Annual Report 1998
What more can we say about our first year — we got this thing off the ground! Our sincere thanks to our charter members and contributors for their financial support and participation in CGIN’s start-up.
Incorporation and legal matters
CGIN was incorporated as a non-profit in Vermont on 28 January 1998. We held CGIN’s first annual meeting in Cleveland, elected its first board, and approved its bylaws. Later, we discovered that we would need to re-incorporate to pursue tax-exempt status as a 501©6 trade association. We reincorporated in October, after a vote by members. Our application for tax-exempt status was filed with the IRS in late December. It may be another 4-6 months before we know if it is approved.
Web site launched
Our web pages were officially launched in March. Our home page provides basic background on CGIN and how to submit materials. Other basic information include a page of FAQ (frequently asked questions), membership application, a listing of board members, CGIN’s bylaws, and a form for submitting materials. In the fall, we also added a series of pages providing basic information of use to all food co-ops. These pages, called “Resources for Food Co-op,” provide online links to information about cooperatives and food co-ops, resource organizations, materials on how to start or operate a food co-op, cooperative wholesalers and suppliers, Cooperative Grocer articles online, and industry/trade organizations.
Beyond our basic, public-access web pages, CGIN also maintains a series of web pages that are accessible only to members. This is to restrict the availability of these materials to food co-ops and to provide contributing members with the assurance that they aren’t sharing their best ideas with potential competitors. As of the end of 1998, these web pages offer 45 different items, including, among other things, sample Articles and bylaws, membership materials, employee orientation checklists, consumer information brochures, cooking class materials, training programs, a store audit program, member loan documents, job descriptions, special order and product demo forms, and sample board governance policies.
Most importantly, CGIN’s web pages are being used. Members may review all materials without obligation to pay for items. As of the end of September, CGIN’s pages were averaging almost 40 hits per day. And, in the last quarter of the year, CGIN members registered “purchases” of almost 50 separate items from CGIN’s secured-access web pages.
CGIN also maintains a listserve through which members can send messages to all members and list subscribers. As the year evolved, it became obvious that CGIN’s listserve could help all food co-ops if it were open to anyone, not just to CGIN members. CGIN’s list has been open to any subscriber now for six months and is beginning to divert food co-op-specific discussions away from the “cooperative-bus” list to the relief of many of those subscribers. CGIN’s list provides a forum for exchange of information for food co-ops, beyond just a way for members to communicate about items that may be valuable for exchange.
In 1998, 50 retail co-ops joined CGIN. In addition, three organizations have joined CGIN as associate (non-voting) members. The most frequently cited reasons for not joining CGIN are that the co-op currently doesn’t have Internet access, the co-op is not yet an NCBA member, or that the co-op can’t afford to join CGIN or to computerize sufficiently to utilize CGIN. (Retails must be NCBA members to join CGIN; NCBA passes on a portion of its dues from food co-ops to CGIN.)
Membership structure change
Originally, primary members paid CGIN a one-time registration fee and paid for each item printed or downloaded off CGIN’s site. (Associate members pay annual dues.) Through the course of this first year, however, it became obvious that this system was not viable for CGIN. CGIN usage fee income for 1998 was barely 10% of what we had projected; it was clear that usage fees would never bring in the income we’d projected for future years (over $5,500 in 1999). This shortfall seems primarily due to the fact that CGIN members are more generous than we’d realized — members are willingly sharing materials free of charge. And, since we have far fewer items on our pages so far than we’d anticipated, our usage fee income is not going to provide CGIN with an adequate source of income.
To respond to this situation, the CGIN board has decided to change CGIN into a direct charge organization. Primary members will be required to pay an annual fee, set each year based on CGIN’s financial needs and plans. The 1999 annual fee will be $100. Members will also be able to earn a credit toward next year’s fees by contributing items — to provide an incentive for contributions. For every 5 items contributed (or 25 deli recipes), members will receive a credit of $25. This credit can be applied toward next year’s annual fee or donated to a scholarship fund; co-ops can earn up to $50 in credit per year.
New scholarship fund
CGIN can be a very valuable resource for smaller co-op. Yet, to avoid creating a more complex organization, CGIN’s fees are set up on a flat basis (rather than proportional to sales). To help make CGIN more accessible to small co-ops, members may also donate their credit for contributions to a scholarship fund. This fund will be used to offset up to half of the annual fee for co-ops with sales of up to $2 million per year — as funds are available. We also welcome direct contributions to this fund.
In 1998, CGIN’s total income amounted to $37,835, including a start-up grant from NCB Development Corporation. Expenses will reach about $32,000, leaving the organization with a surplus of about $5,500 in its first year. For 1999, income is projected to reach about $30,000, including almost $3,000 in sponsorships and contributions, while total expenses are expected to total $29,450.
Thanks to our partners: Anne Reynolds and the UWCC
CGIN receives invaluable technical assistance from Anne Reynolds of the University of Wisconsin Center for Cooperatives. Anne serves as CGIN’s technical consultant and provider by interfacing with CGIN’s internet service provider (ISP), setting up and maintaining CGIN’s security procedures (to restrict access of certain pages to members and to encrypt credit card information for payments), and supervising the conversion of materials into HTML (the language/format used by pages on the web). CGIN would not have been able to so easily and inexpensively establish its relatively complex web pages without Anne’s vital assistance. CGIN is grateful to Anne and the UWCC for this help.
Finances remain CGIN’s primary challenge. To remain affordable, CGIN strives to keep its dues and fees at a minimal level. However, these fees are CGIN’s only real source of income other than dues sharing from NCBA. Nonetheless, we’re very optimistic about CGIN’s future. We have a core of supportive members and a solid organizational infrastructure. Our web pages and listserve function well and are growing in recognition. For 1999, we also look forward to: obtaining tax exempt status, launching a deli recipe exchange, and working to triple the number of items available on our web pages for members.