Background

A standard definition of cooperatives in the U.S., a user-owned, user-controlled business that distributes benefits based on use, combines the model’s three fundamental principles: user-ownership, user-control, and the distribution of net income based on patronage rather than investment (Zeuli and Cropp 2004). A coop’s user is a person that supplies its raw product (e.g., grain for processing) or purchases its goods and services. The “user-owner” principle implies that the people who use the co-op help finance the co-op in return for ownership shares. Cooperative patrons (or users) become members by investing equity (either up-front or over time) in the cooperative. Members generally contribute thirty to fifty percent of the capital required to finance the enterprise.4 The collective investment of equity creates joint ownership of the business. Cooperatives may receive grants and loans (debt capital) from lending institutions (there are banks that specialize in providing cooperative credit) but there are limitations on receiving equity capital from individuals or organizations that will not patronize the cooperative. Cooperatives may obtain equity from non-members, but the investors may not be granted any voting rights and their returns from the investment are limited by state cooperative statutes (in most states dividends may not exceed eight percent annually).

Self-help community development The self-help model places community members at the core of a development process with two goals: to improve the quality of life within the community and to increase the community’s internal capacity to create further change by institutionalizing the community development process.

A community’s assets include the human, social, physical, financial, and environmental, or taken together what Green and Haines (2002) call “community capital.” By virtue of being locally developed, locally owned and locally controlled, cooperatives clearly build on a community’s human capital, social capital, and financial capital.

The cooperative contribution to human capital development (education, skills, and experience) may be its most substantial community development impact. According to Richardson (2000), the value of leadership training cannot be overestimated: “If I were pressed to select only one from a list of the ten most important components needed for sustainable rural community development, it would have to be leadership training”

The willingness of people to cooperate and trust is a fundamental building block in a cooperative development strategy. Communities with established networks and relationships (civic communities) build trust and make organizing efforts easier.

Concept and objectives for Kinsale Co-operative Society (KCS)

  1. A NFP trust with members who are residing in or have a strong interest in Kinsale.
  2. A ‘self-development co-operative’ which promotes community residents to use local financial resources to create businesses/services and assets that are locally owned and controlled.
  3. A tightly defined list of objectives which are administered by the (elected) trustees and potentially an executive:
  4. Acquisition of assets (eg buildings or land) and business entities for the benefit of the Kinsale community. This should be limited to acquiring a controlling interest, and each entity should be in principle self-financing in due course.
  5. Provision of services for the community (incremental to existing services, not substitutional) which augment the status and quality of Kinsale (eg Kinsale Wifi) – this could include tourism services making Kinsale a better attraction, town management services to improve the living environment for residents or educational services to supplement existing state-run education.
  6. Education in specific skills – eg managing small businesses in the town – potentially through the provision of multi-business supports (eg a hub)
  7. Provide sustainable employment opportunities for residents of Kinsale, especially those without transferrable skills or the wish/ability to work elsewhere.
  8. Investment in small local enterprises and community-based projects to support sustainable futures. It should be able to include some element of risk by the KCS
  9. A robust process of evaluation, monitoring and review of projects and their achievements will be essential.

Governing principles

The principles governing KCS would include the ICO guidelines:

  1. Voluntary and Open Membership
  2. Democratic Member Control
  3. Member Economic Participation
  4. Autonomy and Independence
  5. Education, Training and Information
  6. 6. Co-operation among Co-operatives
  7. 7. Concern for Community

Finance

Funds in the form of member shares ,some of which are withdrawable:

  1. A small unit price for minimum membership – non-withdrawable but allows access to the Kinsale Membership Card (eg €10-20 per year). This should be attainable by adults and children/younger members, residents and those visitors who want to benefit from Kinsale offers during their stay
  2. A manageable larger unit with voting rights and withdrawable at par (eg €100-500 per unit)
  3. A Larger ‘charitable donation’ share – this would be in the form of a non-withdrawable donation but could attract benefits
  4. An investor level (private or corporate) share – this might include ethical VC, crowd funding and investment by other co-operatives – the proportion of paid-up capital in this area would be limited.  It might be better to reserve this investment for specific projects (eg JV acquisition of public spaces)

2 and 4 would perhaps attract dividend payments

2 and 3 would include specific benefits:

  1. Listings on a consumer-facing website, brochures etc and participation in promotional events (KCS show etc)
  2. Membership card which offers benefits to local spending
  3. Consulting and marketing support for businesses which participate

Technical solutions

It is important that a system is built to administer KCS, based on online financial management.  Consider:

  1. Automated membership payments
  2. Administration of loans and investments
  3. Loyalty card points-based reward system allowing members to use their card in Kinsale businesses to earn points which can be spent within the community on KCS investments – a virtuous circle investment.
  4. Full financial accountability and governance to benefit from tax breaks etc
  5. Online voting

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s