Board Blog

2013 and 2018 are apparently very good years for member loans. Those two years are filling up quickly!

When Jacqueline created the plans for the co-op’s move to Lincoln Square she constructed a detailed spreadsheet that shows costs, sales forecasts and repayment of the bank and member loans going out 11 years. To keep the co-op’s cash flow positive throughout this time we need to spread the member loans out evenly across each of the six years (2013-2018). Once we accept $41,000 worth of loans for one year we can’t accept any more for that year.

So far the five and ten year loans have been the most popular with our members.

If you have a particular year you’d like to choose for the repayment of your loan you will need to get your request in soon.

To request a loan form you can email me or just fill in our simple information request form on the website.

If you have given us a dollar commitment, but haven’t yet told us the term and rate of your loan contact me to complete the paperwork and get your place reserved in the payback year of your choice.

What’s your favorite year?

Ben Galewsky
Treasurer

I have a confession: I have an uneasy relationship with money. I've made more and less of it at various points of my life, spent and felt guilty, was frugal and felt righteous, leered at those that had more, pitied those that had less, and generally wished for a day that money would just go away. From the beginning I therefore expected the effort to raise money for our relocation to be an uncomfortable but necessary task, something I would get through and then heave a sigh of relief.

In contrast to my foreboding, the generosity of those that have committed loans and donations to Common Ground has been truly inspiring. In the three weeks our program has been running, we now have... $94,500 committed from about forty members! In talking to people at the party, on the phone, and even while walking around town, the enthusiasm for helping to build our new home has been incredible, and it's made me realize more clearly that money is a means to an end, and that using it doesn't taint things, so long as it is given willingly, spent wisely, and used toward a noble end. What I expected to be an uncomfortable process has turned out to be beautiful. People are excited to invest in our shared dream, and by each of us playing our part, we're building a great future for sustainable food in our community.

The member loan program still has a ways to go. I hope that you'll be part of it, either by emailing finance@commonground.coop, coming into the store and picking up information, or filling out the form on this website to have someone contact you. The minimum loan amount is $1,000, and every loan helps. (We had one member that was concerned that we might not want loans for the minimum amount...not true!) For more information, see the member loans section of this site.

We also recognize that many people cannot afford this amount, and are looking for another way to help. In a previous blog post (see the full board blog page for previous posts) we announced the proposed changes to the equity structure. The board accepted comments over a period of two weeks, and those comments were overwhelmingly in support of the changes. In addition, several people at the party approached me and asked when these changes would go into effect, so that they could buy more equity shares and help fund the relocation in this more affordable way

This week the board approved those changes, and they will take effect March 1st. To allow additional equity shares to be purchased will require a change to the bylaws, and we bring all such changes to the membership as a group to approve, so there will be a special General Membership Meeting on Sunday, February 24th at 7:00pm in Wisegarver Lounge, down the hall from the store. We'll have a discussion, take a vote, and also answer questions about equity and other current topics. All members are invited and encouraged to come join us at that meeting.

As our carrot shows (digital version courtesy of my daughter Kate), we're getting there, but we're not there yet! Please help us fill in the carrot, in whatever way you can. We only have six weeks left to raise another $150,000. That's about 70 more people just like the 40 who have already made a commitment. I'm certain we can do it.

Peace,

Clint Popetz

Board Chair

We've received some comments that the process for making a member loan is a little complicated. We tried to make it as simple as possible, but to protect the co-op and the lenders we have to follow the legal advice that we were given by an attorney who specializes in member loan programs for co-ops.

It's not really very hard. To make it easy we added a form on the co-op's website to start things off. Just fill in the Member Info Request Form and one of us will contact you to find out how much you would like to loan. We'll help you figure out the interest rate and the repayment date.

We need to make sure that you have a copy of the info packet and can mail you one if you don't already have it.

Finally, I have to write up some contracts. They are signed be the co-op treasurer (that's me) as well as the board secretary (that's Katrina Bromann) and send them on to you. You sign the contract where indicated and send it back in an enclosed envelope. I'll make a copy for our records and send you the originals back to you.

You can send your check in that envelope or any time before the 1st of April.

That's all there is to it.

My phone number is
384-2033

By now all members should have received information about the member loan program that we are relying on to fund our move to Lincoln Square this summer.

