Can co-ops address economic inequality?

Three years ago, I joined the cooperative industry as an outsider seeking to make a positive impact on society through ensuring greater access to economic opportunities for all. 

I optimistically approached the “co-op world” with a growth mindset and a vision to combat the growing inequality in our country and in the world. It was--and still is--my hope that the cooperative model could be leveraged as part of a solution to revitalize local community economies and address the broader, systemic economic challenges that years of under-regulated capitalism have created. But, as we all know, hope is not a strategy, and significant barriers stand in the way of this vision.

The pandemic and Black Lives Matter movement have hit our country hard and have exacerbated and highlighted these economic disparities. And, as the big tech companies get bigger and more powerful -- our small businesses and local communities will struggle more without new solutions. 

The optimist in me still wonders: can co-ops be part of the answer to economic inequality? 

If we are to leverage the co-op model to resuscitate and stimulate equitable economic growth for all, there is one significant barrier we must first address and work to overcome: the barrier to entry.

The “table stakes” for entry into the co-op world can be high. The majority of co-ops today seek and only consider new members who have something of economic value to share, such as an existing, owned retail footprint, a piece of land (i.e. a farm), an established workforce, or other quantifiable assets. 

So, what can we do to address this major challenge? I would like to share three ideas with you:

First, we need to have a mechanism for those who have nothing to start with to get a business off the ground. (i.e. current SBA loans do not work unless you have collateral, such as a home).  I believe that there needs to be a government or impact investment sponsored partnership that provides equity or capital upfront to those that show interest, complete a certification, or come out of trade school but don’t have the equity to get started. That investment could be matched by a co-op structure/support engine--something akin to our recently-launched business improvement platform, Member Center which provides the scale and tools to give the business owner a much better chance of being successful. 

Second, we need high-profile leaders in government with an understanding of our financial and banking systems and with a desire to help small businesses get off the ground. My big wish: I really would love Elizabeth Warren and Andrew Yang to bring this to the table in the next administration… we need people who understand the banking system and how to get businesses off the ground in today’s economy. And if they could see the coop model as the guardrails for success, they could bring coops into the mainstream. 

Finally, we need to turn something that has no real, quantifiable monetary value today (such as data) so that more people immediately have equity and thus have a chance of getting a business off the ground. For example, what if you could back your starter business loan by giving access to your Facebook feed? These aren’t pie in the sky suggestions. Companies like Driver’s Seat and Savvy Cooperative are heroically shifting the balance of profiting off of data from tech companies to those that actually produce the data-- the individuals.  

Intrigued? Wouldn’t creating business opportunities be better than continued funding and dismantling of social programs combating the challenges of the inequality we all have created? What else can we do?