The power of cooperation constantly increases with the lockdown. While we experience social distancing, our need to exchange and collaborate is growing. How will small and medium entreprises (SMEs) survive the crisis? Cooperatives have found a way to keep going, relying on each other and enlarging cooperation. Your Public Value reproduces the blog that Ed Mayo, Secretary General at Co-operatives UK and Vice President of Cooperatives Europe, recently wrote on the power of cooperation under COVID-19.

What has Italy got right?

Co-operation is written into the constitution of Italy. Article 45 of the Constitution of 1948 states specifically that the Republic recognises the benefits of co-operatives operating for mutual benefit, free from private speculation. It goes on to prescribe that Italian law should assist and promote the development of co-ops and ensure their integrity.

It is not the only country to write co-ops into the national constitution, although it is less common in Europe. Ifigeneia Douvitsa teaches in the School of Law at Democritus University of Thrace, Greece. She has trawled through constitutions worldwide and concludes that around 1 out of 3 national constitutions internationally refer explicitly to co-ops.

(The first, by the way, in the research she has sent me was the 1917 constitution of Mexico, a product of the 1910 revolution and a beacon of radical intent, including social and economic rights and the protection of labour rights and working conditions.)

In Italy around ten per cent of the economy (gross domestic product) is organised through co-operatives, with around eleven per cent of the workforce employed by co-ops, including many large-scale worker co-ops of course.

The response of co-ops in Italy to the health, social and economic crisis of the COVID-19 pandemic has been to draw on their values, for sure, but also to find ways to co-operate between co-operatives.

The retail co-ops, for example, have seen revenues increase as essential services. Yes, they have faced increased costs too, but their decision was to gift the proceeds, millions of euros, in support of Italian public hospitals and community co-operatives that are playing a crucial role in supporting local communities.

In Lombardy, one of the regions worst affected, my friend Stefania Marcone tells me that through her national co-operative alliance, Legacoop (working alongside Confcooperative and AGCI) there is support for worker co-ops of cleaners switching to working in hospitals, social co-operatives delivering food and taxi co-operatives providing free transport for people who are over 65.

With support from the wider sector, twelve co-ops have come together to start production of 400,000 face masks per day, with a design I am told is innovative in being able to be re-used up to 100 times. Design of course is another strong sector for Italian co-ops in pre-crisis times, bringing together small firms and connecting to financial co-operatives to be able to compete at an international level.

In small villages, community co-operatives like the “Biccari” community cooperative, in the province of Foggia have turned on a sixpence to provide a local home delivery service for those who need it.

International cooperation

This solidarity is international too. The Bulgarian retail co-operatives were able to respond to a national shortage of disinfectants and cleaning detergents, because Coop Italy responded with deliveries, despite themselves being in the most critical situation with challenging and complex logistics.

And the international solidarity comes back too, like a boomerang. The outstanding freelancer co-op SMART, who I have written about before in supporting members in crisis, has launched a Plan Corona to sustain freelancers who have lost their jobs due to the virus. Starting in Belgium and France, it is now being extended to Italy.

Of course there are other international examples that are outstanding in terms of co-operative action – as no doubt can be found in other sectors, of civil society, social enterprise and wider corporate action. After all, this is not a competition. Co-ops don’t claim to be better than others on values – they simply claim to live up to their values and so often when I look, I find that to be true.

Here are examples that I have come across that I appreciate:

  • French co-operative banks around Paris have opened up lines of credit worth €100 million for hospitals and healthcare centres.
  • German co-operative banks have led on increasing the limit for contactless payment for customers to 50 euros – practical and helpful.
  • In Spain, Lionel Messi helped to lead a 70% pay cut by players at FC Barcelona, the iconic football co-op, in order to ensure that lower-paid workers receive full pay and protection from being laid off.
  • Desjardins in Canada has announced a discount for car insurance customers who are driving less in a lock-down.
  • Irish credit unions have remained open when bank branches have closed, offering new emergency loans.
  • Co-op insurers in Sweden have placed investments of US$235 million in new bonds to finance public health actions not just in the Baltic region but worldwide. Ylva Wessén, CEO, promises that “Folksam Group is actively seeking investment opportunities that alleviate the social and economic consequences of the coronavirus.” 

