Back to Basics: Aligning Our National Organizations with Co-op Principles

In his 2010 Grassroots Economic Organizing (GEO) article “What should our movement look like in 2040?,” John McNamara, past president of the US Federation of Worker Cooperatives (USFWC, “the Federation”) and current Co-Director of the Northwest Cooperative Development Center, used the metaphor of building a house. He saw the first four years of the USFWC (2004-2008) as the foundation laid by the cooperation and collaboration amongst three democratic regional formations: the Western Worker Cooperative Conference, the Eastern Conference for Workplace Democracy and the Midwest Worker Cooperative Conference. The walls of the house were being framed out by the creation of the Democracy at Work Network (DAWN), a democratic peer-to-peer technical support project drawing on the skills of experienced worker co-operators with its own Board of Governors.

In 2010 the Democracy at Work Institute (DAWI) was a project of the USFWC and had yet to launch as an independent nonprofit, but McNamara saw DAWI’s potential to provide more critical infrastructure for the movement. He wrote:

Over the next 5-10 years, DAWN and DAWI will be working with the USFWC to create the basic shape (of the house). At the USFWC board retreat we discussed our future. We settled on a basic three-year plan, but the larger visionary discussion was put on hold.

That weekend-long retreat was hosted by my parents at their farm in Glastonbury, CT. It was my second year serving on the USFWC board, and I was still getting oriented to the culture of the organization. I had understood this culture to be rooted in collective self-determination, co-operation, and a shared vision of the transformative nature of collective worker control of our jobs and workplaces, as well as the promise of building trade networks that would form the basis of strong co-op institutions and an actual solidarity economy. All board members at the time were worker-owners, and we all participated in the work that weekend. I remember the amazing food we made and ate during the retreat - John’s borscht! Melissa’s Persian rice! I also remember the tension between the deep need to have that larger visionary discussion and the urgency of making a practical three-year plan in order to get DAWI off the ground.

Collective Self-Determination: the Heart of Cooperativism

Jose Maria Arizmendiarrieta, visionary and founder of the worker cooperative movement that evolved in Mondragon, Spain amidst the ruins of the Spanish Civil War, believed that the cooperative enterprise and cooperative associations are not ends in and of themselves. Rather, they are the means through which humans become cooperative beings with the ability to collectively liberate and transform their societies both within and beyond their cooperative entities. This quote from Reflections, a collection of his writings published by the Mondragon center for management and cooperative development Otalora, describes the most basic element of self-determination and cooperation:

Authentic wealth resides in the integral development of our personhood. If we do not attain this development, even when we have achieved distributive justice in the sharing of material goods, we will continue being slaves.

I came to the world of worker cooperatives inadvertently in July, 2000, looking for a job to tide my family over until my “real” job was to start in October. Having a lifelong fascination with transportation systems, I walked over to the local taxi company, Union Cab, and applied for a job. I was hired as a night driver and immediately fell in love with the job. I was told that Union Cab was a worker cooperative, but I had no idea what that meant. Within a few weeks of being hired I got an intensive, on the job “Intro to Worker Coops” course.

At that time, Union Cab had 3 divisions: taxi, bus and paratransit. The Co-op was locked into contract agreements with the local bus system that ended up losing money to the point where we couldn’t continue to operate that service anymore. The board called a series of member meetings to decide how to handle the problem. I couldn’t believe that as a brand new worker, still on probation and with little knowledge about business practices, I was being asked to weigh in on the existential decisions of a $6 million/year company! And further, that the co-op trusted its diverse body of 180 members to collectively come up with solutions! Isn’t that what managers are for?

After a series of long member meetings that included open sharing of the co-op’s books, information about the contracts and much heated debate, we collectively made the decision to shut down the bus and transit divisions, offering employment to workers from those divisions within the taxi division. Every member who wanted to stay was given work. The taxi division flourished. And all of us who participated in that process built confidence and faith in our ability to collectively determine our fate and the quality of our future.

Some years later the co-op was dealing with serious abuse and abuse of power issues exacerbated by our General Manager’s inability to deal with them effectively. Members were being harmed and the GM, whose role it was to implement disciplinary policy, was unable to hold the perpetrator(s) accountable because of their “indispensable” roles in the co-op.

