This presentation from the 46th NOFA Summer Conference is for folks interested in establishing your food/farm business as a legacy and retaining jobs using the co-operative business structure. Co-ops root business in communities, strengthen buy-in, build a resilient & sustainable economy. Learn how co-ops work, the start-up process, benefits of conversion & track record. Hear from those who’ve converted their business to the co-op model, members from worker co-ops, and co-op developers. Presenters: Bonnie Hudspeth, Co-op Developer, Neighboring Food Co-op Association. Adam Trott, Executive Director, Valley Alliance of Worker Co-ops & Shared Capital Co-operative, Member Relations Director.

1. How to Start or
Convert to a
Co-operative Business
NOFA Summer
Conference 2020
Bonnie Hudspeth, Neighboring Food Co-ops
Adam Trott, Valley Alliance of Worker Co-ops

2. ¡ What’s a Co-op?
¡ Co-ops and Rebuilding Systems with Resilience
¡ Building Community Power: Starting/Converting to a Co-op
¡ Conversion Case Studies
¡ Discussion, Questions, Ideas
Plan For Our Time

3. ADAM TROTT
¡ Executive Director, VAWC
¡ Worker/Member, Collective Copies
¡ Board of Directors, Valley Co-operative
Business Association
¡ Vice President, Co-operative Capital Fund
(CFNE sister fund)
¡ Former Community and Political Organizer
Meet the Co-operators
BONNIE HUDSPETH
§ Co-operative Development, Neighboring Food Co-ops
§ Board Vice President, Cooperative Fund of New England
§ Project Manager, Monadnock Food Co-op
§ Farm worker, Tracie’s Community Farm & Goose Creek
Organic Farm

4. Valley Alliance of Worker Co-ops
• Serving worker co-ops in Western MA and
Southern VT with 5 member co-ops
• Supported 7 conversions since 2010
• Co-founded:
• UMass Co-operative Enterprise Collaborative
• Valley Co-op Business Association
• Our own loan fund
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5. Neighboring Food Co-op Association
• 40 food co-ops across New England and
New York
• 11 Startups: New jobs, infrastructure
• Locally owned by over 150,000 members
• Employing 2,350 people
• $347 million revenue
• $93+ million in local purchases
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*2019 data based on Neighboring Food Co-op Association member survey.

6. ¡ Increased consolidation & concentration of control.
¡ An unaccountable food system & economy
¡ Crisis of global economy
¡ Unemployment
¡ Dramatic inequality in wealth
¡ Diminished democracy in political systems
¡ Hunger for alternatives
¡ Corporate consolidation of food system
¡ Relocalization & regional economies
Traditional Economic System

7. There was an alternative economic system that...
…was democratic?
…was accountable to the people it served?
…was rooted in our local communities?
…was part of a values based movement?
…put common good before private gain?
…was flexible and innovative?
…was successful and more sustainable?
…was accessible for everyday people?
What If?

8. An Inclusive, Co-operative Economy is…
Equitable
• Upward mobility, reduction of
inequality, equal access
Participatory
• Economic participation, market
transparency, infrastructure benefits
everyone
Growing
• Increased job opportunities,
improved economic well-being that is
broadly shared
Sustainable
• Well-being is sustained over time,
investment in environmental
health and reduced natural
resource usage, long-term
decision-making
Stable
• Confidence in the future, people
can plan for the future,
communities are resilient to
shocks and stresses
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9. What is a Co-operative?
Co-operatives are people-centered enterprises jointly
owned and democratically controlled by and for their
members to realize their common socio-economic
needs and aspirations.
As enterprises based on values and principles, they
put fairness and equality first allowing people to
create sustainable enterprises that generate long-
term jobs and prosperity.
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10. A Flexible Business Model
• Worker Co-ops: Owned and operated by the people who contribute
their labor to the business.
• Consumer Co-ops: Owned by the people who purchase goods or
services.
• Producer Co-ops: Owned by producers who purchase inputs, process
and market their products.
• Community Co-ops: Owned and governed by members of community.
• Multistakeholder Co-ops: Owned and controlled by combination of
member types.
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11. Co-op Structure
10
MEMBERS
BOARD OF DIRECTORS
MANAGEMENT
EMPLOYEES
CONSUMERS OR
PRODUCERS
Consumer or
Producer Co-op
Worker Co-op
Collectives
flatten organizational
layers, emphasizing
consensus and group
decision-making
A Multistakeholder Co-op
includes a combination of
member types in ownership
and governance.