In the UK, Nick Crofts, President of the Co-op Group has commented that:

“co-ops have consistently set an example that other businesses and even the Government have subsequently followed. It was Co-op Food stores that were the first to promise help to food banks struggling because of panic buying. Co-op Academies were the first to announce that no child should go hungry because schools were closed.

In Wales, co-op taxi drivers are offering free rides to key workers. And right here in Liverpool a co-op bakery is baking fresh bread for food banks and delivering pies to ambulance workers. I know that co-operators are up to this challenge and that our co-operative movement anchored in the communities that we serve will always back those who need it most.”

You can read about new examples here and abroad, including recent posts on USA, India and Brazil via Co-op News, in Europe from Co-ops Europe and more widely from the ILO. Co-ops UK is collecting evidence from our members on the impact and the response too so it is worth signing up to receive our newsletter too, or checking out our latest specialist advice.

In Italy, as the prospects of loosening lock-down brighten, the cultural co-ops across the country are promising a programme of public engagement, to rebuild the country.

I had the opportunity to meet the President of Legacoop, Mauro Lusetti, on a brilliantly informative trip to Bologna two years ago. The example he has set in Italy has been immense. This is how he puts it – what Italy has got right:

“We are normal people, who try every day with passion, courage and competence to do their duty, to do their job.

We are women and men cooperators who are in places of suffering alongside doctors and nurses, to keep hospitals clean, and to operate, from kitchens to thermal power plants. We are women and men who try to make essential services work in warehouses in the streets, in supermarkets, in offices; we are the ones who in social cooperation try in every way to keep assistance alive for all the people who were fragile before the Coronavirus and today they are even more so.

Continuing to be women and men cooperators , asking to continue working and being able to do so in safety is for us the only way we know of thinking about our future and that of our community.

The infection will end and as we work every day we try to imagine how to face the world that will come, so that no sacrifice has been in vain.”

What can charities and co-ops learn from each other?

Like two different football clubs in one great city, for years charities and co-operatives would have relatively little to do with each other.

Can we learn from each other?

For the charity sector, co-ops are business clubs focused on private gain – values-based, open and entrepreneurial. That is seen as in contrast with a wider public purpose – indeed charity law tends to test public benefit negatively, through the absence of private benefit.

For the co-operative sector, philanthropy is about the public works of private people – generous with their time and money, prosperous, often establishment. That is seen as in contrast with the working class roots of the self-help movement – participatory and emerging out of need.

Each probably think the other is in some way the status quo – charities representing a more traditional, paternalistic approach to service delivery, co-operatives being part of markets that still leave people in need.

In reality, each has always aimed higher, at transforming society through values.

Close your eyes and image you are in society 100 years ago. Open your eyes and you would find little democracy, few employment rights, no votes for women and widespread racism. These most significant changes to our lives have been led by civil society, both charitable and co-operative. Politics rides and shapes the waves. But it rarely, in terms of state action, changes the tide. At our best, we both do that.

I have been involved in both these parts of civil society all my life. I work at Co-ops UK now and in July, I will take up a new role as CEO of Pilotlight, a social enterprise that provides support for small charities in partnership with business.

At our best, we are the free organisation of individuals around issues of need and of passion. This is what generates and regenerates the values that holds society together and takes it forward. When Harvey Weinstein describes himself as a dinosaur, there is an underlying truth. Technology changes, fashions change and you have to keep up. But values change, if you don’t fit, you will be found out.

I joined as an individual member of The Co-op when I left school. I was elected to the board of a national charity when I was twenty three.

In the 1990s, when I was Chief Executive of the charity, the New Economics Foundation, we launched a programme called Values-Based Organisation. Led by Simon Zadek, a profound thinker, the challenge as we saw it was that the reference points for learning in civil society were the wrong ones. Management thinking at the time was all and only about business structure and business strategy in the private sector.

Interestingly, one of the tools we helped to develop through this programme – social auditing – became in time part of triple bottom line accounting, reimported as learning into the world of business through the lens of corporate social responsibility.

So, where are the current intersections and opportunities for co-ops and charities to learn from each other?

Intersection 1: Open Membership

Co-operatives are all about membership. Co-ops are businesses owned by those involved in the business, called members to distinguish them from the more distant investors that own shareholder companies.

