Permanent cooperatives are organizations that spread wealth and power by engaging everyday people in the development and stewardship of critical assets like renewable energy, housing, farmland, and technology. For the past 8 years, the Sustainable Economies Law Center has collaborated with frontline communities to identify a set of patterns and practices that make up the core structure of permanent cooperatives. Now, we are incubating four organizations that are putting this model to the test and sharing lessons learned so that frontline communities can more readily deploy these models to build regenerative economies. The Law Center’s work cuts across multiple sectors – including energy, farming, food, and housing – and we have established solid organizational capacity, positioning us to serve as an incubator for new organizations, supporting with their fundraising, legal, accounting, and operational needs. Over the next year, we aim to raise $3 million in grants and donations to support these four cooperatives – and others like them – with a solid launchpad to get off the ground:
- East Bay Permanent Real Estate Cooperative (housing and commercial real estate)
- H2H Cooperative (farmland)
- Loconomics Cooperative (a worker-owned “gig economy” platform)
- Permanent Community Energy Cooperative (community-owned solar)
Background and Need:
After providing legal support to over 900 grassroots organizations and enterprises, the Sustainable Economies Law Center, with input from our many partner organizations, has honed in on a model of ownership and governance that draws upon our collective insights into what makes organizations inclusive, equitable, scalable, and sustainable. We have been using the phrase “permanent cooperative” to describe this organizational model, in order to set it apart from related models that it builds upon, such as community land trusts, worker cooperatives, and energy cooperatives.
Failure to establish well-designed legal structures can be fatal to our movements for just transition and equitable economies. An organization’s legal, financial, and governance structure is an absolutely critical consideration, because it determines whether wealth and power will spread or become concentrated. We have seen many promising and value-aligned organizations become too insular, replicate oppressive power structures, lose traction, and/or get swallowed up by investors and businesses representing the predominant economy.
Emerging Permanent Cooperatives and Funding Needs:
We are incubating four permanent cooperatives in the San Francisco Bay Area and aim to raise grant and donation capital so that we, our partner organizations, and leaders of these new cooperatives can dedicate the necessary time and energy to grow the cooperatives, build and train strong leadership, organize and engage thousands of community members, and share lessons learned so that the models can be replicated across the U.S. and beyond. In brief, the current permanent cooperatives are:
- Permanent Community Energy Cooperative: We’ve brought together a team of 11 local leaders (mostly women of color) to pilot a model of solar development that engages everyday people in developing and financing solar projects that will be owned and controlled by the community in the long term.
- East Bay Permanent Real Estate Cooperative: A people of color-led organization that emerged from our 2-year collaboration with the People of Color Sustainable Housing Network to combat displacement and transform the way we own and steward land and housing.
- H2H Cooperative: Makes farmland affordable to farmers of color by integrating natural burial cemeteries on pastureland and open space attached to farms. Americans alive today will spend more than $3 trillion on funerals and burials. H2H will enable people to channel those funds to create a different legacy: land justice and permanent ecological land stewardship.
- Loconomics Cooperative: A “gig economy” platform (comparable to Handy or Task Rabbit) that is owned and controlled by the workers (home cleaners, dog walkers, massage therapists, care providers) who offer services through the platform.
The last three cooperatives have been sustained by volunteer labor – for two, three, and five years, respectively – which is a testament to the dedication of the leaders, but also evidence that even the most dedicated POC and queer leaders are shut out of conventional funding channels. Already two cooperatives lost incredible leaders from their teams because they could no longer afford to live in the Bay Area. This project aims to sustain leaders so they can nurture their communities and these projects.
While the cooperatives, themselves, are designed to be self-financing and self-sustaining, the work to pilot, refine, and share the models will require significant grant capital. We aim to raise $3 million to enable each cooperative to sustain 2-3 staff for 3 years each and to “de-risk” the capital that frontline communities members will invest as they form the initial membership base for these cooperatives. We have already received support from the Christensen Fund, the California Energy Commission, Capital Impact Partners, Full Circle Fund, the Clarence E. Heller Charitable Foundation, and the San Francisco Foundation for this work on permanent cooperatives.
