How a Startup D.C. Purchasing Co-op Saved Members $1 Million

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A social-purpose cooperative that leverages the buying power of community institutions, the Community Purchasing Alliance (CPA) in the greater Washington DC area helps over 130 churches, synagogues, schools and other institutions save money and make investments in environmental sustainability, worker equity, and community organizing.

Through group procurement of services, CPA, which is wholly owned by its members, helps members save money and get better service. It also holds vendors to higher environmental and labor standards. Services include electricity, waste hauling, solar, landscaping, and copier leasing.

Since its founding in 2011, CPA has saved community institutions nearly one million dollars on energy bills and other services. The organization also facilitates peer-to-peer sharing of best practices between member institutions.

Shareable connected with Felipe Witchger, executive director and co-founder of CPA and a former energy consultant, to find out more about the potential of leveraging institutional purchasing, the community being created around the organization, the decision to make CPA a social-cooperative, and what the future holds for the alliance.

Shareable: CPA started with 12 churches in 2011 and has grown to hundreds of community organizations. How did the idea for CPA come about?

Felipe Witchger: Community organizer and CPA co-founder Martin Trimble realized during the Great Recession that utility bills posed a significant challenge for the churches and nonprofits he worked with. He thought bulk energy purchasing might be feasible, and so when I approached him, we decided to try the experiment with 12 churches.

After early success with energy, we convened administrators from the participating organizations, nominated a steering committee, and started growing the group. We also started to explore group purchasing for other service areas such as natural gas and trash hauling. After gaining some experience and confidence, we hired an experienced consultant to help with a feasibility study. That’s when we felt we had the basis for a full-fledged cooperative.

Member organizations save an average of $6,000 in the first year. Where do these organizations generally see the biggest savings?

It depends on the organization. For some it’s energy, for others it’s trash. We have a couple churches that began saving $20,000 by switching to a local waste-hauling company. In energy, when the market conditions are good, we’ve saved a school $30,000 on electricity bills. With the installation of solar panels, five organizations will save an average of $4,000 per year, while generating about 25 percent of their energy on the roof. The five areas where we see the biggest savings are electricity, waste hauling, solar, landscaping and copier leasing.

Aside from saving money through the purchasing alliance, there’s a strong, diverse community forming around CPA. Was this something you envisioned from the beginning or did it emerge organically?

We’ve always envisioned a strong, diverse community, but it’s a difficult balancing act when the focus often is on transactional purchasing decisions. However, CPA has grown out of a strong relationship-based organizing tradition (Industrial Areas Foundation), so creation of a community has been both intentional and somewhat organic.

We aspire to do more relationship building among administrators and other leaders to build a stronger community, since many members tell us this is one of the more important secondary benefits of CPA. For example, people reach out to each other after they learn of the other’s involvement in CPA. We’ve seen all kinds of collaborations from churches sharing worship space with neighboring synagogues to administrators sharing references for roofers and describing their technology best practices.

Felipe Witchger at CPA's 2014 Launch Meeting and Celebration

Another valuable aspect of CPA is its commitment to working with environmentally sound, socially just, community-focused vendors. Why is this important, and are all your members in agreement?

Our membership feels a strong commitment to the environment and to buying local and from community-focused vendors. This mission-focused aspect of our work draws many of our members to CPA. However, the institutions that are less focused on these commitments still value the opportunity to have a positive impact on their local community.

People want to do good for their community. These values are part of the identity of faith and educational institutions, which make up the bulk of our membership. Our hope is that CPA can help our members take this to the next level. For example, through CPA, they’re able to be part of solar and energy-efficiency investments that are complex and hard to tackle on their own.

Regarding justice, we have found specific vendors that have questionable employment practices, offer low wages, have little to no benefits for employees, and unethical business practices. This information has had a significant bearing on how we select which organizations we ultimately partner with. Beyond the savings, we hope the coop can be a vehicle for broader social change by aggregating our collective power and using it for social, economic and environmental justice.

What were some of the initial challenges for CPA?

Building trust and overcoming internal decision-making inertia among participating organizations was, and continues to be, a challenge. With volunteer boards and committees and multiple layers of decision-making, it’s difficult finding the right person to sign up, then get the organization to participate or join as a formal member.

Raising the start-up funds and investment capital also has been a challenge. Fortunately, our track record of saving money for organizations helped make asking for reinvestment of a portion of those savings easier.

Deciding on a structure that would make CPA financially self-sustaining, as well as mission-focused, was challenging, but the coop model lent itself well to our goals, since the interests of the members are the heart of the coop.

CPA recently formed as a social-purpose cooperative. What does that mean for the organization, members and community at large?