Co-ops themselves can be formed under any corporate form, so it is not unlike the diverse legal mix open to charities. You just have to set the articles or rules for open membership, in line with international co-operative principles.

A huge swathe of charities too are based on membership. In the disability field, over many years, membership has been a practical tool in the move away from a tradition of paternalism, acting ‘for’ people with disabilities, to a culture of participation, in which action is led by people with disabilities.

In England and Wales, the Charity Commission estimates that are around 80,000 charities that have a membership structure. There will be uncounted thousands more in the low-flying heroes of the UK’s community sector, often unincorporated associations where participation is based on a presumption of equality. Think too of churches, trade unions, sports clubs, building societies and membership associations…

So, how many members of this form are there in the UK?

My estimate has been a minimum of 91 million members: more members than people in the UK, because enough of us are members many times over. But still, this is a dramatic number. It is ten times the number of individual shareholders in the UK. Can we imagine the television news, where member ups and downs were treated with the same profile and respect as stocks and shares?

But it varies, of course. There are many forms of association. Some are one-way models only. Having a loyalty card for a coffee chain gives you no voice. Being a friend of a museum gives you no vote.

Good membership is a two-way relationship between an individual and an institution, with purpose at its heart (see for example research of the New Citizenship Project).

But membership is changing:

  • Grassroots, participatory membership has been pushed out by a shift towards consolidation in the charity sector. Scale can erode membership as norms of expertise and professionalism override those of participation and accountability.
  • Conversely, there has been a rise in membership models over the last twenty years around key public services in the cause of ‘co-production’ – mental health trusts are a rather good example, acute health trusts a rather poor one.

What membership can do well is to answer the question ‘who are you accountable to?’.

For housing associations for example, the answer to this accountability test has never been sure and simple. It is a successful field but a world to itself, never quite sure whether its reference points are to charity, to co-operatives or to business. Social housing has grown to scale, but rarely has it been a confident voice for its tenants, let alone a platform for their self-organising.

The accountability test is also one that charities with no members to speak of can also struggle with. At its heart, perhaps, this is a tension between stakeholder models, where accountability comes through participation, and wider causes, where no-one can fully represent the purpose at hand. If your concerns go beyond people, for example – faith, the natural environment, other species – then accountability to people may never be enough.

Acting in trust without the complexities of wider accountability (beyond law and regulation that is) can be a way to entrench an enduring purpose over time. But I suspect that it can be harder to ensure that there is periodic renewal.

Charity is associated in the public mind with the call for new money. Yet there are billions of pounds of charitable assets that lie dead and dormant rather than being used to challenge and change society: beautiful paintings; wonderful halls in city centres; legacy foundations administered by banks and accountants. I am told that one penny in every pound traded on the stock exchange is on behalf of the charitable sector.

Yet of course, when it comes to accountability, mutual membership – particularly passive, mass consumer membership – doesn’t always do better. The old saying about building society managers was that their job was easy – borrow at 1 per cent, lend at 2 and be at golf by 3. This was before the shock of demutualisation…

The challenge of accountability and renewal is why governance matters.

Intersection 2: Participatory Governance

In both the charity and co-operative sectors, there have been high profile governance failures and scandals. And there are similar efforts in both to drive up quality.

Co-ops UK hosts a Co-operative Governance Expert Reference Panel. We operate a governance code updated from the start of this year and produce a range of governance support tools, from how to design democratic process where you need Boards with a balance of expertise, gender equality, work on conflict, values and culture, training and development as well as a range of templates for the use of Boards.

Our view of good governance is summarised in a Co-operative Governance Wheel that I helped to introduce. It is a one page reference point for good practice.

One of the great innovations in the co-op sector recent years, thanks in part to solicitors such as Anthony Collins, has been the development of a robust model of what we might call a ‘multi-stakeholder’ governance. If you are a worker co-operative, what about the customers? If you are customer-owned co-op, what about the workers? The multi-stakeholder model, still one member, one vote but within weighted constituencies, operates as a 360 degree co-operative.

