Black Business Cooperatives, Group Economics, And What We Can Learn From Others

Black Business Cooperatives, Group Economics, And What We Can Learn From Others

One of my favorite African quotes is “If you want to go far, go together.” If we Pan-Africans are serious about enacting mass economic action plans, then building Black business cooperatives is one of the most efficient means of practicing group economics.

When I first started my entrepreneurial journey, I faced a problem that most new Black entrepreneurs face: I did not have the capital that my business needed to hire employees or market at scale.

I discussed the issue with one of my mentors who told me to either find an angel investor or join a “cooperative”.

I had never heard the word Cooperative in any of my business classes, so that prompted me to do some research and seek out African American Cooperatives (there are very few).

As I dug deeper into what Cooperatives were, I realized that I had heard the principles of Cooperative Enterprises discussed  in books like Powernomics and The Rise and Fall of Black Wall Street.

I also asked myself questions like:

  • How are people able to save up enough money to buy apartment buildings?
  • How are individual investors able to purchase large shares of stock at one time?
  • How are these people able to make major money moves without taking on debt?

The answer is Cooperatives.

What Is A Cooperative?

A Cooperative is a group of individuals who pool their money, ideas, and education together to create enterprises that make them more money.

A cooperative business belongs to the people who use it – people who have organized to provide themselves with the goods and services they need, while making money at the same time.

Member-owners meet regularly, present and hear reports on their business and investment activities, and hire General Managers to handle day-to-day affairs in their companies. Members invest in the businesses to provide capital for a strong and efficient operation, and once the businesses start making money, the profits are returned to co-op members.

There are over 100 million people involved in 47,000 U.S. cooperatives that are in every sector of our economy.

Ace Hardware, Jackson Electric, Floridas Natural Growers, and The Pentagon Federal Credit Union are all examples of people coming together to create an enterprise.

The World’s Most Infamous Cooperative

Black Business Cooperatives, Group Economics, And What We Can Learn From Others
The Mafia used the principles of group economics to build a global empire.

If there is one group that embodies the principles of cooperative economics, it is probably the Italian Mafia.

Say what you will about La Cosa Nostra and their violent ways, when it comes to business these criminals are masterminds. Each and every member of ‘la familia’ was dedicated to working for the greater good. And the enterprises they built are so far removed from the “gangsters” that created them that some of those companies are now publicly traded on Wall Street!

“There’s a risk that Mafia organizations can profit from the current [financial] crisis by buying control of struggling businesses…in fact they have done very well during this recession by lending and investing what’s become a scarce commodity these days: a growing hoard of cash.” (Bloomberg.com; May 2009)

Unlike over leveraged companies burned in the credit crisis, the Mafia and its cash-based, debt-free business model breezed through hard economic times. With young, savvy leaders at the helm,  their organized crime operations expanded to become legitimate companies.

The TIGER 21 Group

Tiger21 (an acronym for The Investment Group for Enhanced Results, 21st Century) is an insider group for high net worth ($10 Million +) individuals. Members attend private, day long gatherings where their investment portfolios are shared and dissected, business deals are made, and ideas are exchanged.

Black Business Cooperatives, Group Economics, And What We Can Learn From OthersMeetings begin with a World Update (to keep members aware of possible investing opportunities and threats), lunch consists of speakers from large investment firms who are called in to deliver presentations, and unmoderated group sessions wrap up the meeting.

Tiger21 is probably the most influential, most productive, and least talked about Cooperative in America. What gives this group its power and influence is the fact that they are a group of people working together for mutual benefit.

Challenges We Face With Building Black Cooperatives

There are 3 problems that I can imagine one would encounter while trying to build a group: trust, ego, and recruiting.

A Black Man is naturally proud of his ability to make moves on his own. Black men tend to be solitary creatures that hunt alone, and the idea of joining a cooperative would interfere with their ego and the image they have built of themselves.

This has to be overcome, since we are just the kind of strong willed, intelligent, and able individuals that would make for a powerful group. But even if you were able to convince another Black Man or woman of the mutual benefit of joining forces, you would still have a major issue – trust.

When it comes to trust, I believe the Mafia was so successful because of the fact that they kept their dealings in the family, and in most cases you can trust family more that strangers. A stranger could pick up and move to Japan and you’d never hear from them again, but if your brother did the same thing , he would eventually be ratted out by a call from your niece or nephew.

But how would you be able to maintain a level of trust with a group of people you aren’t related to? Questions would have to be answered like:

  • Once money is collected for investing, who would hold on to it?
  • Who would be able to access funds?
  • Once an enterprise is launched, how will all members be sure they are getting their fair share of the profits?

Recruiting individuals would also be difficult, since recruiting means getting people to commit their time, energy, and money to a group of people they do not know. And there is also the problem of recruiting the right mix of people.

If all these problems can be overcome, the result would be a group of investors able to launch enterprises, buy real estate (and split collected rents), and take on increasingly more lucrative and influential business endeavors.

It can be done, as we have seen in the cases of the Mafia, TIGER 21, and the 47,000 other cooperatives in existence. The question remains for us in the Black community; will we do it?

Written by Asad Malik

Asad is the Executive Officer of The Pan-African Alliance, and the Founder of United Black America.

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AfrikanEyes
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AfrikanEyes

Thank you for touching upon one of the most overlooked tool for people of any color to effectively counter “vulture capitalism”, build inter-generational wealth and advanced the living standards of ordinary people. I would like to share with you another example of the validity of cooperatives as powerful tools of economic empowerment, the Mondragon Corporation from the Basque region of Spain. The video link below is a short overview.

https://www.youtube.com/watch?v=8ZoI0C1mPek

William M. Conner, Jr.
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William M. Conner, Jr.

Thanks for the information. I agree with the constructive element of cooperatives, that element is trust. I am ready to invest. I have secured residual income, but looking forward to locating like minded Africans in Houston, Texas that are motivated to establish cooperatives to provide micro loans for funding of African development/ ventures within our communities.

A’mor fati.