Your Co-op is Thriving!

By Elizabeth Archerd, Member Services Director

An October article by Ralph Nader makes a strong case for rebuilding New Orleans by forming cooperatives.* He emphasized the differences between co-ops and other types of business. It was a timely article, arriving in Co-op Month, and a reminder that many people, even co-op members, may not have a clear understanding of the co-op difference. These important distinctions include the purpose of the business itself and the value and use of the shares of business stock.

Over the past few years there have been huge scandals about corporate CEOs manipulating financial data to inf late the share price of company stock. Those who knew what was going on sold their shares at high prices before the truth about the actual financial performance of the companies was revealed. At that point, the share price plummeted and those who'd held on to their shares experienced a great loss while those who had manipulated the numbers pocketed millions.

Since the stock market is open to anyone with money, shareholders might never set foot in a building owned by "their" company and never buy a company product. Shareholders may receive dividend payments on each share if the company makes a profit. They also profit by selling shares for more than they paid for them. People who invest in the stock market use the company financial statements to determine if a company is worth an investment. They use share price, and dividends paid on shares, as another important measure of corporate health.

Cooperative corporations** exist to serve their members by providing goods or services, and co-op stock exists to benefit the co-op, not individual investors. Co-op stock represents the members' pooled resources that finance the business. Members patronize their store and share any surplus (AKA profit). They only get back any "profit" generated by their own purchases. Co-op members can only sell their shares back to the co-op, the share price does not rise and fall daily according to the profitability of the business, and profit is not distributed based on the number of shares owned. Very importantly, staff and directors don't get stock as part of their compensation. There is no motivation in the system to manipulate data to make the co-op appear more profitable than it is, because co-op shares can't be sold for a profit.

Since share price isn't an indicator of co-op health, how do you know if your co-op is thriving? Take a look at audited statements first (in this issue). Is the co-op making good progress toward retiring debt-or does it have none? Then look at the shelves. Are they full of products? Are fixtures and equipment in good repair, fixed or replaced as needed? Is the store clean? Do trucks pull up regularly and unload product? Is the store adequately staffed and are staff confident that their paychecks will clear?

Then there is the "something extra" that is the unique aspect of the cooperatives, the patronage refund. Does your co-op business generate enough surplus to distribute some of your annual expenditures back to you after all business expenses are paid? If the answer is "yes" to the above questions, you know your co-op is thriving.

Wedge members can see every day how their co-op is thriving. And once a year there is the additional reminder in the form of a check. This year the Wedge distr ibuted $560,000, the largest cash patronage refund in its 31 year history, to 10,745 members who shopped between July 1, 2004 and June 30, 2005. You are members of one of the most successful natural food co-ops in the U.S. Enjoy your check, enjoy your store, and enjoy knowing that you contribute to a thriving local business that contributes to the local economy in every way it can.

*Look for the "Cooperatives" article in the October archives at www.nader.org

**Corporation: "a body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members"