After that situation was finally and painfully resolved, members came together to analyze the roots of the issue. Over the course of a year and a half we conducted member surveys and convened member meetings. We formed a working group to propose a plan to mitigate against the inherent vulnerability all cooperative endeavors have to highly skilled, charismatic people who become seemingly indispensable and then perpetrate harm. We came to the conclusion that the solution to that and many other thorny issues within cooperatives is essentially this: more democracy.

In the course of devising the plan that flattened our management system and put the responsibility for our disciplinary and accountability system and its implementation into the hands of member councils, I discovered that collective self-determination is rooted in trust, care and humility. While talking through scenarios and proposals, we learned that no single idea is so brilliant that it can’t be improved upon by adding other perspectives. And many times those added perspectives launch the initiative into completely unforeseen and wonderful new directions. Once again, through the practice of cooperation and self-determination we were transforming both ourselves and our co-op.

Another exercise in the collective self-determination of our membership helped to transform conditions both for our co-op and within the larger local transportation industry. Privatization of public services hit the medical transportation sector in Wisconsin in 2011. Medical rides for people served by Medicaid that county agencies had previously arranged for and brokered had been contracted out to a for-profit company based in Arizona.

Logisticare, which also proudly announced to investors that they could earn large profits from the privatization of prisons, was now the entity that would contract with Union Cab and other taxi and medical transportation companies to transport our regular riders to and from their medical appointments. Medical rides constituted about 35% of Union Cab’s business at the time. Because of the high volume of our business this represented, our business manager recommended to the board that we enter into a contract with Logisticare that required drug testing for all drivers, lower than meter rates, and no compensation for “no-loads” - instances when a taxi shows up for a call but the passenger doesn’t take the ride. Seeing this recommendation on a board agenda, some members circulated a petition asking the board to hold a special member meeting to discuss the issue.

The petition received more than enough signatures, and a meeting was held where all of the objectionable terms were discussed. The overwhelming sentiment was that we should not sign that contract. Members came up with many ideas about how to make up for the potentially lost income and committed to working towards that goal. We felt that the loss of our autonomy (drug testing) and agreeing to exploitative terms was not in our collective best interest. We voted to direct the business manager to decline the contract, and instead to welcome Logisticare to use our services on our terms, like any other client.

Hearing about our approach to Logisticare, one of the other taxi companies providing this service also refused to sign on. The one company that did sign on revoked the contract after the first day of operations. In order to provide the services Logisticare had promised the State of Wisconsin they could deliver, they were eventually forced to deal with all transportation companies on terms agreeable to us. Had our members lacked the confidence and knowledge of their power to challenge the business manager’s recommendation or the knowledge and experience of dealing with issues through democratic means, the story would have ended much differently.

Experience on USFWC and DAWI Boards

I was first elected to the USFWC board at the 2009 annual member meeting held in Madison, WI where I represented Union Cab. During that meeting, the membership decided to raise dues by 50% to support ongoing operations and the anticipated formation of DAWN and DAWI. Some key thoughts about the role and importance of self-determination from the discussion were recorded in the notes:

This is not the time to hesitate on the fundamentals of institution-building. If we do not have a strong and self-sufficient Federation, we won’t have a strong and vibrant co-operative movement in America. Without solidarity, we will lose this rare chance to build something that is capable of making a profound difference in this country from the ground up.

Collaborating with other worker co-operators from around the country to serve the membership and guide the growth of the Federation was exciting - and a lot of work. We were a working board with one full-time and one part-time staff member whom we could not afford to pay very well, especially given the intensity and high quality of their work. Without rapid, massive growth in membership or new revenue streams, we would not be able to build the local, regional and national institutions envisioned by the membership. Board members served on multiple committees, and those who were regional representatives had additional responsibilities for organizing and doing outreach to new, existing and prospective co-ops in their regions.

In the fall of 2011, Occupy Wall Street elevated the issue of income inequality in the US and brought unprecedented public attention to worker co-operatives. At encampments across the country, worker co-ops and local worker co-op associations shared their experiences, skills and knowledge with folks eager to build an economic justice movement. Many young people were attracted to the idea of a solidarity economy in general, and worker co-operatives in particular. Philanthropists and foundations also began to take notice.

At the 2012 USFWC conference in Boston, the Federation was approached by the US Conference of Catholic Bishops with an invitation to apply for funding from the Catholic Campaign for Human Development to support worker co-op development in immigrant communities. In order to receive the $750,000 that was on offer, we had to have a 501(c)3 organization to receive and administer it. This led to a rush for DAWI to file for 501(c)3 status, which we did in 2013.

