2. What does a CDA do?

Essentially, a CDA exists to assist as many people as possible to establish and maintain co-operative enterprises. Exactly how this is achieved will depend on a number of factors, including the extent to which an enterprise culture already exists within the community served, the resources available, priorities of funders, local demography, and so on. However, the following key functions may be identified.

2.1 Proselytise:

The principles and practice of co-operation are not widely known in contemporary society. Despite an internationally acknowledged and respected history, the subject is almost entirely absent from the school curriculum, and very few business advisers include the option within their portfolios. Consequently a fundamental task of a CDA is to spread the word of co-operative ethics and economics. As first touched upon by the Rochdale Pioneers 150 years ago, co-operativism is a very viable and very humane system for managing economies in the interests of people not engaged in speculation (see "Speculation" in the Appendices). A CDA Development Officer’s (DO) role is to carry this message to schools, colleges, clubs, associations, and to anywhere and everywhere else possible.

CDAs will often find that they have a major educational function to perform in raising public awareness of the co-operative option. In addition to achieving publicity and general media coverage for the CDA and its services, a CDA will also target particular sectors within society and take its message to these (community groups, clubs, etc.).

2.2 Develop/encourage/support a co-operative culture

Co-operative development works best in an environment of mutual support and recognition. Effective promotion (especially through existing networks) can lead to a situation where it becomes "normal" to utilise the co-operative model for certain types of business start-up, with encouragement offered by other local co-operatives, the voluntary sector, public authorities and others.

A good CDA is a focal point for local co-ops. It encourages networking among local co-ops to strengthen the mutual identity and to create constructive links. CDA activities should promote the exchange of ideas, the discussion of issues, the development of policy, and should always endeavour to provide opportunities for co-operators to socialise.

2.3 Assist Business Start-ups:

Start-up development involves working with groups of individuals, who will often be unemployed, from the initial business idea through to trading. This is the core work of many CDAs. The nature of the CDA's input, and the timescale, will depend upon the group's existing skills, their access to finance, and the ambitiousness of their plans. This development process will not always result in a viable, trading co-operative. In such cases members of the group may go on to some other form of self-employment, or take the new skills they have acquired into other areas of their lives. And it is important to remember that the process of developing a business plan which demonstrates to the proposers that their idea is NOT viable is also, in itself, a service. At least they will have explored the option.

The start-up phase does not normally end neatly on the day the new business starts trading. Close support, additional training and so on, will usually be required for a period - perhaps up to three years.

Many CDAs deal with business start-up enquiries of any kind - whether co-operative or not. Support is provided to sole traderships, partnerships, or whatever in the first year or two of their trading life. This is important because it may not always be evident at the outset if a particular proposal is ideally suited to a co-operative structure. Development Officers (DOs) dealing with a variety of start-ups retain the co-operative option at the backs of their minds and are in a position to suggest it when and if the circumstances dictate. However, many CDAs concentrate solely on co-operative business start-ups.

2.4 Provide Business Support:

Support to co-operative limited companies is normally extended for the life of the co-op. In the case of well established, prospering companies, charges would normally be made. For ones still in the throes of getting established or experiencing a cash crisis, services would be provided free or at nominal cost.

Business Support is, of course, a very broad brush. DOs cannot be expected to be experts in every area. Many large CDAs have in-house specialists for specific areas, but are not averse to looking more widely for expert help in matters for which they have limited in-house expertise. This should be acknowledged and budgeted for from the very outset. Generally speaking, CDAs are happy to exchange expertise on a planned and negotiated basis.

2.5 Initiate Conversions:

Co-operative companies may be formed from start up, or they may be conversions from ordinary limited companies or growing partnerships or sole traders. This is a relatively new and increasingly important area of CDA activity - converting ordinary limited companies into co-operative or employee share owned limited companies.

Conversion situations arise for a number of reasons.

  • A family business may be experiencing a succession problem, where there is no natural heir to take it on.
  • Existing proprietors or shareholders may wish to realise some cash value without selling out to a larger concern with different priorities.
  • A private sector business may be out-sourcing some of its requirements, making staff redundant in the process, but at the same time creating a new market for those workers' skills.
  • A public authority may similarly externalise a facility which previously it provided in-house (typically care and leisure services).

CDAs can provide a solution through Employee Share Ownership Plans (or ESOPs). These are a sort of halfway house between ordinary limited companies and full blown common ownership co-operative limited companies (see "The Common Ownership Continuum" in the Appendices). An ESOP allows for considerable tax benefit and for variable shareholding among institutional and individual shareholders.

In all such cases, the task of a CDA is to assist the existing workforce to restructure themselves as a co-operative, equipped to meet the known market through collective self-management.

