A different way of doing business

Cooperatives emphasize building community, meeting social goals -- while operating a successful business

By Jodi Heckel
CIB contributor, editor

Common Ground Food Co-op moved into a new, much larger space in 2008, adding more products and a deli, and its sales have increased by about 30 percent each of the last several years.

Now a new expansion is underway that will triple the size of the local and organic foods store in Urbana.

"The growth has been phenomenal, far beyond anything we predicted," said Ben Galewsky, chairman of the board of the cooperative.

Galewsky is hoping the success of the Common Ground co-op can be replicated at the Art Theater. He's been working with theater operator Sanford Hess on laying the groundwork for a cooperative to take over operations of the downtown Champaign theater.

Operating the Art Theater has been a labor of love for Hess, but not a particularly lucrative one. A single-screen theater is not a big moneymaker, and the theater needs a new $80,000 digital projection system, as all films will soon be available only in a high-resolution digital format.

While the Art may not turn a huge profit, it is valuable to a community that wants to have a movie house that shows independent films. The community support for the Art is why Hess and Galewsky believe a cooperative is the ideal business model for it.

"It gives a nice avenue for everybody to say, 'I really believe in this. I want to be part of it,'" said Hess.

Members of a cooperative buy a share and receive an ownership stake in the business, as well as a voice in how it operates. Businesses that are local in focus and enjoy broad community support work well for a cooperative business model, Galewsky said. Common Ground is a good example.

"People love this store and love being part of it, knowing the money they put into it stays in our community. To many owners, it's a lot more than a grocery store," he said.

The mission of the cooperative includes building a local food network and educating owners on food issues. Likewise, Galewsky said, the Art builds community by bringing in film festivals and offering "2 Minute Theater," during which any audience member can introduce one of the Late Night movies and explain why he loves it.

"That's what cinema is -- the difference between going to cinema or staying in the living room," Galewsky said.

Cooperatives exist to meet the economic and social needs of a community, and they are democratically governed by their owners -- the two main differences between cooperatives and more traditional or investor-owned businesses.

While social dividends take priority over profits, the business must still be run as a for-profit business, in a way that meets the needs of its customers. Hess likes the entrepreneurial energy around cooperatives such as Common Ground.

"Common Ground is a thriving business. They moved, the new store is beautiful, they want to do more. The spirit of it is like a for-profit business," he said. "If you don't seek to do anything more than what you're doing, you will stagnate."

A cooperative business model can also be a good way to raise capital. Common Ground's owners offered $700,000 in loans to help finance its expansion. And the financial risk is spread among many.

For the Art to become a cooperative, it needs at least 1,000 people to join, and it needs to begin operations with $100,000 -- $80,000 for the digital equipment and $20,000 for operating expenses. The price of a one-time ownership share will be $65. The drive for co-op members began in mid-December and will finish in October 2012.

"They're not going to get a huge dollar return. That's not what it's about," Hess said. "We don't want people putting money in because they think they are going to get money out of this. We want people putting money in because they support the Art Theater."