12. Co-operative Principles
1. Voluntary & Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy & Independence
5. Education, Training & Information
6. Co-operation among Co-operatives
7. Concern for Community
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Willy Street Co-op Image

13. Co-op movements through history and
time: spring up in response to need
[There is] a continuous thread of
cooperative activity and development
among African-Americans over the past
two centuries, because of both need
and strategy...
These co-ops have often been a tool
toward the elimination of economic
exploitation and the transition to a
new economic and social order.
Jessica Gordon Nemhard (2015)
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The Co-operative Movement
Detail from mural, Federation of Southern
Cooperatives Training Center, Epes, AL

14. 13
Federation of Southern Co-operatives/
Land Assistance Fund
• Develop cooperatives and credit unions as a means for
people to enhance the quality of their lives and improve
their communities
• Save, protect, and expand the landholdings of Black family
farmers in the South
• Develop a unique and effective Rural Training and Research
Center to provide information, skills, and awareness, in a
cultural context, to help our members and constituents to
build strong rural communities
• Develop, advocate, and support public policies to benefit
our membership of Black and other family farmers; and the
low-income rural communities where they live

15. Economic
¡ Disruption of local economies.
¡ Depression level unemployment.
Food System
¡ Increased consolidation & concentration
of control.
¡ Family farmers and farm workers at
increased risk.
Social
¡ Most vulnerable impacted most.
¡ Isolation, disconnection,
disempowerment.
Long Term Impacts of the Pandemic

16. How Do Food Co-ops Help Build a Better Future?
¡ Build on Local Skills & Assets
¡ Pool Limited Resources for Scale & Impact
¡ Build an Inclusive Economy through Community Ownership
¡ Focus on Meeting Needs, Rather than Financial Return
¡ Maintain Good, Local Jobs
¡ Grow a Sustainable Food System & Economy
¡ Build Community Infrastructure for the Long-Term
¡ Anchor Wealth in the Community
Let’s Rebuild Resiliently

17. Food Co-op Organizing is
Community Organizing!
§ Co-ops bring people together to identify
shared needs and create solutions.
§ They build on local skills and experience,
and strengthen community participation.
§ Co-op Members do not just share in the
ownership – they are participants in
creating a better future.
§ More than 12,000 people joined their
local Food Co-ops in 2019, alone!
Co-ops Build on Local Skills & Assets
Urban Greens Co-op Market, Providence, RI, opened in 2019.
*2019 data based on Neighboring Food Co-op Association member survey.

18. Community Members Pool
Small Amounts of Money…
§ Average cost of a Member Share is
about $150.
…to Build Community
Infrastructure & Impact!
§ Average Food Co-op revenue is
almost $12 Million.
§ And together, our co-ops generate
$347 million in shared revenue.
Co-ops Pool Limited Resources
to Create Economic Scale
Portland Food Co-op, Portland, ME
*2019 data based on Neighboring Food Co-op Association member survey.

19. Your Neighboring Food Co-ops
include 29 Food Co-ops and 10
startups across New England and
New York State!
§ Locally-owned by 150,000 people like you!
§ Democratically governed on the basis of
one member, one vote.
§ 60% of Board Members are women and
50% are under 45 (compared to 19% and
3% on S&P 500 Boards).
§ Co-ops are working together to be more
inclusive of their communities.
*2019 data based on Neighboring Food Co-op Association member survey.
Food Co-ops Build
a More Inclusive Economy
Leverett Village Food Co-op, Leverett, MA

20. Food Co-ops serve their
Members — the people
who use the business to
meet shared needs!
§ Resources are reinvested in the community,
rather than in financial returns for investors.
§ $4.9 million distributed to Members in
discounts and patronage rebates.
§ $729,000 in additional discounts distributed
to people on limited incomes.
§ $789,000 in donations to community
organizations.
Food Co-ops Focus
on Meeting Member Needs
GreenStar Food Co-op, Ithaca, NY.
*2019 data based on Neighboring Food Co-op Association member survey.