What is a Permanent Cooperative?
Permanent cooperatives develop and steward assets with the goal of permanent ownership by and for a specific community connected to those assets. The model uses both legal tools and strong community engagement to ensure that the community – not the speculative market – will determine the future of critical resources, such as renewable energy, farmland, food enterprises, housing, water, technology, and other resources critical to people’s lives and livelihoods.
1. Larger organizations that facilitate small-scale, grassroots-led projects:
One of our key insights is that we need to build organizations that are large enough to:
- Sustain permanent staffing and administrative capacity,
- Build broad membership bases,
- Raise capital from diverse sources, including investments from foundation endowments, pensions, and other institutional funds divested from fossil fuels and other extractive industries, and
- Exercise political and market power.
However, even in these large cooperatives, most people’s experience of the cooperative will be quite personal and local. For example, imagine a real estate cooperative with tens of thousands of members. Each land acquisition will be driven by small groups of members who organize support for the acquisition, negotiate the terms, and steward the land under an agreement with the cooperative. The decentralized and grassroots-driven nature of land acquisition and stewardship will lead to the empowerment of many local leaders, small democratic groups of land stewards, preservation of cultural diversity, and local control of critical resources.
2. Embedded in movements:
Another insight is that the permanent cooperative model only succeeds when it is embedded in, informed by, a tool of, and actively builds with mass movements. As people everywhere build and contest for power, the permanent cooperative is the answer to the very practical question of: who or what should own and control assets critical to the thriving of our communities? Permanent cooperatives are structures that we believe most effectively and permanently put assets in the hands of “the people,” and they embed movement values and visions into the fabric of our economies. Unlike conventional housing cooperatives or energy cooperatives, which are formed to provide housing or energy to a narrowly defined group of members, a permanent cooperative could be described as a “movement cooperative,” because it is designed not only to provide housing or energy, for example, but also to build a large membership base and serve members’ collective goal to transform our systems for land ownership and control of energy. This means that membership in a permanent cooperative is often not just for people who will use the cooperative’s land, energy, or technology; it’s for everyone who wants to be part of the movement. Permanent cooperatives will also build alongside other permanent cooperatives and related organizations, like community land trusts. A single isolated permanent cooperative will not transform the system, but if we work in intersectional movements to create such models everywhere, then we will create mutually supporting systems that are viable and fully transformative.
3. Empowered self-help and mutual aid:
Many social change efforts are organized as or under 501(c)(3) nonprofits, which are designed for public benefit, rather than mutual benefit. But when communities come together to collectively meet their own needs and govern their own resources, they are engaged in mutual aid. Cooperatives bring people together to work for their own and their collective benefit, which activates a different mindset and relationship to community. Permanent cooperatives are designed to harness capital directly from the community, engage lots of people in community governance, and steward collective assets for the long-term. These activities are complementary to many nonprofit social change efforts, but can harness resources, activate mindsets, and set priorities that nonprofits often cannot, due to the limitations of 501(c)(3) law. The Law Center is a 501(c)(3) nonprofit that prioritizes incubation of separate autonomous cooperatives, because we believe that cooperatives are critical to social transformation.
4. Decentralized control:
Decentralized control is key. If the fate of each parcel of land, source of energy, and livelihood opportunity is no longer to be determined by the speculative market, then someone or something else will need to determine it, preferably by taking into account the highly localized and nuanced needs of communities, economies, and ecosystems. People everywhere naturally develop an enormous amount of knowledge about, affection for, and motivation to care for the places, people, and resources close to them, so people everywhere should be the decision-makers.
