In simple terms then, what Shared Interest typically offers is advance payments on sales for fair trade co-operatives overseas. This is small scale, high risk lending and rarely available from mainstream banks, here or abroad. But as Shared Interest showed over the nine years Mark was Managing Director, it can pay its way.

Today, there are 11,700 members of Shared Interest, typically investing with patience, with average share holdings of around fourteen years. You can join online. In 2019, the society helped to make a positive impact on the lives of around 400,000 people across 55 countries.

An example is Azucena Quispe Rodas, a member of Cecanor, a coffee co-op based on the northern coast of Peru. The co-operative is playing a key role in promoting the role and voice of women in the coffee sector through its partnership Café Feminino.

Shared Interest has provided finance for Rodas and her fellow members at Cecanor for over six years, providing regular payments for their crops and enabling investments to help the farmers improve their yield on a sustainable basis. What she says is that the finance from Shared Interest “helps us to improve our farms, improve our food and also improve our homes.

Mark set out his approach to co-operative finance in a 2013 discussion paper for Co-operatives UK. He argued that “the co-operative principle of limited return on capital needs to be asserted clearly but also understood more imaginatively.

This is an appreciation of a life that I feel deeply. I am writing this on my way to represent Co-operatives UK at Mark’s funeral.

We first met in the early 1990s and I last saw him in November, courtesy of Patricia Alexander and the team at Shared Interest. Having finished his new book on Keynes, I was looking forward to talk with him on the growing agenda for and articulation of a green new deal, such as in the excellent recent book by Ann Pettifor.

There is a saying that I learned from a farmer co-operative last year that seems appropriate. When someone dies who has given so much to society, it is for society and not just the person that we grieve.

Happy new year, with a community cheer

2020 will be a big year for the UK co-operative sector and it has been a joy to start on New Years Day at Tafarn Sinc – the highest co-operative pub in the country.

In a remote Pembrokeshire village, with a closed train station across the path and a slate quarry in the hills, the zinc clad pub is a warm-hearted and eclectic model of community action. Threatened with closure in 2017, the local community rallied around to save the pub as a local facility.

“When we heard that the pub was being put up for sale, we didn’t worry at first,” says Hefin Wyn, from the neighbouring village of Maenclochog. But then, when no bidder came forward, he joined other members to save the pub through community ownership. The campaign was backed by Pembrokeshire-born actor Rhys Ifans and supported through Co-ops UK’s community shares programme. £400,000 was raised through shares and loans to save a pub first opened in 1876.

On New Years Day 2020, I found traditional dancing over the afternoon, followed by folk music, at least up to the start of Doctor Who on TV.

“We became members because we simply wanted to save the pub” explains Sheila, a community care worker who danced and played today. “As the pub was shaped by the community, so we got involved more.”

Dan works behind the bar, interested in how community ownership works and also a keen Manchester United fan. Peter, who I just missed after stepping out for a walk in the neighbouring hillside park, also community run, is distinguished academic on mining history… and takes photos for the society of music evenings.

Coming up in 2020 will be our activities around two points of history – the 150th anniversary of Co-operatives UK, of which Tafarn Sinc is a member, and the 175th anniversary of the original Rochdale Pioneers, widely recognised as the first modern co-operative.

Looking forward, we will be launching our next round of our Unfound Programme, supporting a new generation of digital co-operatives. And we are campaigning with the Employee Ownership Association for a step change in industrial democracy with our joint One Million Owners campaign.

In policy terms, it is welcome that one of the only financial commitments in the Conservative Manifesto for the December 2019 election was a promise of a new Community Ownership Fund. We will work collaboratively with partners to make the most of this opportunity, which mirrors the success under the last Government of the community housing programme, championed by the Confederation of Cooperative Housing and allies.

The example of community co-operatives such as Tafarn Sinc show what is possible when people come together.

In tough times, that is the enduring hope that co-operatives point to – that we are stronger together.

When the cotton is high

‘Fish is jumpin and the cotton is high’ is of course from the 1935 song Summertime, Porgy & Bess; a favourite of my late father and one of the many wonders that I learned from him. But I’d never been near a cotton field, until today

http://www.antbirlik.com.trI have been with the Board of Co-operatives Europe, meeting in Antalya, Turkey, and then speaking at a Social Economy conference where I met members from two agricultural co-operatives, Antbirlik and Pankobirlik. An invitation followed and this morning I came into a world of cotton.

Antbirlik is a regional cooperative that started processing and marketing cotton from local farmers before the Antalya region became what it is today, a well developed tourist destination, with its beaches, mountains, archaeological heritage and warm micro-climate, with seas warm enough to swim in at dawn in December (yes… I like to if I can).

Today the co-op has ten thousand members and has diversified into a range of products, including oranges, lemons and above all olives. I am told that the Anatolian olive has a heart shaped stone and that the region is said to include the earliest settlement in time to harvest olives.

When the cotton comes in from the fields, it heads for a factory run by the co-op, which can process 200 tonnes every day. From there, the packed cotton, wonderfully soft, heads off across Turkey to be made into products for Adidas, Nike and Puma among others.

I know that cotton can be a water intensive product to grow, but the members I talk to say that in an area still with swamps, that is not yet an issue. They do operate an environmental accreditation system, Better Cotton, and support farmers with advice, but it is not organic; that is something for the future, they hope.

The cotton is loaded into a mini mountain at the entrance to the works. The cotton is high.

Then, within the factory itself, cotton is everywhere, as the threads rise and fall in the air, hanging like artwork on ladder steps and machinery frames.

The beauty of the cotton, soft and grey-white (with the remnants separated out to make animal feed) is a point of pride for the members that show us around.

They had made this. Together.