Spring 2019 – Room to Grow
No Place Like Home
It’s time to fund the demand for local ownership
By Alex Stone
The Rural Cooperative Development Grant (RCDG) program has been an integral part of developing and rebuilding rural economies for the last 20 years. This program funds the work of cooperative development nonprofits and university extension services. These organizations offer critical business planning and feasibility analysis, board and leadership training, and other technical assistance that support people in creating cooperatively owned businesses. The RCDG program subsidizes these services for people who would otherwise not be able to afford them, making the dream of business-ownership and self-sufficiency attainable for all rural Americans.
Although RCDG recipients work in every co-op sector and across all 50 states, the goal of the program is always similar: provide the support necessary for cooperatively-owned businesses to establish themselves and thrive in rural communities. Coops create needed jobs, provide crucial services, and contribute to a robust local economy that truly supports the community.
Creating economic stability
Between 2008 and 2017, cooperative development centers nationwide used RCDG to create or preserve nearly 15,000 jobs, assist in the incorporation of over 1,000 businesses, and create more than 4,000 cooperative housing units. More difficult to represent in numbers is the impact a single cooperative can have on a rural community. When the only grocery in a small town folds, it can mean economic collapse for that community. RCDG funds used to convert an unprofitable privately-owned grocery store into a community asset proudly owned by the people who shop there can make the difference in the town’s survival. When parents can send their kids to a childcare co-op, it means greater economic mobility for that family. A worker cooperative can give parents a living wage in an industry that otherwise doesn’t and provide benefits like paid vacation, sick days and health insurance. These benefits enable those workers to better care for their families, creating economic stability at home and in the community. In a country where rural communities are struggling, a cooperative can be a lifeline. The Rural Cooperative Development Grant program funds services that keep rural America running. Here are just a few of the projects that were made possible by RCDG funding.
The Rural Cooperative Development Grant program funds services that keep rural America running. Stagnant RCDG funds mean less capacity for organizations that offer unique and critical business support to our rural communities.
Lost River Grocery and Deli
The Indiana Cooperative Development Center (ICDC) and Food Co-op Initiative (FCI) assisted with the creation of the Lost River Grocery and Deli in Paoli, Indiana where the population is approximately 3,600. This consumer food co-op, which opened in 2007, employs 10-14 people, has generated $1.86 million in direct payroll, and spends 89 percent of its expenditures within 100 miles of the store. This “buy local” approach has contributed $4.5 million to the area’s economy over the past decade. With RCDG funds, ICDC was able to provide technical assistance with development of by-laws, as well as a market study, board training and scholarships for the Up & Coming Food Co-op Conference. FCI provided a $10,000 seed grant, ongoing phone and email support, local visits to review development progress, review of financials projections, hiring support and post-opening support.
It is time to increase the appropriations for the RCDG program. Funding for the program has remained stagnant or decreased since 2010.
Poultry Processing Facilities
Lake County Community Development Corporation assisted in the creation of the Montana Poultry Grower’s Cooperative Processing Facility. It is one of only two poultry processing facilities in the state, and is unique in its cooperative ownership. The facility has not only created nine part time or seasonal jobs in Hamilton—a town of approximately 4,700 people—but as a state inspected processor it has allowed farmers to expand markets and scale up their businesses.
Resident-Owned Communities
The Cooperative Development Institute has been the main technical assistance provider of 41 conversions of manufactured home parks to Resident-Owned Communities across New England (outside of New Hampshire) since 2009. This resulted in thousands of people who were able to keep their homes and gain cooperative ownership of the land under them.
Yolo Eco-Clean Cooperative
RCDG funded a feasibility study, business planning, and other technical assistance to start the workerowned Yolo Eco-Clean Cooperative, or YECC (pronounced “YES”). The worker cooperative provides environmentally green residential and commercial cleaning services and creates jobs and cooperative ownership opportunities for underserved community members in Yolo County, California. The co-op just celebrated its second year in business and has grown to 145 member-owners. Last year, worker-owners earned almost $20 per hour with patronage, making their average wage about 50 percent more than the industry average for California. This is also 54 percent higher than the living wage for a single adult in Yolo County.
It’s time to increase funding
The impact of the RCDG program is clear. It is time to increase the appropriations for the RCDG program. Funding for the program has remained stagnant or decreased since 2010, when it peaked at $8,317,312 ($9,490,247 accounting for inflation). Between 2014 and 2017, funding has been within $100,000 of $5.8 million. When accounting for inflation, however, annual funding has actually decreased by $325,000. Similarly, the median award per center has remained flat at $200,000 since 2013. When adjusted for inflation, spending power has decreased by $13,000. These decreases can mean everything from less staff time spent on projects to fewer site visits to a lack of seed funding so crucial for startup lift-off. One thing is clear: stagnant RCDG funds mean less capacity for organizations that offer unique and critical business support to our rural communities.
Co-ops are a means to create or preserve stable jobs, keep local money in the community, foster democracy, and maintain local control over vital institutions and the economy.
With the exception of FY 2018, the number of centers funded each year has also decreased. From FY 2010 to FY 2017, five fewer centers received funding—a decrease of nearly 20 percent. Cooperative development centers often serve entire states or regions, which means that a single center losing funding can result in one or more states lacking vital business development services for their rural communities. Between 2016 and 2018, at least three new cooperative development centers were established in states that previously lacked these services. Stagnant funding makes it difficult for these centers to access the capital necessary to have maximal impact in their rural communities.
There are qualified, experienced cooperative development centers every year that are not awarded funding. The lack of consistency in funding can mean that these centers are unable to provide for their communities. As funding for the RCDG program has stagnated, the cooperative business model has gained popularity across the U.S. With the impending wave of retiring business owners, the ongoing consolidation of small businesses into larger ones not tied to community, and the increasing demand for local ownership, more people than ever are turning to cooperatives. They understand them as a means to create or preserve stable jobs, keep local money in the community, foster democracy, and maintain local control over vital institutions and the economy.
This year, cooperative development centers across the U.S. reached out to their Senators and Representatives to request increased appropriations for the Rural Cooperative Development Grant program. In partnership with NCBA CLUSA, CooperationWorks! and its members requested an increase of $2.2 million, to bring the funding to $8 million. Our vision is that this funding will both support increased award amounts for recipients and a greater number of recipients. Larger awards will improve existing centers’ ability to serve their region with greater capacity for providing technical assistance, training and education to groups invested in the cooperative model. A greater number of recipients will ensure that capable and effective centers don’t needlessly suffer unpredictable budget crises that cripple their capacity for years to come. This will also enable newer centers to access the funding that will help them grow into robust organizations that provide key cooperative business development services in rural areas.
Now is the time to increase appropriations for RCDG. All rural Americans deserve access to the cooperative development services that enable them to build stable local business, robust community institutions, and an economy that allows them to thrive in place.
Alex Stone is executive director of CooperationWorks!, a national network of cooperative development centers that provide everything from board trainings to business planning for new and expanding co-ops. Interested in helping grow the cooperative movement? Email Alex at alex@cooperationworks.coop.