A central question in the Law Center’s work is: How do we build power for everyone through decentralized governance structures? What does governance look like when we abandon conventional hierarchies? The Law Center has a flat pay structure and distributed decision-making process that has allowed us to practice this for years. Last year, we formed the Nonprofit Democracy Network to bring together 17 democratic nonprofits around the country to share best practices. We have drawn a lot of insight from ways that communities around the world have managed resources like fisheries and grazing lands, learning from commons governance scholars like Elinor Ostrom. We have also learned a lot from decentralized organizations emerging in recent decades. In sum, a key element of a permanent cooperative is that it implements governance models that actively engage, train, and distribute power to as many people as possible.
5. Community-sourced and divestment-driven capital:
Permanent cooperatives are intended to harness capital from the wealth of our communities, largely because of the growing awareness that most of that wealth is currently invested in ways that harm our communities and planet. People are divesting from fossil fuels and from other business models that drive extraction and exploitation. It all adds up to a growing collective aspiration to get our money out of Wall Street, and into local, sustainable, equitable economies. Permanent cooperatives are a critical channel for divested funds, and the Law Center is working on various legal steps to facilitate this, including through the creation of self-directed IRAs and 401ks that can channel capital to permanent cooperatives. Ultimately, sourcing capital from community members and paying a small return to community members has the effect of building our whole community’s wealth.
While permanent cooperatives are designed to build large membership bases, their decentralized structures will enable members to participate and build many small and tight-knit communities. In these communities, people will build solar projects together, look for land together, or form small worker collectives. However, the goal of building community will be an end in and of itself. As we collectively abandon the notion that consumerism and corporate capitalism will meet our needs, then cooperatives of all kinds create space where people come together and ask: What do we need and how can we meet that need? It might be food, money, childcare, eldercare, housing, electricity, or anything. In our predominant economic system, people meet those needs by getting jobs, earning money, and turning to commercial businesses to purchase goods and services. In a cooperative, people turn to each other to meet those needs. It’s a powerful shift in how we do things, and it’s essential to a broader economic transformation that will make all of this possible. Community-building will therefore be a core value and component of permanent cooperatives. For example, as we are building the Permanent Community Energy Cooperative in Oakland, team members don’t simply walk through the dry steps toward building a solar project; they form enduring social bonds by sharing meals, socializing and having fun together, and creating unique shared experiences.
7. Worker-driven and meaningful work:
A new and large workforce will have to emerge to support the unique needs of the permanent cooperative movement. The goal of spreading power demands that the movement train its own support system from among the diverse communities involved. The cooperative staff teams will necessarily abandon stifling power structures and implement the values of equity and participatory governance throughout the organization. Unlike older cooperatives and credit unions, where members exercise influence primarily through Board of Directors elections, the decentralized nature of permanent cooperatives means that small groups will exercise power through activities that will often require the support of cooperative staff. For example, members will organize the acquisition of land or building of solar projects, and they will need technical and administrative support from staff. In other words, members will exercise power through and in collaboration with staff. The staff can’t simply be hired instruments of the cooperative; rather, they must work in solidarity with the membership. The funding we currently seek is to hire, train, and support these unique democratic staff collectives to build the four cooperatives we’re incubating.
Many of the above qualities and characteristics – democratic control, shared ownership, and high levels of community engagement – lend to a core component of permanent cooperatives: their permanence. In a world where the buying and selling of land, water, power, and other essential assets constantly destabilizes our communities, and where government and elected seats can similarly be bought and sold by special interests, our communities’ best hope is to look to each other to create institutions that endure and provide for us in the long term. Permanent cooperatives additionally use legal tools to ensure permanence. These tools include charter provisions that prevent, or require high approval thresholds for, the sale of assets. Permanent cooperatives also ideally “anchor” themselves to other permanent cooperatives and community-based organizations, giving such organizations the veto power over or right of first refusal on the sale of assets. Extraction of wealth from the cooperatives will also be limited, such as through enforcement of salary caps, limited appreciation of equity shares, and restrictions on the free alienation of ownership shares.