After 40 years of working in the cooperative economics realm, Ron Gaydos says he’s learned one thing with absolute certainty:
“If you’ve seen one co-op, you’ve seen one co-op.”
The tongue-in-cheek comment spotlights the diversity of American businesses that employ the unique structure of cooperative ownership by members or employees.
A South Hills native and Squirrel Hill resident, Gaydos is the cooperative development director of Keystone Development Center, an Ephrata-based nonprofit providing technical and research assistance to groups looking to organize as cooperatives.
The first cited cooperative business in the U.S. was the Philadelphia mutual fire insurance company founded in 1752 by Benjamin Franklin. As the nation grew, co-ops sprang up in rural areas among farmers, credit unions and grocery retailers in response to monopolistic practices by centralized corporations. In the 1930s, sparked by innovative New Deal programs, the co-op model took root in U.S. cities to confront social as well as economic issues.
Pittsburgh has several thriving co-ops, one of the largest being the East End Food Co-op founded by Point Breeze residents in 1972 as a bulk-buying club addressing food insecurity in the surrounding neighborhood.
But there are many examples:
The Hill District is home to Ujamaa Collective, a fair trade marketplace co-op active since 2008. Fourth River Workers Guild is an employee-owned landscape business embracing ecological habitat principles. In Homewood, Black Urban Gardeners and Farmers of Pittsburgh is in its ninth year of operating a 31,000-square-foot community garden that offers nutrition education and food distribution. Bloomfield’s Big Idea Bookstore hosts educational readings, poetry open mic nights and film screenings. Justseeds Artist Cooperative in Oakland showcases the designs of more than 40 visual artists from Canada, Mexico and the U.S.
For Gaydos, the attraction of the co-op principle reflects his core belief that there is always a “better way to do things.” After two decades of serving as a consultant with numerous community development groups, he co-founded the Pittsburgh Chamber of Cooperatives in 2015 with a startup grant from Neighborhood Allies, incubating local co-ops in agriculture, food catering, youth training and text message campaigning.
Recently, he spoke with NEXTpittsburgh about the advantages co-ops can offer to the city’s increasingly entrepreneur-based economy.
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NEXTpittsburgh: What got you interested in exploring co-op economics?
Gaydos: My bachelor’s degree from University of Pittsburgh was in Political Science and International Relations, and I saw that those subjects were influenced by economics. I concluded that economics is not necessarily a science but a philosophy of morality. I wondered if there was a way to do business that works out fairly for everybody, from executives to all levels of employees. What does it take to do economics right?
In 1983, Jim Ferlo, Joyce Rothermel and some other friends contributed enough money for me to attend a week-long seminar at Bard College called “Tools for Community Economic Self-Reliance.” It was oriented toward cooperatives, employee ownership, land trusts, workplace democracy, employee stock-ownership plans.
I met Bill Mollison, founder of the permaculture movement, and Shann Turnbull from Australia, an incredibly iconoclastic business thinker who founded the international Sustainable Money Group. A land reformer from India, Govindrao Deshpande talked about product-based currency exchange. I learned about the Mondragón Cooperative Corporation, a regional co-op in Spain founded in the 1950s that was employing 70,000 people and producing $14.5 billion in revenue a year with nearly 100 co-ops covering finance, retail, industry and knowledge.
I thought, “How could that be done in the Mon Valley?”
NEXTpittsburgh: Sounds like a life-changing week!
Gaydos: When I got back to Pittsburgh, I started holding meetups on “appropriate technology,” which was what “sustainable development” was called in the 1980s. I wanted to engage in business that was regenerative and equitable, so I started a construction company to see if I could integrate those principles into the work.
I had the company for 13 years until I enrolled in Carnegie Mellon University’s Heinz College to earn an MS in Public Policy & Management focused on Economic Development/Strategy.
NEXTpittsburgh: What is the advantage of a co-op for a business and for individuals?
Gaydos: Employee-controlled companies stay in business longer, grow faster in revenue and longevity and the workers get paid more.
NEXTpittsburgh: What’s the first step to organizing a co-op?
Gaydos: The very first step would be to have a viable business idea. Does what you intend to do truly fit a clear business or social need? Then you need a group of people committed to that idea. And then those people need to commit to collaboration and cooperation.
NEXTpittsburgh: What if it’s an existing business?
Gaydos: The owner should understand the co-op concept and determine whether the existing business could succeed as a co-op. And understand what operational changes will need to occur in transitioning to a co-op, while also making sure employees understand the business fundamentals and their new roles and responsibilities.
NEXTpittsburgh: Does Keystone Development Center assist with that?
Gaydos: We have a Co-op Academy that offers instruction and hands-on coaching, from assessing your idea and its feasibility, helping you plan and incorporate the business, building the co-op’s operations and decision-making culture.
NEXTpittsburgh: Is it hard for that culture to evolve if it hasn’t been part of the business before?
Gaydos: One challenge with a co-op is that not everyone wants shared responsibility. You have to expose people to other ways of making decisions that are not majority rule and not consensus, which can be challenging in large groups. Consensus is everybody says “yes.” Another way is arriving at consensus is consent — nobody says “no.”
You find a decision that’s within everyone’s tolerance zone. It’s not really what everyone may want, but it’s close and they can work with it. You set a temporary term for the new structure of three or six months, knowing it can be adjusted if necessary; if people aren’t committed to it forever, they feel better about trying it out. It’s a smart and agile process.
NEXTpittsburgh: What’s the next economic area where you think the co-op paradigm might develop in a big way?
Gaydos: Baby boomer-owned businesses make up almost half of U.S. small businesses. A significant number of boomer businesses are going to end up being employee-owned. Or they’ll disappear. But in terms of succession, only an estimated 15% of family-owned businesses have a family member interested in taking over. Will employees be able to carry those businesses forward?
NEXTpittsburgh: It seems like that would be good for small business development in general.
Gaydos: According to the National Center for Employee Ownership, employee-owned businesses are rising. Pennsylvania has nearly 100 more employee-owned businesses than there were five years ago; Pittsburgh currently ranks as number 22 in the U.S. in the number of employee-owned businesses.
In 2019, Pittsburgh created the first city-sponsored effort in the country, the Pittsburgh Citywide Task Force on Employee Ownership co-chaired by Councilwoman Erika Strassburger and Kevin McPhillips of the Pennsylvania Center for Employee Ownership. It’s a task force that promotes the benefits employee ownership can deliver to business owners, employees, communities and the local economy.
NEXTpittsburgh: What’s the most important thing you want people to know about starting a co-op?
Gaydos: If you build a culture of collaboration in the beginning, you have a better chance of succeeding. Every society around the world has cooperative traditions. One thing everybody finds out when you start any kind of community development is, if you take shortcuts, it takes longer.
Besides calculating the profitability of your action, ask if what you’re doing benefits the people in and around it.