DAWI’s first 990 filing for the 2013 tax year states that:

The mission of the Democracy at Work Institute (DAWI) is to expand the promise of co-operative business ownership to reach those communities most directly affected by social and economic inequality. It ensures that further growth in the worker co-operative movement is both rooted in worker cooperatives themselves and reaches out to new communities of worker-owners, particularly low-income people, people of color and recent immigrants.

This was another point in time ripe for deeper reflection and visioning as a movement, but the Federation did not prioritize the stated goal of DAWI remaining “rooted in worker cooperatives themselves.” Instead, the board signed off on a plan that relied on DAWI to bring in resources to create new co-ops which would, in theory, swell the membership ranks and create a more secure and sustainable foundation for the Federation. As USFWC Executive Director (ED) Melissa Hoover shifted over to lead DAWI, the new ED of the Federation was to initiate new revenue streams based on member benefits - insurance, retirement plans, etc.

It took several years for those new revenue streams to be developed within the Federation, and in the meantime, the lion’s share of the new donor funds coming in for worker co-op development ($1M - $2M/year) went to DAWI, with only about $20,000/year being passed through to the Federation, according to my knowledge as a board member through 2016. Prior to DAWI’s formal 501(c)3 designation in 2013, the North American Students for Cooperation (NASCO) served as the unincorporated project’s fiscal sponsor. After 2013 NASCO continued to make fiscal sponsorship agreements with the USFWC, enabling the Federation to fundraise separately from DAWI.

Erosion of Democracy

2013 marked the beginning of the erosion of democracy in our still young institutions. Whereas prior to 2011 board and member working groups participated in all levels of strategic planning and direction for decisions of this magnitude, by 2013 members did not have any real voice in how DAWI was planned, rolled out or implemented. They were simply informed after the fact. There were heated debates in both USFWC and DAWI board meetings, but we never formally took the issues back to the membership - those who built and constituted the worker cooperative movement.

In fact, the argument was made that since the USFWC membership included many co-ops with mostly white members, it couldn’t be trusted to weigh in on decisions around strategy for building worker co-ops in BIPOC and immigrant communities. The result was that the wealth of practical, lived expertise in cooperation and self-determination embodied by the Federation’s membership was largely absent from the formation of DAWI, although there were a few worker cooperators on the 2013 board. That same argument is still being made to undermine the legitimacy of organizing efforts by local and regional worker co-op associations. It has become a standard tune in the divide-and-conquer songbook which has sowed mistrust and unnecessarily slowed the growth of practical solidarity economy formations.

The pursuit of grant money to the detriment of organizing, the foregrounding of the needs of DAWI over those of the Federation and its members, the increasing numbers of co-op developers and staff with no experience as worker owners or ties to the movement, and the elimination of regional representatives to the board has created a distance between the Federation and many of its member worker cooperatives and worker co-op associations. The fundamental dynamic and democratic power of self-determination has been effectively eliminated from the USFWC.

Having abandoned its organizing orientation, the USFWC is now essentially a business service and lobbying trade association. Far from being the self-sufficient and self-determining organization members had once envisioned it to be, only 6.8% of the Federation’s revenue came from dues in 2022, while 67% of funding came from grants, much of which was used to support the operation of Guilded, the freelancer co-op incubated by the USFWC. How many Federation members have even heard of Guilded, let alone know what it is or why so many Federation resources are going to support it?

I’m not suggesting that we shouldn’t seek support from outside our membership. I’m saying that when we do seek that support, the membership should have a voice in determining the sources of that support and the general uses to which it will be put if we’re serious about building a solidarity economy movement.

When DAWN, the democratic peer-to-peer technical support project launched in 2010, it was conceived of as a project of DAWI, itself at the time a project of the USFWC. DAWN moved out from under the Federation with DAWI in 2013. After several years, DAWI began to starve DAWN of resources, and at the 2018 national conference the members of DAWN were informed, without prior consultation or consent, that the project was finished (For more details about how DAWN operated and ended, see this video). Soon thereafter DAWI and the Federation began separate fee-based, technical assistance projects, but the peer-based train-the-trainer and trainer certification functions have been lost.

In 2019 the USFWC took over both the Western Worker Coop Conference and the Eastern Conference of Workplace Democracy, putting an end to two of its founding organizations. Instead of supporting the WWCC and ECWD through the challenges they were facing, Federation staff ended up taking over, with little attempt to discuss this decision with members or to maintain the essential grassroots character and governance of the conferences.

