New Life in A Broken Economy: A Strategy Input Session on Organizing, Finance, and CPA’s Future 


“How do we fund the next generation of movement experiments, that focuses not just on political power and change, but also on economic power? How do we breathe new life into the new economy that I think we’re all a part of here?” - Felipe 

Who’s at the table? Felipe Witchger, Executive Director, CPA (Community Purchasing Alliance); Geraldo Espinoza, Executive Director, LEAF (Local Enterprise Assistance Fund); Kathleen Patron, Lead Organizer, GBIO (Greater Boston Interfaith Organization); Maurice R Smith, President/CEO, Local Government Federal Credit Union; Joseph Cureton, Chief Coordinating Officer, Staffing Cooperative; Keisha Krumm, Executive Director, Common Ground; Emilia Istrate, Vice President for Resource Development, National Cooperative Business Association CLUSA; Doug O’Brien, President and CEO, National Cooperative Business Association CLUSA; Kwaku Osei, CEO, Cooperative Capital; Joe Naroditsky, Director of Solar Programs, CPA (Community Purchasing Alliance); Todd Leverette, Program Manager of Legacy Business Initiatives, DAWI (Democracy at Work Institute);.  Jake Schlachter, Executive Director, We Own It; Laura Everett, Executive Director, Massachusetts Council of Churches

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Setting the stage: Last month CPA Co-op executive director Felipe Witchger hosted a strategy input session on how to breathe new life into a broken economy. Felipe set the stage for the call by sharing CPA Co-op’s success adding value on contract decisions for organizations who work together to tackle ambitious, mission-aligned economic actions. These actions position CPA to help community institutions think about all of their economic transactions, and integrate their values and mission and purpose into not just their purchasing, but also their real estate and their investing. The call brought together representatives from stakeholders across the country: co-op organizing and finance, credit unions and church mutuals, national co-op organizations and new start-ups, to explore this new economy. What follows is a series of highlights from this conversation. 

Organizing for Economic Impact

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Cooperative solutions from organizing structures When Common Ground Cooperative found its businesses were being “eaten up” by health care costs, as Keisha Krumm put it; and when GBIO found that health care was "crushing” the people of Massachusetts, per Kathleen Patron, these two Metro IAF organizations discerned an unusual organizing imperative: health care cooperatives. Now as ACA co-ops face challenges to their survival, Keisha credits Common Ground's organizing capacity for giving the health care co-op the tools necessary to not just negotiate with the big health providers but also structure internally ways to get to know the membership and target the social determinants of health. Regarding Common Ground’s advocacy mission, organizing in this mold has bestowed the crucial financial independence necessary to fight battles that cut against the self-interest of outside funders.

The co-op or the membership? Jake Schlachter of We Own It shared a thought provoking finding from a recent fundraiser at his Willy St Co-op: The organizational contribution was dwarfed by the amount raised directly by the 34,000 strong membership contributing an extra 1% on their bill. This drove home that the real power of a co-op is its ability to organize its members and to help build alignment for what they are able to accomplish, because they have much more power than the co-op does. Jake challenged the group to take stock of the possibilities framed by the fact that this country is home to 130 million co-op members. Reinvigorated economic organizing could open the door to truly audacious projects, even on the scale of a cooperative virtual cellular network provider.

Who is gathered, who is served? Felipe shared that through “relational organizing” CPA built the trust and shared infrastructure necessary to shift 57% of CPA Co-op’s member spending  to minority owned businesses. Laura Everett of the Massachusetts Council of Churches noted that among her constituents as well enthusiasm is high for such a shift towards contracting with minority owned businesses. But an information gap impedes progress. For example,. a financially strapped part time pastor driving Uber to make income may not have time to seek new contracts that would cut into the 97% of city contracts in Boston going to white and male owned businesses. By way of a hopeful response, Laura shared  an example of hardship leading to broadening sense of constituency: An economically depressed church in Pittsfield that wasn’t meeting its revenue needs from Sunday giving was able to reconfigure its sanctuary to serve the wider community, allowing it to leverage real estate for financial viability by expanding its stakeholder base. 


Reflection & Challenge:

- What opportunities for organizing through existing co-op structures are being left on the table? 

- Where are the opportunities for collaboration between the business and financial side of the co-op movement and the movement’s organizers, especially Metro IAF? 

- Speaking from her church context about the in-language of organizing (and finance?), Laura stated that potential partners “maybe don’t know this is the conversation for them because of the way things get framed.”

