Co-operative Principle #3 is “Owner Economic Participation – You Control the Capital.” We’re so proud of this that a couple of years ago we made (and many staff & member-owners still proudly wear) DFC T-shirts proclaiming “Stick It To The Man – We Own It!”
But do we? Well, yes – and no, not entirely. The Co-op currently has over four million dollars in member equity. But when we need capital for a major project, like our most recent remodel or adding new technology, our only choice has been to go to bankers – that’s right, The Man – and beg for a loan. These bankers, IF they decide we’re good enough, charge us more for the use of their money than they pay their depositors (or they wouldn’t be in business) and add conditions on our operations. Called “loan covenants,” these conditions last as long as we owe them even a penny of principal. Don’t worry - DFC is not in any trouble with our bankers, we make all payments on time and easily exceed the performance metrics required by our loans. But still, we currently owe over two million dollars to a major multi-national bank – and to that extent they “own” us.
What if there was a way WE, the member-owners of the Davis Food Co-op, could fully own our land, building and business – while reducing operating expenses – and also pay for new projects (like replacing our outdated rooftop solar system) without borrowing from banks again? That’s one of the main ideas behind the Bylaws Restatement your Board is putting forth on the Spring 2017 ballot: There is a way, and it’s called Community Investment Shares. In short, this means member-owners of DFC can invest our own money in our own business – while saving the Co-op on interest rates and getting a higher rate of return than any bank will pay!
We can do this only by issuing a new class of shares, which are not allowed by our current Bylaws or Articles of Incorporation. By restating both of these, with appropriate safeguards and in full consultation with our membership and California Cooperative law, we can maintain our current Membership Share structure (including the vital “one member, one vote” principle) while giving our Board permission to issue non-voting Community Investment Shares. Under the Proposed New Bylaws, these “Preferred Shares” (the technical term means simply that they are paid back first, according to law) will finally be possible – helping the Co-op to long-term financial strength and sustainability – but can never gain any special treatment for those who invest in them (and there’s a limit to how many one member may own).
Have questions or comments about this or other governance issues? Come to our next Board meeting [6:30pm February 13, in the Teaching Kitchen] or email us at email@example.com. And this Spring, remember to vote – and invest – like it’s your business. Because it is!