Most cooperatives distribute their “net margins” (similar to profits), to their members as a dividend. As a social-purpose cooperative, we’re structured so that 60 percent of our net margins will go to community organizing and other community-based, cooperative-development initiatives.

As prospective organizations consider membership, we ask them to commit to our social mission, as well as our more traditional programs. For the broader community, this means we hope to shift CPA’s millions in annual purchasing to more local and values-aligned companies, and ideally, worker-owned businesses.

CPA has saved a diverse group of community institutions nearly one million dollars in the last three years.

Within the group there are experts in various fields. How do you leverage the knowledge of the group to help strengthen and grow it? Can you provide any examples where members have contributed directly to negotiations or more favorable contracts?

We invite participating organizations to help structure the negotiations, look at the evaluation criteria, and ultimately select the winning vendors. We also ask them, as well as lawyers and sector experts from their congregations, to contribute their expertise when we’re developing a new offering. This was a huge benefit when we were starting in electricity. We had an energy procurement attorney help us write our first Request for Proposals and then create our template service agreement.

In trash and recycling, one of our founding members, Jim Walker, facility manager at National Presbyterian Church had 10 years experience facilitating procurement for a national chain of hundreds of restaurants on the East Coast. He helped lead the development of our waste hauling and landscaping programs. When it came to contract negotiations, Jim helped us assess what a reasonable set of terms would be to ask for in our sample contract, which is our standard agreement for vendors. Our winning vendors now use our standard service agreement, which puts the customer first.

For copier leasing services, Ellen Agler, executive director at Temple Sinai, led the CPA Request for Proposals. Since her temple needed a new copier, she did all the negotiation with vendors on behalf of her synagogue and other CPA members. The result was more than 25 percent in savings for Temple Sinai and a set of pricing and terms that has helped CPA members save between 20 and 40 percent.

The list of services available to members includes solar installation, trash and recycling, electricity, gas, landscaping, snow removal, office and cleaning supplies, and more. I understand you plan to grow the number of services for members. What else would you like to see, and how are new services added?

In the next few months, we’re rolling out new programs for energy efficiency and energy-performance contracting, heating, ventilation, air conditioning (HVAC) maintenance contracts, and electricity-demand response.

We generally evaluate new services by looking at which operating expenses are significant across a large number of our member institutions and where there is opportunity to meaningfully add value, get better quality service, and/or have a more significant social, environmental and community impact.

Peer-to-peer sharing of best practices is another aspect of CPA. What does that look like? Who are you working with?

We’re still in the early stages of how best to facilitate this sharing. As a staff person for the coop, I interact with hundreds of organizations each year and am able to connect ones that are having similar challenges. Currently, the main way we help connect peers to facilitate sharing is through the co-op organizers who constantly are interacting with members and hearing different needs.

We also have an online group for members where we see lots of interaction about vendor recommendations, questions on how to approach challenges with technology, building projects, capital campaigns and other mission activities.

What’s your vision for CPA? What would you like to see in the next five to 10 years?

Our hope is that we can build an effective model in five years that is generating huge savings for members, significant funds for community organizing, and an ever-growing impact on the sustainability and worker-equity focus of CPA institutions. With 250,000 houses of worship nationally and billions in annual spending to maintain these facilities, the opportunity to shift to local, sustainable and democratic partners, is significant. Our hope is to create a financially self-sustaining model that can save millions of dollars for members and generate hundreds of thousands of dollars each year for community organizing and local community-wealth building.

In the next few years, we hope to discover where the model is strongest, and then build and adapt from those strengths. In 10 years, I’d love to see the model successfully replicated in five other regions of the country.

I think CPA can be a way to share expertise, build relationships and maintain the health of our communities and the institutions that are critically important to their on-going vitality. Moreover, I think CPA can be a vehicle for greater social inclusion, climate and economic resilience, and more transformative strategies for social and economic justice.

What advice can you offer to those looking to start a project similar to CPA in their town?

A key ingredient is leadership that can bring together a group of institutions to try group purchasing. If you can find an area (energy, landscaping, trash, solar) where group purchasing works (adds value, earns money to cover costs and has a positive community impact), then you have one of the necessary building blocks.

The hardest part usually is finding the person or people who have the relationships with the right people and the passion to be able to get a group or organizations together and try cooperative purchasing. As CPA grows, we have some initial support from the National Cooperative Bank to help more communities assess what they can do to explore feasibility of a similar organization in their community.

The first hurdle is convening a group of decision makers to talk about purchasing one local service together. To get that group to the table, you need to be confident that you can offer them some significant value. If you’re already at that point, then take the next step. Working cooperatively and building the Community Purchasing Alliance has been the most rewarding work of my life.

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