21. Your Neighboring Food
Co-ops employ more
than 2,300 people!
§ More than 60% of staff are employed
full-time.
§ Over 65% of employees are also
Members, sharing in the ownership of
their local Food Co-op.
§ $3 million in employee discounts
distributed to to staff.
Food Co-ops Build
Good, Local Jobs
Monadnock Food Co-op, Keene, NH
*2019 data based on Neighboring Food Co-op Association member survey.

22. $93+ Million in Local Product Sales
§ The average Food Co-op purchases from 250
local suppliers with local sales comprising
29% of annual revenue.
$97+ Million in Organic Products
§ Supporting community health and combating
climate change.
$18 Million in Co-op Products
§ Working with other co-operatives to build a
more sustainable & inclusive economy.
$14 Million in Fair Trade Products
§ Supporting community empowerment and
economic justice around the world.
Food Co-ops Build a
Sustainable Food System & Economy
UMass Amherst intern, Dunya Mahmood representing our food co-ops
at the NOFA Summer Conference, Hampshire College
*2019 data based on Neighboring Food Co-op Association member survey.

23. The average Food Co-op
has been in business for
more than 30 years!
§ 10 years or less: 5 Co-ops
§ 10+ years: 24 Food Co-ops
§ 30+ years: 17 Food Co-ops
§ 80+ years: 2 Food Co-ops
Co-ops Build
Community Infrastructure
Celebrating 25 Years of Co-operation — in 1961! — at
Hanover Consumer Co-operative, Hanover, NH.
*2019 data based on Neighboring Food Co-op Association member survey.

24. Food Co-ops are
Community-Owned!
§ Because they are rooted in the
community, Food Co-ops will not
leave in search of higher profits.
§ Co-ops are democratically
governed and therefore very
difficult to buy out.
§ Your local Food Co-op is a
community asset, owned by and
accountable to the community!
*2019 data based on Neighboring Food Co-op Association member survey.
Co-ops Anchor Wealth
in our Communities
Urban Greens Co-op Market, Providence, RI.

25. 1. Converting an existing business
§ Existing customer base, systems
§ Retain existing jobs, infrastructure
§ Current owners’ skills and knowledge
2. Launching a new co-op
§ Can be a longer process
§ More flexible in terms of mission and purpose
§ New jobs and infrastructure
Building Community Power

26. Launching a Co-operative
Activities:
• Define overall purpose or goal
• Create steering committee
• Raise pre-development funds
• Hire a coordinator, if possible/desired
• Conduct feasibility study & create marketing plan
• Establish the founding board
• Incorporate as a co-op and adopt by-laws
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27. Launching a Co-operative…
Activities, continued:
• Develop a business plan
• Create membership agreements
• Recruit members and equity investment
• Access necessary debt financing
• Hire appropriate management
• Open for business
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28. Basic Development Process
Timeline
• 12-18 months to incorporate (varies widely)
• Open doors – 2 yrs., 4 yrs., 12 yrs.
• Existing business can be faster!
Resources needed
• Committed, visionary leadership
• Co-op specific business, legal, and financial support
• Member equity investment
• Start-up financing
• Peer support & guidance
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29. Concerns?
• Understanding group dynamics
• Facilitation of process, shared vision
• Defining roles and responsibilities early
• Professional standards
• Participatory but focused environment
• Recognizing strengths and weaknesses
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30. Consider…
• Engagement of members
• Encourage and develop broad leadership
• Ongoing training in:
–Co-operative values & principles
–Board leadership and accountability to members
–Fiscal oversight
–Project & strategic planning
–Communication, facilitation, conflict resolution
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31. Guidelines for Success
• Strong, committed member leadership
• Set realistic goals and focus on them
• Base decisions on concrete market research and business planning
• Invest in member education and keep members informed and
involved
• Use technical assistance from co-op networks and reputable co-op
developers
• Join regional co-op networks and seek out peer support from other
co-ops
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32. How to Start a Food Co-op
in Your Community
1. Read FCI’s guide first!
2. Food Co-op Initiative resources
3. Follow EVERY startup food co-op