Investing in the New Economy 

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Perspectives on the impact investing sector The current promise of impact investing appeared in as many aspects as there were voices in the conversation. Todd Leverette of DAWI stated that, “the impact world and even the traditional foundation world is starting to look and feel and act more like the Wall St world.” For his fund that means highlighting the scalability of the impact story, and in fund design attaching (the carry) to the impact metrics, in the very same way that our financial return is tied in, making it possible articulate impact in a way that is readily understandable. Todd’s business partner Phil spoke of ongoing efforts to find the right financial mechanism to entice banks to provide riskier capital necessary to keep things moving.

Doug O’Brien of the National Cooperative Business Association highlighted the difficulty of finding impact investors willing to sacrifice return, and pointed to the need to look for the right investors in the co-op community: credit unions, established co-ops, and mutuals. His cool assessment (Doug’s words) was challenged by stories from Felipe and Joseph Cureton, who stated that people speak with their dollars, noting that he walked out of SOCAP with venture funding (for Staffing Cooperative) and a sense of the moment being captured by Zebras Unite (alternative to investment as search for the “unicorn”), just one of the players envisioning a fund to catalyze co-ops. Joseph’s assessment that SOCAP investors are hungry for the untraditional was mirrored by Maurice’s sense from the board of CUNA (Credit Union National Association) that his sector too is looking for the next big idea, and is a willing audience for Felipe’s vision for national cooperative development. 

New templates for community investment What shape do these big ideas take when it comes to investment in the context of real communities? Felipe and Kwaku Osei’s ongoing dialogue offered tantalizing glimpses. For Kwaku, speaking from Detroit, a lack of widespread ownership results in new investment driving displacement: “‘A rising tide lifts all boats’, but most people in their respective communities don’t have boats.” So his Cooperative Capital facilitates a large base of people all investing in their backyard together collectively accessing and de-risking. Kwaku noted that investment types otherwise closed off for ordinary people, support those things that they have an investment stake in.

For his part, Felipe shared that his own personal investment has opened his mind to a different kind of economic relationship. He spoke gratefully of a community in North Carolina that has invited him into peer to peer relationships with business owners and investors, providing investment related relationships that get at racial reconciliation. For example, when talking about a $2K loan to a woman-owned teashop in Durham, Jeddah’s Tea, he related that it became the centerpiece for a trusting relationship that de-risked the investment.  Broadening out, Felipe pointed to a future for CPA in investor education and long-term cohort formation around the values and strategies that define a movement like Slow Money embracing retirement portfolios with 2-3% return instead of 8 in order to focus on non financial returns such as those relevant to building a livable future and actively anti-racist alternatives to the structures of white supremacy. 

Reflection & Challenge:

- In the impact investing world, is there a choice to be made between welcoming "Wall St" interest and accompanying paradigms vs pushing towards investment grounded in relationship, and even embracing below market returns? Or, is this both/and? 

- Where are opportunities for relationship-forming investment, be that "peer to peer" lending or forming community of learning and practice around investing for social transformation? 

CPA’s Horizons 

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Financing the future To be able to finance its growth, Felipe brought up raising one to two million in capital, and specifically asked the group for feedback on CPA’s current plan to issue preferred equity shares with a target dividend of 5%. 

Geraldo Espinoza of LEAF was optimistic about CPA’s ability to raise this with its momentum to accelerate. As a social investor, he praised the fact that CPA’s collective financial heft provides the benefits of a small anchor organization without losing the ability to work with small clients. Similarly, capitalizing CPA means assisting the small organizations that comprise it: “The potential on both sides is what attracts me." As far as risks to be cognizant of, Geraldo mentioned the potential limit to scale if there turns out to be a trade off between “economic value” and “impact value”, and Maurice cautioned about a similar potential limit if the social impact investing audience is only so large. For his part, Jake’s feedback was that with exciting financials and the ability to offer preferred equity shares at an attractive rate of return is promising.

Cohort based expansion and investor education Felipe used a few junctures of the conversation to describe CPA’s coming transformation, and at the behest of Kwaku and other curious interlocutors the conversation turned to specifics. Felipe spoke of CPA expanding to three to five new regions in 2020 using a cohort model where the national cooperative organization provides incubation and ongoing support for the locally controlled entities. Describing the respective contributions from the national and local organizations, Felipe said, “We’ll provide all the technical assistance, the playbook, the programs, the market analysis, the brand if you’d like, and the marketing infrastructure; you bring the relationships and the organizing.” To Jake, this meant “that in all these new places, CPA can be the beachhead and initial hub for member organizing among co-ops”, eventually opening up “business models that we haven’t really tried yet”.

 Reflection & Challenge

- What ambitious economic actions could an organizing partner like CPA help to carry out?

- Who among your contacts should CPA be talking to at this juncture? Let us know!

Interested? Look for a formal solicitation for potential cohort members in early 2020!