The relationships between the worker co-op movement and the two national organizations it spawned has moved from full engagement and ownership in the first six or seven years to transactional over the subsequent eight or nine years to, at times, downright extractive in the past five years. It has literally taken years for a member to get a single item on a member meeting agenda. The lack of clear and transparent policies and practices about dues and data sharing between the Federation and regional co-op associations has seriously eroded trust.

For example, there was a long-standing policy about dues sharing between the USFWC and regional co-op associations that was published on the website.

Several years ago MadWorC, the Madison, WI based worker co-op association, began collecting dues and worked with USFWC staff to formalize the arrangement, having referred to the policy on the website. Federation membership staff worked hard to create a Memorandum of Understanding (MOU) with MadWorC based on this policy. When they sent the MOU to the ED to sign, staff were informed that despite what was published on the website, there is no such policy and each association has to negotiate dues sharing terms separately with the ED, and that they would no longer be making new MOUs. However, the Federation is still honoring the legacy agreements with associations in New York City and the San Francisco Bay Area, thus creating disparities between older and younger associations.

This appeared to be the unilateral decision of the ED, as USFWC board members MadWorC reached out to were not aware of the policy change. While the Labor-Trade Option and Paying Dues & Payment Plans sections remain the same, the Discount For Regional Dues Paid item has since been removed from the website:

Starting with the 2023 co-op census there is now an option for those who respond to surveys administered by the USFWC to choose to share their answers with local associations, as well as a standard agreement for local partners to access USFWC data. However, these partners don’t know how much data or what categories of data are available. They can only find out after they sign the agreement.

Both DAWI and the Federation continue to fundraise millions of dollars a year on the foundation that worker co-operators have collectively built, without providing meaningful support for on-the-ground organizing or movement building.

USFWC and DAWI Impact

Since 2013, DAWI and the USFWC have brought public attention to worker cooperatives and built research and technical assistance programs. They also created a new profession - the “field” of employee ownership which adds worker cooperatives to a larger grouping of businesses that includes Employee Stock Ownership Plans (ESOPs). These so-called employee owned businesses are not necessarily democratic in either ownership or management, nor are they rooted in cooperative principles. The focus of this profession is upon wealth-building for individuals as distinct from movement-building and social transformation. Much of the work done in the field involves attracting the capital of banks, foundations and other non-democratic financial institutions.

Through USFWC and DAWI programs hundreds of people have been trained as worker co-op developers, cities have been encouraged to become involved in the employee ownership field, and new co-ops and ESOPs have been developed. State and national level policies have been championed and passed. There is now even a Division of Employee Ownership in the US Department of Labor thanks to their advocacy work. And they have spent a great deal of time organizing capital. But all this work has been done without meaningful or democratic engagement with the worker cooperative movement on the ground. And without connection to a larger movement, a worker co-operative is just another form of business, lacking the transformative potential that comes with self-determination, solidarity and trade networks built on trusting relationships.

Instead of continuing to democratically build the house that John McNamara envisioned back in 2010 to accommodate the needs of current and future residents and to sustainably produce much of what we need ourselves and in partnership with movement-based financial institutions, we’ve demolished the foundation and walls (WWCC, ECWD, DAWN) and built a new, fancy high-rise, with the US Department of Labor in the penthouse suite. The building has many managers - maybe even more building managers than residents. But there are high vacancy and turnover rates. Some residents live in proximity to one another and know their direct neighbors. Some have privileged access to the managers. Most do not.

Communications from the Federation and DAWI to USFWC members overwhelmingly promote projects and advocacy campaigns, with the occasional request for survey data and dues. If they are dealing with challenges or reckoning with failures as most organizations do, no emails or newsletters informing members of the issues or asking for input have gone out. If members know details about the challenges and struggles of the Federation or DAWI, they likely were informed through the rumor mill and/or one-on-one relationships with individual staff members.

This is not a healthy state of affairs for any organization, but especially for those which are founded on cooperative principles whose public-facing work explicitly deals with economic democracy. It starves the organizations of the vitality and creativity that member knowledge and involvement could bring to our collective conundrums.

In USFWC’s 2021-2022 biannual [sic] report, membership statistics are listed for 2021: 337 members, 67 new; and 2022: 372 members, 73 new. This statement describes their orientation to the movement not as an organization that is accountable to its members, but more like a recruiting agency scouting for new talent:

Our growing membership is a reflection of the growth of the worker co-operative field, and the solidarity economy in general. We continue to scan the field and stay up to date and bring new members into our network.

