Co-op Accounting: Business Services Co-op

One of the major contradictions that worker co-ops need to grapple with arises with the way they are forced to manage the books. For instance, if a co-op’s mission is living wages and a safe work environment, those mission items show up as expenses and detract from member equity. In fact, workplace safety is the equity of the co-op. In addition, this feature of mainstream accounting practices also make co-ops look financially inefficient from a lender’s perspective. The very form of accounting used by the financial system works against the co-op model.

This is why I am happy to see the rise of bookkeeping co-ops in the US. I know of three and will feature Business Services Co-op in Olympia in this post. However, I do want to mention the other two that I know about: A Bookkeeping Cooperative in Brooklyn, NY and Common Good Bookkeeping Cooperative in Madison, WI.

Business Services Co-op’s mission is “to strengthen a cooperative economy by providing comprehensive business & consulting services primarily to cooperatives & small businesses by skilled & helpful professionals.”

The co-op was formed by experienced co-operators in the Olympia community (founders of New Moon Café and experienced in co-op development). They saw the need that almost anyone dealing with worker co-ops sees–a need for accountants and bookkeepers that understand the needs of cooperatives. For the BSC folks, they expanded beyond bookkeeping to also provide support for financial planning and more. In addition to working with a number of the worker co-ops in Olympia, they have also branched out to serve the Resident Owned Communities.

For a lot of housing and worker co-ops, the bookkeeping part may not be within the skill set of the membership. In addition, the members may be dealing with enough just focusing the operations end (especially if the co-op is in a start-up phase). Larger co-ops can train folks up and create Accounts Receivable and Accounts Payable departments, but even then, this is a bit out of the mission and might create conflict within the membership (income producers vs. non-income producers). Having an option to hire specialists for back-of-the-house functions and keep those dollars within the co-op economy is a great option and might reduce division within the co-op.

BSC offers a wide range of services, and also includes monthly meetings with the co-op to make sure that people understand the numbers. The work isn’t just about farming out a service, BSC streamlines the process for co-ops while also educating the co-op members on how to read financials and create meaningful ratios to track the ability of the co-op to meet its mission. This provides essential education and helps build a culture of fiscal responsibility within the co-op. Hopefully, as BSC’s clients advance, they can avoid the “boom and bust” model* that has traditionally been the argument against worker cooperation.

I hope that as more bookkeeping co-ops arise, that they will also help change the discourse of accounting. As mentioned earlier, co-ops are forced to used Generally Accepted Accounting Principles designed to value the maximization of return of investment over member benefits. At some point we need a GAAP for co-ops, but the only way to make that argument to hold water will be if it comes from accountants in the field.

*Worker cooperation has generally been dismissed as economists presume that workers will just raise wages to an untenable level until the co-ops fails.

About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-op in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University. He has served on the board of the US Federation of Worker Cooperatives and the Board of Governors for the late, great Democracy at Work Network. He currently sits on the Co-op Circle for Sociocracy for All. He has taught on worker co-operatives and democratic management in the summer at The Evergreen State College and Presidio Graduate School.
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