I have spoken to several members over the course of the past couple of weeks and have assembled this list of answers to the frequently asked questions:

What is the member loan program? I

Equity is not unique to cooperatives…but member equity certainly is. When twenty-eight folks in Lancashire in 1844 pooled six weeks worth of wages to form the Rochdale Pioneers, they introduced the world of business to a fundamentally different model of capitalization. This was the birth of the cooperative movement, and member equity made it happen. I hope I haven’t lost you already. If you’re still with me, let’s get some other words out of the way: Balance Sheet. Debt to Equity Ratio. Liabilities. Still awake? It’s tough enough to deal with our own finances, let alone those of our grocery store. Running a business is a complex and daunting task, particularly in a market with low margin (i.e we don’t sell the food for a lot more than we pay for it) and high competition. Most members don’t really care how the co-op stays afloat…but they certainly love it and want to keep it around. They trust their board and management to make good decisions that keep things going smoothly. As a board member, I’m grateful for that trust. But there are times when we need to take complicated issues to the membership because they’re important, they have long term ramifications, and we want to make sure that everyone is involved with and understands the decisions that are made. The need to change our member equity levels is just such an issue. In a privately-held business the owners will contribute a part of their own savings to fund the business, and this represents ownership equity. In a co-op you are those owners. A healthy co-op has equity that comes partly from retained earnings (saving a little bit of the profits) and partly from members. Too much of one or the other (or too little of both) represents a weak financial picture. Equity is also treated specially. It gets its own account. It is spent only on fixed capital improvements, so for example, your equity doesn’t pay wages, but it could help buy a new cooler. Member equity is the lifeblood of cooperatives. It represents the stake of each member-owner in the business. Now the nitty gritty. Our equity level is way below where it needs to be for a cooperative our size, and way way too low (can you hear my English teacher cringe?) considering that we’re more than doubling in size with the relocation. It means our owners don’t have a big enough investment in the business, and that looks bad for banks loaning us money. The bank says “why should I loan you money when your owners aren’t pitching in?” We’re not the first co-op to encounter this situation, though most did so a decade or so ago. As co-ops transitioned from the 1970’s membership fees model to one based on equity, little attention was paid to setting those levels, and failures to educate on this topic led to misunderstandings about what member equity means and why we should pay it. Co-op members across the globe have however gradually made the transition from thinking as shoppers to thinking as owners. And as part of that, their equity levels have gone up. We need to catch up. This is especially critical as we prepare for our move: a decent chunk of the change needed to make this move happen will have to come from increased equity levels, from members old and new. So here’s the board’s proposal:

• Membership equity should increase to $60 as of March 1st.
• The existing single ($30) and family ($50) member equity levels would be combined into one equity level. Most co-ops have dropped multi-level equity systems in order to make things more fair and understandable. This doesn’t mean every member of a household must join in order to shop, though we certainly encourage each adult to become a member (in particular so that each gets their own vote.)
• Existing members would have a period of 6 months to pay up to the new level from their current levels. So you’d have 6 months to pay either $30 or $10, depending on your current investment.
• New members would, as always, have a period of 6 months to pay in their equity, so that the cost of joining can be budgeted over time if needed.
• A fund would be established for providing “membership scholarships” for those that cannot afford to pay equity. Members that leave the co-op could choose to donate their equity to this fund, to help keep the co-op economically accessible.
• A change would be made to the bylaws to allow people to by up to ten additional equity shares, which would not give them additional rights (i.e. it’s still “one member, one vote”) but which would allow them to invest incrementally in their co-op. This is common to food co-ops, and is something that has been requested by members of our store as well.

Over the next two weeks we’ll have cards at the register with which you can give your feedback to the board about this plan. You can also email us, or post comments here. We’ll gather all of this information, and make a decision about equity levels at our February 11th board meeting. There would then be a general membership meeting on February 24th to approve the bylaw changes necessary for the last item (buying more than one share.) So many of you give your heart and soul to the co-op. You make the decision to support this shared vision, and you renew that commitment week after week, each time you shop, work, or eat. Many of you are also participating in the member loan program (check your mailbox!), which is crucial to our move. Member equity represents yet another part to play: the part of an owner. I hope you can join me in playing that part. This pooling of resources that we call member equity is one of the wonderful facets of cooperatives, and has a rich history. As inspiration, here’s a bit written 144 years ago about the first co-op, those 28 Rochdale Pioneers I described above:

They determined to club together. Their joint capital made up a sum of fifteen odd pounds sterling. With this they opened a store, getting credit for the rent of the building. At the beginning there was no profit, and very little satisfaction. But the acting manager, himself a workman, was persevering; the directors, in the main, were men of firm purpose, and all of them were true to each other. Energy, steadiness of effort, courage and honest dealing ultimately gained the day. That fifteen pounds stock of goods, mainly groceries, has grown steadily and surely, till to-day it approaches close to a half a million sterling. – The New York Times , November 27, 1864