Adding 73 new members in 2022 to the 337 members in 2021 equals 410. But there were only 372 members in 2022. What happened to the 38 members that dropped off between 2021 and 2022? That’s a loss of nearly 10% of total membership. Is the Federation tracking and following up with them? Is there general information about this precipitous loss that can be shared with the remaining membership, and particularly with local worker co-op associations, that we can learn from? Local associations are often on the ground in communities to assist struggling and failing co-ops that have been developed without ongoing support. They may have some wisdom to share.

So much institutional memory is lost when an organization is disconnected from the movement that formed it. That same report said:

The USFWC and the Democracy at Work Network (DAWI) have partnered for years to host this biannual [sic] conference, but 2022 was a banner year for two reasons. It was our first time hosting an in person event since the COVID-19 pandemic, and it was USFWC’s first time taking the lead on the conference planning and logistics.

DAWI may have taken the lead on conference planning in 2014, 2016 and 2018, but for the first five national conferences it was the collective of founding members and then members, board and staff of the USFWC who took the lead.

Without being in “right relationship” to the movement and to the co-ops and co-op associations that form it, our national organizations fail to prioritize the needs of worker co-op networks and co-op associations working in communities. More critically, the organizing work necessary to movement-building goes mostly unsupported and is sometimes directly undermined.

Thoughts on Moving Forward

I was a USFWC representative on the DAWI board that was formed to seek 501(c)3 designation in 2013, but resigned after the second year due to concerns about the bylaws being silent on board oversight of the ED, and a very loose conflict of interest provision that allowed for self-dealing by board members.

Elandria Williams, who at the time was working as an educator at Highlander Research and Education Center, served on the DAWI board with me for the first few years. We discussed the need for DAWI and the Federation to support local and regional organizing, and in particular supply chain development - the building of trade networks between and among worker cooperatives and other producers of goods and services aligned with cooperative and solidarity economy values. Elandria’s Mapping Our Futures curriculum is a brilliant example of what was being called for years earlier at the 2008 USFWC annual member meeting. The minutes from that meeting include notes on the “Inclusion Small Group Discussion.” The need for co-ops and their associations to create and operate from a power analysis was highlighted, with warnings about co-ops being “co-opted” by capitalism:

If you are not careful you can create mini-capitalists. Everyone has to do critical self-examination of themselves and their co-op. We need organization on a local level to make the national organization strong. This will make the movement real.

The recent death of community and labor organizer Jane McAlevey caused me to reflect on the themes in her book No Shortcuts: Organizing for Power in the New Gilded Age where she talks about an elite theory of power that gives rise to advocacy and mobilizing models of change. In these models, staffers of labor organizations control advocacy and mobilization campaigns for change as they “see themselves, not ordinary people, as the key agents of change.” Changes can be made to policy and contract language in this way, but power relations remain intact. Workers do not build meaningful power this way. They build power through self-determination: by developing their own power analysis and then debating and organizing around that analysis, with staff in a supportive rather than a directive or controlling role.

I remained on the USFWC board through 2016 serving as President for most of those years. The board never did get around to having a visionary conversation detached from the immediate needs of, and pressures on, the Federation. We never made space for members to have that conversation either. I wonder if we would have moved differently had we taken the time to reflect and envision together on a regular basis?

GEO has been the organization holding space for those conversations through the Advancing the Development of Worker Cooperatives conferences that took place as pre-conferences to five Eastern Conference for Workplace Democracy gatherings. After the final 2019 ECWD held in Baltimore, about a dozen of us, including several founders of the USFWC, met to discuss the state of the movement - its accomplishments and missed opportunities - and to brainstorm principles that could help reorient and guide worker co-operative movement building into the future.

The draft “Baltimore Principles” created by those dozen cooperators over lunch at Red Emma’s Cafe formed the basis for the Solidarity Economy Principles Project, which also draws heavily from the inspiration and work of Elandria Williams. These principles and practices provide guides to course-correcting actions we could take to reinvigorate the movement. Many of us are practicing them at local and regional levels, re-building from the ground up. But we need our national and international organizations to join us. I call on others to participate in building the movement while reframing and redirecting the Federation to become a member-controlled and -focused organization once again.

I’m so grateful for the opportunities GEO continues to give all of us to engage in these debates and conversations through their website. Please support them with an ongoing donation if you can!