The Co-op Food Stores of New Hampshire and Vermont

added 07/29/10

by Terry Appleby
Co-op General Manager

In early June, at an annual meeting of consumer cooperative leaders, I had the opportunity to hear Michael Shuman speak on the topic of local economies. Mr. Shuman, author of The Small-Mart Revolution, has been writing and thinking about the topic for some time. He began his talk by asking the audience to respond to a couple of questions. He inquired as to how many in the crowd banked at a community bank or credit union. Nearly everyone raised a hand. He then asked how many had their 401(k) retirement money invested in local companies. I did not see a single hand raised in a crowd of several hundred.

Shuman was speaking to a group of people who are almost uniformly supportive of local ownership, and yet none were investing for the future in his or her local community. He went on to point out the many ways in which the deck is largely stacked against small, local businesses: the stimulus and incentives provided by all levels of American government are overwhelmingly slanted to large corporations; securities laws hinder investment in small business by the average, non-wealthy individual, who cannot qualify to be an “accredited investor.”

The good news is that large corporations have been so intertwined with the economic mess in which we now find ourselves, citizens are becoming more and more interested in alternatives and not merely for basic financial reasons. Development through local economies can have benefits related to climate change and sustainable living, as well. One example of local alternatives gaining strength is in the financial sector where consumers are moving assets to local banks and credit unions.

What are consumers seeing in credit unions that would lead them to transfer billions of dollars from large commercial banks? For one, credit unions offer local consumer control. They are owned by the people who use them, just like consumer cooperatives. Credit unions are democratically controlled, so decisions of the organization are made by local people who have knowledge of local needs. As an owner, a depositor can run for a credit union board of directors or use a vote to influence its direction.

Local ownership and member control are two reasons consumers feel comfortable banking with credit unions. Add to that the natural tendency of credit unions to invest money conservatively, thus protecting member assets from the kind of risk-taking and questionable practices of financial institutions that required taxpayer bailouts and threatened world-wide financial collapse. These factors add up to a high level of trust in credit unions. Independent surveys taken over the past 20 years repeatedly rank credit unions as the most trusted sector in the financial market.

If consumers trust these types of organizations, how do we then begin to move more money on a broader scale toward our local economy and promote the kinds of investments that consumers feel good about making? According to Shuman, the answer is within our grasp. He suggests that, as active consumers and citizens, we can influence the creation of local economies by changing laws and practices that favor corporate interests over local ones. We can hold entities charged with economic development to creating policies that support local businesses over outside ones. We can support local businesses with our purchases. And in the same way that consumers are moving money to local banks and credit unions, we can create avenues for investments that support our communities, rather than working against them. It can happen.