Presented by

Melbah M. SmithFederation of Southern Cooperatives/

Land Assistance Fundat

University of the Virgin IslandsMarch 27, 2017 – Albert A. Sheen St. Croix Campus

March 30, 2017-Weiss Hall, Thomas Campus8:30a.m. - 5:00p.m.

What is Cooperation? What is a Cooperatives Why Build Cooperatives What Cooperatives Do? Who Sparks the Idea? Cooperative Principle Who control and how they are controlled Financing of Cooperatives

“What is a Cooperative?A group of people who have joined together to control

their destiny.A business that is organized on a voluntary basisOwned and controlled by it membersMembers are the users of the businessMembers share in the benefits and risks of the businessGain in the direct proportion to the extent that they use

the services of the business or members gain from the services provided by the cooperativeSuch as marketing of products grown by membersThe provision of training and educational opportunities to

assist members to grow their farm, business, etc

Cooperative is a business A legal entity that is incorporated and chartered by the

state in which the business if formed Comprised of a group of people (like-minded) –of

one mind, having the same love, being of one accord who come together

For a specific purpose; To tackle a specific need or provide a specific

service

“Alone one person can do little,…but togetherwe can create new jobs and extra income.”

Cooperatives

We build them

We control them

Cooperatives

We Benefit from them

We Own them

Usually perform any one or a combination of five (5) service functions, but with varying emphasis;

They are usually classified by their major activity◦ (1)Marketing Cooperative – market products

members produce, milk, fruits, vegetable, grain, livestock, rice poultry, cotton, sugar, cane, and many specialty products◦ Marketing includes assembling, processing and

selling raw or processed products in retail or wholesale markets for members

(2) Purchasing Cooperatives – often clledsupply cooperatives that provide members with many production supplies for their operation. These co-ops cut out the middle man by buying directly from the wholesaler. The savings are passed on to the members.

(3) Service Cooperatives –provide services related to the production and marketing of members products. These other services include credit, electricity, insurance, research, forest management and many more.

(4) Consumer Cooperatives –buy consumers who buy goods or services from their cooperative. These can be grocery or supermarket stores, or other retail outlets

(5) Worker-owned Cooperative – democra-tically governed buy employees who are co-op members

A compelling need and a few leaders can spark the idea of forming a cooperative

Usually, these leaders are producers◦ Who have an economic need◦ They believe a cooperative can fulfill this need

◦ These leaders can be farmers, fisherman, rural craft producers

Open MembershipA co-op is open to all persons who have a common

need or interest One Person-One VoteCo-ops are democratically controlled by their members

Limited Return on InvestmentFor a co-op to get off the ground, the members in

some cases will need to invest some money and time into it. The returns to those who invest in the co-op is limited.

Benefits Returned according to UseReturn to members based on their patronage of the co-

op (called patronage refund) Business for Cash Whenever PracticalBecause co-ops must raise most of their capital and

operating funds form members. Granting credit is expensive and always risky

Constant Expansion If a co-op is effectively serving its members, they will demand

increased services from the organization which in turn will force expansion. A coop should always be ready to grow and increase its capacity to serve the members

Constant EducationSince co-ops are working in a way different from other

organizations, education is constantly needed by the members to understand and operate their co-op. Co-ops should establish a regular membership education program to keep their members informed and involved in the affairs of the organization

Cooperation among Cooperatives Support among cooperatives is beneficial, especially to smaller groups, those who are starting out…..

One Person-One VoteEach member has an equal vote. This means that no

member has more control of the co-op than any other member

We Use our votesTo elect a Board of DirectorsTo make important decisionsParticipate in the Annual Meeting, where

the board of directors and the members decide on the goals of the co-op for the upcoming year.

Membership Fees Withholding from sales Deferred refund system Markup on purchases Certain Assessments Sale of Shares of Stock Encourage members to stay informed (Managers Do Not Share Ownership)

Individually Owned Business Partnership owned Business Corporations Cooperatives are type of cooperative

One PersonOwnsControlsOperates Benefits/profits

Two or more people

OwnControlOperate Share in risks and profit

Multiple owners Variety of goods

and services Physical facilities State chartered Investors Profits shared

among investors

Multiple owners who are user members

A group of people who form a business◦ Based upon common need or interest

Variety of goods and services Physical facilities State chartered Members are investors Owned and controlled by members

who use its services

Credit Transportation Facilities Recreational

Equipment Food Housing Health care

Child care Wholesale goods

and supplies Electricity Telephone and

electric services Farm production

supplies and service Farm marketing

Getting Started Sequence of Events for Organizing a

Cooperative Legal Requirements

NOTE: Starting a cooperative is a complex undertakingStart with a small group of individuals discussing a

common problem/need that they are experiencingSecondly, they began discussing ideas on how to

solve it.