In Wales, one of the leading social care charities, Cartrefi Cymru, has converted to a multi-stakeholder charitable co-op, because giving a voice to users, people with learning disabilities, carers and to staff can give them back their dignity. As Adrian Roper, Chief Executive of Cartrefi Cymru says, decrying the marketisation of care based on competition and a race to the bottom:

“if you feel that behaving like rats in a sack is a deeply inappropriate and resource-wasting way for social care providers to act, and you see no evidence that charitable status is any guard against rat-like behaviour, then co-operative principle 6 (co-operation amongst co-operatives) calls to your soul.”

In Italy, this model – multi-stakeholder social co-operatives providing care, health and employment services – has grown from 650 in 1985 to seven thousand today, with 244,000 staff and 35,000 volunteers.

Even so, where you have the self-selecting governance model of many charities – trustees of today choose the trustees of tomorrow – that doesn’t mean that they are necessarily cut off from wider stakeholders. LSE Professor Howard Glennister once suggested that the distinctive nature of voluntary organisations is their ambiguity – meaning that people can play different roles, including as trustees.

Naturally, this includes volunteers. In the most professionalised charities, the trustees are the only true volunteers left. But more widely, as some excellent recent NCVO research shows, volunteering still plays a foundational role in the participatory life of the nation. Seven in ten people have volunteered at some point in their lives.

Combining voluntary and paid efforts is an art and some, like the National Trust, do it brilliantly. At the intersection of co-ops and charities is the Plunkett Foundation. This is a specialist charity, 100 years old this year, that supports rural co-ops. Typically, these combine paid and volunteer staff in the context of a commercial business, with around 800,000 volunteer hours each year.

There are close to 350 community shops across the UK, supported by Plunkett, serving 1,400 remote rural communities. The long-run survival rate for these – part of a wider array of over 9,000 community businesses according to Power to Change – is outstanding given that all but a few were shops threatened with outright closure when local people took them on. After thirty years, only five per cent are not still running today.

Part of that success can be put down to the commitment of those involved, which is not just their time but also their money.

Intersection 3: Social Investment

Alongside membership and governance, the third area of intersection between charities and co-operatives is money. Here, the point of learning is not about traditional forms of giving but new ones, blending the motivation of donors and investors in a genuine form of social investment.

Here the community benefit society model has been a ‘game changer’ in that it is a model that encourages communities of people to come together to support charitable projects, through their time and fiscal investment, on a democratic one-member one vote basis. This uses traditional co-operative models of equity capital raising from members in a new setting, called ‘community shares’. Over the last decade, around 150,000 people have co-invested over £150 million in over 500 community businesses through this approach.

Equity like this is what most social ventures need – patient over time, asset-locked equity capital that can be crowd-funded from your supporters. It is not a pushing of expensive short-term debt, which is sadly what a fair amount of social investment passes for.

As a member, you don’t see capital gains and your money is at risk, but you can be paid interest on your investment and you benefit as a member from the success of the society – whether it is Equal Care Co-op, developing social care solutions, or Awel Aman Tawe, spreading solar power across Wales.

Again there are hybrids. The charitable community benefit society model has been used widely by communities that are looking to conserve heritage assets. This week, we have launched an offer of £600,000 of equity match funding for community businesses running heritage projects. This is through the Community Shares Booster programme, set up in partnership with Locality and Power to Change and now the Architectural Heritage Fund.

Creating or converting to a charitable community benefit society is becoming a real choice for a wide range of initiatives including local examples here where I work in Manchester: Projekts MCR, Ancoats Dispensary and Stretford Public Hall.

Conclusion – learning fast

Civil society is a big values-based tent and within it, there is ample scope to work with each other and scope to learn from each other. Our core traditions still stand apart from the dominant ideologies both of state-led and of market-led power. So I suggest that:

  • Charities can learn from the best of co-operatives how to make a virtue of accountability via open membership.
  • Co-operatives can learn from the best of charities how to make a virtue of purpose via open participation.
  • The best of both are champions of an increased voice for users, communities, workers and volunteers.
  • More widely, we have both something to teach the wider world of business, as well as something to learn.

And this is our shared condition. In a world of need, risk and opportunity, we all have to learn fast if we are to succeed.”

Your Public Value welcomes your thoughts and ideas on the best practices under the COVID-19 crisis. Please send your blogs or contact us, and we’ll be glad to interview you.

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