End of a Transition

For the National Cooperative Grocers Association, the first half of 2007 marks the end of the three-year transition outlined in the “Circle of We” Reorganization Plan approved by regional CGA members in 2004. Many of the reorganization concepts were grounded in research of other organizational transitions, in the historical performance of existing programs, and in feedback from nine months of dialogue to determine what members really needed from a national organization. Nevertheless, a great deal of trust and faith was present in the decision to aggregate assets, staff, and activities.

As we enter 2007, NCGA is well ahead of the financial projections in that plan and has been able to add operational programs and staff positions originally anticipated for later years. The concept of critical mass has borne fruit for NCGA members. Total Assets grew from $180K to $1.9 million after transfer of regional assets in 2004 ($1,563,077 transferred) and increased another 59 percent to $3,017,271 by the end of 2006.

Total association revenue, funding both regional and national programming, grew from $900K in 2004 to over $6.2 million in 2006. NCGA went from 4 employees in 2004 to 29 in early 2007, with the most recent additions in information technology, category management, and regional development staff. Health and wellness promotion is the next position scheduled to be hired in 2007.

NCGA secured a national supply contract with United Natural Foods Inc. and most recently a national data services agreement with SPINS. Both contracts include full-time, in-house staff support for NCGA members within these organizations, providing focused service from these vendors to our growing member stores. We’ve added a national prepared foods program; upgraded our website to allow members to better “shop” NCGA services; and launched numerous marketing initiatives including national public relations, a co-op news service, an online Creative Toolkit, and Co-op Advantage branded packaging supplies. We’ve continued to develop our Co-op Advantage promotional flyer and coupon book programs, designed a “Support Our Success” program to enhance operations within our stores, and conducted dozens of training programs regionally and nationally, to name just a few highlights from our transitional years.

Because of the disparate terms within regional contracts previous to the reorganization, revenue to NCGA was inequitable between regions in 2005 and 2006. This situation led to the infamous “equity compromise,” crediting or debiting a member’s allocated equity account in amounts above or below the agreed percent of revenue to fund operations. These allocated equity accounts also represent each member’s share of the assets transferred from the former regional associations, in excess of NCGA base stock requirements. This equity was used to fund each member’s joint liability account, leaving many members with additional excess equity.

That excess equity is being returned to members in February 2007, three years ahead of full payment projections in the reorganization plan. This makes all members equitable investors in the association and equitable contributors to funding our transitional years. It also honors the trust and faith our members displayed when transferring their assets and investment in regional associations. The return of this equity, either in cash or through transfer to a restricted joint liability account owned by each member, represents a 100 percent return on the assets transferred to NCGA in 2004 ($1.57 million transferred and returned in 2007). This return on former regional assets is in addition to each member’s present NCGA stock value and share of our 2005 patronage dividend.

We are closing the transition we began three years ago. Now that we are staffed and funded within a structure that has proven an effective aggregation of member resources, the question naturally is, “What’s next?” The NCGA board of directors is examining that question with a long-range strategic planning process aimed at determining the big, hairy, audacious goals that will motivate and guide our next steps as an association. Balancing the needs of a diverse and growing membership, delivering on our guiding principle of a member-driven NCGA, effective communications throughout the association, and managing a virtual operation with geographically far-flung staff are ever-present challenges. However, it is gratifying to see that the food co-op sector can accomplish what it sets out to do and do it ahead of schedule.

The reorganization was a great test of our ability to assume risk, build alignment, and execute a national undertaking with complexity on many levels. Every member and staff person of NCGA during the last three years shares in this outstanding accomplishment. Yet it feels like we’re just getting started!

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Robynn Shrader is CEO of the National Cooperative Grocers Association ([email protected]).