The much-anticipated opening of the Detroit People’s Food Co-op (DPFC) last month brought lines of eager customers to the 15,000-square-foot grocery store in the city’s North End neighborhood.
In more than a decade, the grocery store’s leadership convinced more than 3,800 residents to buy into the co-op structure as member-owners, or what Executive Director Malik Yakini called a “community.”
The excitement around the opening created a good excuse to examine the state of cooperative businesses in the city. Detroit has several: the Stitching Up Detroit, Black Bottom Garden Center and City Commons CSA are just a few of them.
Co-ops operate similarly to other businesses, except a co-op is owned and operated by its members, who often have shared values around the business. They can differ in operations and focus: Agricultural co-ops can help farmers sell their products more efficiently, housing co-ops aim to create community and affordability for their members, and worker co-ops allow their members to use their combined skills for stable employment.
If you’re curious about cooperative businesses, here’s what to know before you join or shop at one.
How does a co-op become a co-op?
Co-ops can be any size and exist in any industry.
A potential co-op must have people interested in becoming members from the beginning, though there’s no set number of people needed. Co-ops can be created from scratch or an existing nonprofit can convert to a co-op by appointing up to a third of its members as employee-owners, according to the Michigan Nonprofit Corporation Act.
From there, the process varies by state. In Michigan, interested members have to agree on the co-op’s mission and business plan then file the necessary documents with the Department of Licensing and Regulatory Affairs.
Founding members then create bylaws and an application for future members, and elect a board of directors. The Detroit People’s Food Co-op has nine directors, for example.
It’s important for members to agree on most things, but Troy Clarke, marketing and outreach coordinator at People’s Food Co-op in Ann Arbor, said having a wide range of viewpoints can also be beneficial for a new co-op. But group dynamics can be difficult.
“Strong leadership and clear communication of the co-op’s values can help align member interests,” Clarke said. “But disengaged members can pose challenges to fulfilling the mission.”
Despite the challenges of co-ops, Yakini and Clarke agree that these businesses are essential for communities and worth the hassle.
“We’re trying to create a model of cooperative development,” Yakini said. “We’re trying to create a model of a circular economy … in the hopes that other people will see the benefit in the cooperative model and will begin to create all kinds of cooperatives — not just food cooperatives — as a way of building a strong, local, vibrant economy.”
Do you pay to be in a co-op?
Many co-ops require members to pay a fee to cover the initial expenses.
A co-op’s board of directors can set their fees at any amount, though it’s typically an amount that people in the community can afford. For example, member-owners at the Detroit People’s Food Co-op had to pay $200 either up front or in $20 monthly installments.
“The affordability of the membership and the sense of pride you feel being a part of a co-op that will positively uplift and add to our community is important to me,” said D.R. Castelow, DPFC member-owner and vice president of the Northend Neighbors Block Club.
Each member has equal voting rights on co-op decisions, including how the co-op is run, its mission and any business agreements or contracts.
“A lot of stores don’t do that,” said Colleen Walker, a North End resident and DPFC member-owner. “(It) was a good idea to ask the neighbors what they want in their neighborhood instead of just building their store without asking. This is a major step for us. It’s victory.”
Why join a co-op?
It’s probably not for the money. Many co-ops don’t have a lot of extra cash, but members can sometimes receive dividends from the co-op’s profits.
Clarke said it can take anywhere from a few years to a decade before members start seeing these payouts.
It takes time to raise enough money to start any business, but the process can be longer when more people are involved in the decision-making, Clarke said. It took the Detroit People’s Food Co-op more than a decade just to open its doors.
Clarke said that, even so, co-ops create value for members even before they become profitable, as they can create opportunities for residents to provide high-quality goods and services to the community they live in.
The concept of DPFC stemmed from the fact that there are only two Black-owned grocery stores in the city, despite Detroit being a majority-Black city. Yakini and the other board members wanted to connect with residents and meet their needs through a democratic model.
“Co-ops offer value beyond financial gain,” Clarke said. “(Things like) community support, sustainable practices, member empowerment and providing affordable, high-quality goods tailored to local needs.”
If you would like to learn more about cooperative businesses, Detroit Community Wealth Fund offers educational resources and business support programs. For Southwest Detroit residents, Grace in Action Collectives also offers training to those who want to start a worker cooperative.
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