2.6 Engage in Community Economic Development:

Co-operative development is one aspect of a larger discipline called Community Economic Development (CED). Consequently CDAs will often find their work overlapping with or extending into other forms of CED. CED is concerned with mobilising members of local communities to tackle social disadvantage through economic activity. Outcomes of CED activity may include various forms of co-operative business, but can also include:

  • community businesses, which provide locally needed services and plough any surpluses back into the local community;
  • credit unions, which provide saving and borrowing facilities to their members;
  • local exchange trading systems (LETS), cash-free schemes where members exchange their time and skills;
  • community development trusts, which act like locally-owned development agencies.

All of the above endeavour to assure that local people participate, either as customers or as employees, on the understanding that profits go back into the community itself. These are healthy self-help approaches to regenerating economic activity in a locality.

2.7 Manage Funds:

Access to investment capital is frequently a problem for new-start enterprises in particular, and so many CDAs manage their own revolving loan funds. These are funds normally subscribed to by existing co-ops who will have an interest in assisting other co-ops to set up or expand, but they can be contributed to by any organisations or individuals with an ethical turn of mind. Typically these will provide small grants to finance feasibility studies, trial trading periods etc., and larger loans to provide initial capital to establish the business. Such loans will often form part of a package of finance from several different sources, with the initial risk taken by the CDA encouraging the release of other funds.

2.8 Access external funds

CDAs will typically have expertise in accessing other funds. The common ownership movement was in the forefront of accessing European funds from the very outset. Much of this has now been taken on board by Local Authorities and Regional Development Agencies, but CDAs are often active in bidding partnerships which include these.

With the advent of Single Regeneration Budget (SRB) funds, many CDAs also developed a proficiency in accessing these as well.

But loan funds are also important. Industrial Common Ownership Finance (ICOF, see Appendices) offers unsecured loans to co-operative enterprise in all its forms. Unity Trust (Trade Union bank) and, of course, the Co-operative Bank are bound by their principles to look favourably upon co-operative enterprise. In addition, there are ethical banks, such as Triodos, which understand the nature and intent of co-operation and consider such enterprises to be sound investments in every sense.

2.9 Manage Workspace:

Locating affordable premises is another common obstacle to new enterprise development. Some CDAs therefore manage premises, typically small workspace units, within which small, new co-operatives may spend the first year or two of their trading lives in a sheltered and supportive environment. Rents on such units will often commence at below market rate, building up to full rate over a period of a few years when it is assumed that the business will be able to move on and rent premises on the open market.

In some instances CDAs are directly responsible for every aspect of the premises; in others, only for certain services. Some CDAs are simply obligated in their Service Level Agreements to mailshot Local Government owned and managed workspaces at least once a year with offers of free business counselling and/or advice.

2.10 Encourage Networking and Partnerships

To provide the best possible service to the local community, a CDA will need to forge fruitful partnerships with a wide range of other organisations and agencies. These will include:

2.11 Participate in the development of area Economic Development Strategies

Wherever possible, CDAs should endeavour to contribute to the shaping of ED strategies as evolved by Local Authorities and, increasingly, Regional Development Agencies. Co-operative development can and should be seen and promoted in the context of overall economic development. Co-operative economics, with its emphasis on distributed ownership, is often the only school of thought which provides for rooting the fruits of economic development strategies firmly within their areas of remit.

2.12 Monitor/Evaluate

All CDAs will need to assure themselves and funders that they are achieving output targets and minimum quality standards. Monitoring and evaluation systems will have to be in place for this purpose.

2.13 Manage itself as an organisation

As a CDA is promoting democracy and equality of opportunity, it should maintain high standards of corporate governance within its own affairs, e.g. open and transparent procedures, employment practices, and effective accountability to its membership and "partner" organisations. A typical CDA will at any one time be dealing with a number of contracts, service level agreements etc., and due attention needs to be paid to managing these.

A CDA will also usually have a Board made up of representatives of the local co-op sector and of major funders. This Board needs regular servicing in the form of notice of meetings, agendas, and minutes, plus any formal requirements required of a registered company if the CDA is indeed registered.

2.14 Footnote

How much or how little of the above a CDA takes on board depends entirely on local circumstance. In some cases, perhaps some of the above activities are carried out by an ordinary Enterprise Agency or by in-house Council Departments. Depending on the current state of flux with regard to any of this provision, the brief for CDA Anywhere should be tailored to incorporate all or part of the above as local circumstances dictate. As the CDA becomes established, these circumstances should be regularly reviewed to assess whether others of these functions can be taken on board if provision is being rationalised.