Cooperatives and Community Development: Counter-Cyclical Spending Through Partnerships
Cooperatives, perhaps the oldest form of social enterprise, aim to put people, rather than profits, at the center of their organizational model by empowering workers to collectively own their own businesses. International agencies, such as the United Nations, have touted cooperatives as a way to alleviate poverty, to promote food security, and to prevent environmental degradation due to their commitment to a triple economic, social, and environmental bottom line.
Cooperatives around the globe derive their organizational mission and structure from seven codified principles (i.e., indispensable aspects of practice), one of which is concern for community. Few empirical studies have examined how cooperatives operationalize this principle. In areas where there is little state presence, such as the rural county in Costa Rica where the research was carried out, conceptual works suggest that cooperatives’ concern for the community might help to provide social services. The study, thus, explores empirically how, why, to what extent, and for whom cooperatives promote social welfare.
Data were gathered using an ethnographic approach that involved 8 months of immersion in Coto Brus with two coffee cooperatives. Sources included the following: (1) published government reports, (2) interviews with key government officials, (3) administrative records from the cooperatives, (4) interviews with community leaders, (5) interviews with cooperative management and employees, (6) interviews with members of cooperative administrative committees, (7) in-depth interviews with community members (both cooperative associates and non-associates), (8) participant-observation in cooperative activities, (9) participant-observation in community events, and (10) secondary literature on other cooperative case studies in Costa Rica. A total of 109 people were interviewed for a total of 200 interviews. All data were coded using HypeRESEARCH using 40 retrieval codes and 16 interpretive codes, the latter of which were developed through analytical memos.
Cooperatives in Coto Brus, Costa Rica, provide social goods in the following areas: health, housing, education, infrastructure, and the environment. The projects they carry out benefit both cooperative members and non-members in order to promote community welfare broadly speaking. Cooperatives earmark between 11% and 17% of earnings for development as engrained in their mission, statutes, and organizational structure. When community need is highest for the provision of social goods, coffee cooperatives’ earnings are the lowest. Thus, a limitation in their effectiveness is an inability to engage in counter-cyclical spending. Managers and cooperative members, thus, note the importance of resources from the state, international nongovernmental organizations (e.g., fair trade), and intergovernmental agencies (e.g., the United Nations) to serve the community by providing social goods.
Conclusions and Implications
The cooperative cases in this study provide invaluable services to the community. However, they cannot do so purely by drawing resources from the market. Rather, cooperatives draw from a variety of sources, including the state and NGOs, to bolster social spending precisely when the market is at its worst. The research suggests that social enterprises should look for a mix of funding sources to provide vital and steady services.