Hold a meeting of key individuals to discuss an economic need that formation of a cooperative might fulfill

Hold an exploratory meeting, vote whether to continue. If affirmative, select a steering committee.

Conduct a survey as a basis for determining whether creating a cooperative might be of interest

Hold second general meeting to discuss results of survey. Vote on whether to proceed.

Conduct a market or supply and cost analysis.

Hold a third general meeting to discuss the results of the market or supply and cost analysis. Vote whether to proceed this time by secret ballot.

Conduct a feasibility analysis and develop a business plan.

Hold fourth general meeting to discuss the results of the feasibility analysis

Review Business Plan. Once thoroughly reviewed, Vote again on whether to proceed. If affirmative, vote second time on whether the steering committee should remain intact or changes should be made.

Select a NameDraw up necessary legal paper ◦ Articles of Incorporation, By-laws, Membership

Agreement, and any other documents required by the State;

Cooperatives must operate according to all federal, state and local laws and requirements

Use of professional legal assistance in complying with legal matters

Incorporation is a must in organizing cooperatives –legal entity

Submission of Articles of Incorporation◦ They specify the name of the organization, its

purpose, place of business, # of directors, capital stock or non-stock; officers, directors, employees with responsibility of operating the co-op should be bonded, and more….

By-Laws – Bylaws provide a detailed description of the structure and method of operation of the cooperative. Bylaws are a working plan for how the cooperative should function

In most cases are not filed with the state.

Call a meeting of charter members to adopt the bylaws.

Submit required documents to Secretary of State to become a legal Entity

Conduct a membership DriveHold a Membership Meeting to Elect a Board of Directors

Call the first meeting of the board of directors and elect officers. Assign responsibilities to implement the business plan.

***Acquire capital, including developing a loan application package

Hire the manager Acquire Facilities if necessary Start up operation

Key people involved◦ Three groups are essential to start and operate a

cooperativeMembership Board of DirectorsManager

a. Personnel

Members

Board of Directors

Manager

Employees

Members, as owners-users, are the reason the cooperative is organized

They justify its continued existence through their patronage, capital, investment and participation in decision making

They should be personally interested in the cooperative’s affairs,

Present ideas to improve performance and, Promote the cooperative to others who could

benefit by using it

Elect a Board of DirectorsUsually 7-9 members Make important decisionsParticipate in the Annual Meeting, where

the board of directors and the members decide on the goals of the co-op for the upcoming year.

The Board of directors is the policy making body.Directors are elected from within the membership by members to represent them in overseeing the cooperative’s business affairs. Usually 7 to 9 outstanding members are elected to provide leadership.

Directors as trustees, establish policy, report to members, and give direction to the manager.

Directors are held accountable for their actions in conducting business affairs by the State and Federal laws applying to businesses generally and by the specific bylaws of the cooperative

The manager supervises and coordinates the day-to-day operations by managing people, capital and physical resources. The manager supervises and coordinate business activity, develops plans to reach objectives and takes steps to carry out board policy.

The Manager’s job is the hardest job in any business, especially a cooperative. It is also the most important. If it is not done right, neither the job nor the co-op is going to be around very long.

The manager is the KEY employee The Manager runs the business for the members,

who owns the co-op The Manager has to plan, organize, direct and

control the business so that the objectives of the members can be reached

Hire and supervise other personnel when employed.

VisionMission

Core Values

Must have a clear vision◦ (Vision is calling those things that be not as though

they are)Mission Statement-a clear pathFaith – Must believe that the vision will come to

passCore values – belief system, standards

Trust – that each member has the good of the coop in mind in every decision

A one sentence statement describing the clear and inspirational change an organization desires to bring about through its work.Habakkuk 2:4”Write the vision, and make it plain upon tables, that he may rum that readeth it.”vs.3 For the vision is yet for an appointed time, for at the end it shall speak, and not lie; because it will surely come, it will not tarry.The vision is a witness pointing to what’s coming. It aches for the coming-it can hardly wait. If it seems slow in coming, WAIT. It’s on its way. It will come right on time

The mission is the doing part-it is what you will do to bring the “vision” to pass; to reality.Keep is short and concise; simple, simple, simple!Example:A member owned business that provides education, management, marketing and retail support to local farmers

Core values are the operating principles that guide an organization’s culture—its employee’s behaviors, attitudes, language, and focusEducate members on your valuesHire employees who embody your valuesDefend and uphold organizational values

Written policies and procedures are essential to the effective and efficient operation of your organizationWhy?Need to be clearly communicated to everyone. Members, Board and staff should be trained on these. periodic review –change, add to, etc.Remember, the Board is responsible for the development of policies

Working together is an art form/ symphony Sharing skills, talents, etc. Above all, learning to comprise is essential

when working with groups of people; Be a team player by cooperating with group

members Respect others opinion In meetings speak only to the issue at hand,

NOT personalities