Co-ops are different from profit-oriented businesses. In the case of co-ops, the goal is not to earn a profit for its owners; rather, the goal of the co-op is to provide its member-owners with services or goods they could not otherwise access, or to provide them at a lower cost than is otherwise available. Co-ops begin for a variety of reasons and are a direct reflection of the communities they serve. Co-ops might provide daycare services, energy solutions, grower access to markets, or, in the case of a retail food co-op like ours, access to fresh, healthy food. For a first-hand  look at an existing food co-op, take a trip to Chestnut Hill or Mount Airy, and visit Weaver’s Way, a community owned food market with three stores in Philadelphia. In the meantime, here are some answers to questions you may have:

• What is the financial commitment to join the co-op?
• What are the obligations?
• What are the benefits?
• Is my contribution tax deductible?
• What are the risks of member investment?

What is the financial commitment to join the Doylestown Food Co-op?

Full vestment in the co-op has been set at $360-400 per member family. This equity investment will be payable upfront; over the course of four years; or, in special circumstances, over the course of ten years. Of course, membership is an investment and is fully redeemable (refundable) once the co-op has become profitable (typically two years or so after opening). We are committed to including as many families as possible in membership/ownership, and we expect, based upon free and reduced lunch rates in our area, that somewhere between 6 and 8% of families may not be able to make the full investment within a year. However, for practical financial reasons, we hope that all families interested in seeing the co-op open in Doylestown and able to make the full investment within a year will do so.

What are the obligations of co-op membership?

The primary obligation of members of our food co-op is participation in membership surveys, membership meetings, and annual voting for board members. Since the co-op’s primary goal is to serve member needs, we will want to know from you just what it is that you expect from your co-op!

For those of you with some co-op background, you know that some retail food co-ops require member participation; a good example of such a co-op is Park Slope Food Co-op in Brooklyn, which has excellent pricing as a result of reduced labor costs! However, we know that this might not be a reasonable requirement for our community. Therefore, we do not expect to have a member volunteer requirement. We do know, on the other hand, that volunteer participation in everyday co-op business does reduce operating costs. As a result, we plan to encourage volunteerism by providing a discount for active volunteers. Just what level of discount and how many hours will be determined by the co-op’s financial plan.

What are the benefits of membership?

We expect that the co-op will serve members as well as non-members, which is consistent with our goal of putting as many local foods on our community’s tables as we possibly can. So why become a member…why not wait until the store is opened to shop there rather than make an investment up front? The answer is simple: co-ops exist to serve the needs of members. If there are no members, there is no co-op! Members state their needs, make an investment, support the growth of the co-op, and ultimately patronize the store.

In the early years when the co-op is getting up and running, membership means a belief in the idea of a store. Down the road, we hope to provide members with a number of other typical co-op benefits, including discounts or services provided by other local businesses; dividends in surplus years; occasional member discount opportunities; pre-ordering options; bulk discounts; free or reduced cost classes or workshops; and the like. Mostly, however, membership is ownership. We hope our members will walk into the store on the day it opens like they own the place…because they do!

Is my membership investment tax-deductible?

The co-op is not an IRS 501c3 organization, and therefore membership is not tax deductible. While our future co-op is incorporated as a non-profit business under PA law, that simply means that the goal of the business is not to earn a profit but rather to provide a service to its members. Any dividends issued by the co-op are, however, not taxable. This special provision is only provided to food co-ops. If you are a member of another retail co-op, such as REI, you may be aware that your dividend is taxable. We need to be clear that any donations, loans, or membership equity investment you make in the co-op is not tax deductible (though we wish it were!).

What are the risks of membership investment?

Any investment in a start up business has its risks, and we feel obligated to state these risks clearly. Should you invest in the co-op during our membership drive, and the co-op fails, member investment is subject to loss. During our initial start up phase, membership investment is not put at risk and is not used for membership drive expenses. When the time comes for us to explore store locations, hiring of a general manager, loan options, and capital expenses, our members will be informed of all of these activities through meetings, newsletters, our website and/or surveys.

Ultimately, as with any new business, there is a risk of the loss of some or all investment, as membership equity capital in co-ops is subordinate to all other creditors. We therefore recommend that any family who wishes to become a member should invest using a schedule they are comfortable with.