33. How to Start a Food Co-op
in Your Community
1. Gather Information
2. Assess Community Interest
3. Formally Set up the Co-op
4. Organize!
5. Research Feasibility
6. Review Findings
7. Recruit Members
8. Create a Business Plan
9. Secure Financing
10. Site Selection
11. Prepare for Opening

34. You Are Building a Movement
¡ MUTUAL AID model for community organizing
¡ Use Co-op Resources & Hire Experts
¡ Leverage Members to get Members
¡ Be strategic re: EVERYTHING
¡ Avoid Costly Distractions
¡ Focus on Organization (and organizing) vs. Operations
¡ Structure & Systems (of support, etc.)
¡ Have FUN!
by Janina A. Larenas

35. Basic Questions:
• Is there a willing seller?
• Who are the potential member owners?
• Will current owner(s) stay on as member(s)?
• Is the business viable and sustainable?
• What does the transaction look like?
• Is there a plan for ongoing investment in
education and training?
• Is there a support system among existing co-
op networks?
Converting an Existing Business

36. • Sole proprietorships rarely pass to the next generation
• Winding down of a business represents lost community jobs and
infrastructure
• Closures impacts the wider community (workers, producers, local
government, etc.)
• Conventional path for successful business is selling off to a larger
business or to investors
• Community investment in the success of these local enterprises
is unrecognized
The Challenge of Succession

37. Potential Challenges
• Financing and capital: Is business sustainable over time? What
will the transaction look like?
• Is the current owner supportive? Will they stay involved or will
the business lose their experience and expertise?
• Shift from sole proprietor governance to a co-operative
culture.
• Lack of member financial literacy, governance experience and
management experience.
• Expensive, irregular and often bad advice from professionals
unfamiliar with co-operative model.
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38. Use Co-operative Statutes
CT: Conn. Gen. Stat. 33-183
• Co-operative Associations
• Co-operative Marketing Associations
• Workers Co-operatives
ME: 13 M.R.S. 1501
• Consumer co-op
• Agricultural Marketing & Bargaining
Co-operative
• Employee Co-operative Corporations
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Growing a Food System
for the Future:a manual for co-operative
enterprise development
Six States with One Voice at the National Table
Click here for the Co-op manual

39. Co-operative Statutes
MA: ALM GL Ch. 157
• Co-operative Corporations
• Co-operatives without Stock
• Employee Co-operative Corporations
(157-A)
NH: RSA Title XXVII, Ch. 301
• Co-operative Marketing & Rural
Electrification Assocs
• Consumers Co-operative (Ch. 301-A)
NY: Consolidated Code
• Co-operative Corporations
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RI: R.I. Gen Laws 7-7-1
• Producers Co-operative
• Consumers Co-operative
VT: 8 V.S.A. 31101
• Marketing Co-operative
• Consumers Co-operative
• Worker Co-operative (Title 11, Ch. 8)
Other Options
• Incorporate in a neighboring state using
appropriate co-operative statute

40. Conversions Case Study: Real Pickles
• Founded as sole proprietorship in 2001
• Naturally fermented foods (pickles, sauerkraut, etc.)
• Incorporated as a worker co-op in 2014, with 5 founding
members, including original owners
• $500,000 outside investment raised to fund transition
• $700,000 revenue annually
• Core goals: Preservation of mission, local ownership
and control, retention of staff over time
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41. Conversions Case Study: Old Creamery Co-op
• Founded as dairy co-op, 1886; Rural
grocery since 1930s
• Recent owners operated for 12 yrs.
• Converted to co-op in 2010, NFCA
food co-ops provided peer support
• 771 members
• 35 employees
• $1.8 million revenue
• $462,000+ sales of local product(2018)
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42. Why Go Co-op?
Co-operative Enterprises…
…put people before profit,
…are accountable to their members and communities
…retain local economic infrastructure,
…are successful and resilient,
…strengthen local economies,
…build a better, more sustainable food system & economy
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43. Discussion
• Questions?
• Feedback?
• Ideas?
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44. WE LOVE OUR CO-OPS!
Bonnie Hudspeth
Bonnie@NFCA.coop
www.NFCA.coop
Adam Trott
Adam@valleyworker.coop
www.valleyworker.coop