Co-ops could help combat food insecurity, create equality in Louisville

Hope not only drives success, but it also provides a path to overcome many ingrained issues in society and business.

It’s not a revelation that Louisville has a longstanding and problematic history. Both racial and wealth inequality throughout the city stem from and mirror historical redlining, the practice of denying people in certain areas fair financial opportunities.

Class separation continues to have harmful effects to this day, such as the prevalence of food deserts and food insecurity throughout the more impoverished areas in Louisville. In the midst of these issues, where can we turn for hope?

A new type of business is popping up in Louisville and throughout the commonwealth that could serve as a useful tool in combating some of these issues and creating more equality of opportunity in non-traditional ways.

In 2012, the Kentucky General Assembly passed the Uniform Limited Cooperative Association Act, creating a new business entity known as a cooperative (co-op). Co-ops act in the same manner as any other business in that they have a product or service that follows a business plan. The differences between cooperatives and other entities are only seen in management and ownership, but not in the business.

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Simply put, a cooperative is a democratically run business owned by the worker and/or consumer members.

Each member-owner typically gets only one vote. Therefore, no one member can ever enact change unilaterally, unlike the typical corporation with a 51 percent owner. This stifles outside attempts to control how neighborhood-oriented businesses operate.

Instead, community leaders and everyday citizens are the ones who determine what is necessary for the area and how to best serve the needs of its people. As a general consumer who is not a member of such an organization, you probably wouldn’t notice a difference.

For example, a cleaning service wouldn’t change its interaction with customers, and if it is a bad business, it’d fail.

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But by selecting a cooperative, the lives and voices of those involved would change. Cooperatives can even be used as a succession plan for certain successful small businesses with no apparent heir to ensure longevity and integrity of local businesses. Selling the business to one’s employees can keep that company’s brand, not just its customer base, as a staple in the community.

Quite a few businesses in Kentucky already officially operate a cooperative or a similar entity that uses cooperative principles in its management style, such as Employee Stock Ownership Plans (ESOPs), including:

• Full Stop (similar to a co-op with open-book management)
• Good Foods Co-op (consumer co-op)
• Houchen's Industries, Inc. (ESOP, but uses co-op management styles)
• Mama's Hip (consumer co-op)
• Mountain Tech Media (worker co-op)
• Wild Fig Books and Coffee (worker co-op)

And more cooperatives could be on the way. The Louisville Community Grocery aims to address food insecurity, and the Smoketown Hope Box is considering a venture into cooperatives based on Smoketown’s community needs.

As local politicians become aware of this structure, they will recognize the range of benefits. The concept should garner support from all parts of the political spectrum. For liberals, cooperatives often empower the most vulnerable groups, even if indirectly, which Democrats typically prioritize on their agenda.

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For example, members of a cooperative grocery could have tiered membership fees that let SNAP participants pay little to nothing and still receive the same benefits as wealthier members who pay the whole price. These industries may also provide social programs such as life and skills training as well as financial literacy.

In the same breath, conservatives should idealize cooperatives as they can supplement, if not replace, the need for some social programs. Taking strain off traditional welfare programs could allow for budgetary minimization of these programs. And quite frankly, cooperatives don’t intend to act as a welfare program.

Rather, co-ops foster wealth creation through business opportunities and local small business owners, a concept that recurs in Republican platforms. Wealth creation, in turn, spurs more small business growth, cooperative or otherwise. Co-ops act similarly to conservative-supported ESOPs but are community oriented and only on occasion use initial grants from the government and nothing more. And, typically members (even voting and non-voting investors) can receive patronage dividends depending on the bylaws.

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Some naysayers place negative stigmas on cooperative structures. However, failures of cooperative businesses fall on the underlying business model, not the ownership structure.

Co-ops do not replace traditional corporations or solve all racial and wealth inequality issues. Instead, the cooperative model enables opportunity in a volume and locality that we have yet to see in Louisville, while other cities see success stories.

Cooperatives need to be incorporated into the business fold as a socially acceptable entity in Louisville and the commonwealth, as they consistently create meaning for workers and consumers through ownership.

Community involvement, an integral aspect of policy making, is also increased through co-ops. Supporting cooperatives provides an avenue forward in common sense policy for everyone, regardless of political affiliation. At the end of the day, co-ops at least provide hope.

Andrew Klump is a member of the Audubon Park City Council. Reach him @AndrewJKlump on Twitter.