By Rob Miller, CEO of VSECU
Imagine a strategy that can transform a country’s poorest regional economy into one of great wealth and prosperity. An approach that can build a community that produces more than 9 percent of that country’s Gross Domestic Product (GDP), 12 percent of its exports and 30 percent of its patents, while only comprising 7 percent of its population. This scenario is no fantasy. It’s the realty in Emilia Romagna, Italy. What’s their secret? A thriving cooperative economy. Their success is largely attributed to the region’s commitment to building co-ops and employee-owned firms since 1950. In fact, co-ops now account for 30 percent of Emilia Romagna’s GDP.
The region is just one of many examples, from Spain to Cleveland, that demonstrate how a thriving cooperative economy can spur economic and community development while inspiring entrepreneurialism and job creation at the local level. With these benefits and pivotal shifts in our marketplace—including a growing interest in entrepreneurship, increased emphasis on social good and a consumer commitment to “buying local”—cooperatives are in a unique position to grow our movement from within and substantially impact the U.S. economy.
According to a report from the Global Entrepreneurship Monitor (GEM), 27 million working-age Americans are either starting or running a new business and two-thirds of the world’s population think entrepreneurship is a good career choice. Entrepreneurship can be risky, but cooperatives bring a unique stability that can aid in the success of this new entrepreneur-driven economy. Data from the World Council of Credit Unions, for example, found that within five years of startup, 90 percent of cooperatives were still in operation, versus only 3 – 5 percent of non-cooperative businesses.
Today’s workforce is also placing increased emphasis on the purpose and impact of the organizations they work for and patronize. In fact, 56 percent of Millennials reported their organization’s purpose was part of the reason they chose to work there, according to the Deloitte Millennial Study (2016). Given cooperative organizations’ commitment to the sustainable development of communities, our model could be an ideal fit for young, socially-minded entrepreneurs and employees.
As consumers continue to demand more locally-produced products, particularly in the food industry, establishment of a locally-owned cooperative should further appeal to would-be entrepreneurs looking to contribute to their local economy. The American Independent Business Alliance reports that approximately 48 percent of money spent at local businesses is recirculated within the local community, compared to only 14 percent from non-local businesses. Co-op profits are more equitably distributed across a broader ownership base than traditional businesses, therefore magnifying that impact.
The cooperative model strongly aligns with these new and evolving marketplace trends but we have to act in order to capitalize. If we work together to nurture this entrepreneurial spirit and attract budding entrepreneurs to our model, we can drive significant growth of the cooperative economy and support a sustainable, member-owned, and member-controlled business sector that contributes to vibrant local and regional communities across the country.
But how do we do it? I believe our cooperative guiding principles offer some helpful direction. Consider our commitment to education and training. This principle guides us to educate members and employees to contribute to the development of their cooperative and to educate the community at large on the value cooperatives bring. We are the best ambassadors for our movement, and the more people understand the value and benefit of cooperatives, the more growth we will see.
It was the 6th and 7th cooperative principles—“cooperation amongst cooperatives” and “concern for community”—that inspired my cooperative, VSECU, a statewide credit union, to capitalize on a unique statute in Vermont that allows us to invest in cooperative organizations. Our recently launched Co-op Capital initiative seeks to spur growth in the cooperative economy by providing equity investments to help start new cooperative enterprises and nurture established cooperative businesses. We believe this will not only grow the cooperative economy, but positively benefit our members by creating more local wealth, jobs and opportunities for them and for all Vermonters. This approach may not be an option for all cooperatives, but it demonstrates how we can think creatively as an industry to support entrepreneurialism and further our movement.
So let’s evangelize the cooperative movement and its values! We can think differently about how our educational programs can inspire and attract entrepreneurs to our industry, strengthen the co-op economy and support our local communities. We can explore new ways to cooperate with each other as well as for-profit businesses, non-profit organizations and local government to grow the sector from within. Let’s work together to grow the cooperative movement and strengthen our economy for our members and our communities!
—Rob Miller is CEO of VSECU, a 60,000-member, not for profit cooperative credit union open to everybody in Vermont. He is a former Commissioner of the Vermont Department of Economic Development and senior executive with global asset management and risk consulting companies. He also currently serves on the boards of the Vermont Center for Emerging Technologies, Capstone Community Action, Vermont Council on Rural Development, and the Energy Action Network.