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Should co-op leaders be compensated?

The issue of whether to compensate co-op leaders with money or other benefits has always been controversial. Purists argue that co-op service should be completely voluntary and uncompensated -- especially if the co-op in question is a non-profit or exists to serve the community in some way. They argue that no one should profit from the co-op, and that paid service taints the cooperative ideal.

That's a valid concern, and I'm definitely sympathetic to the desire for all co-op service to be purely voluntary. There's just one problem with it:

It doesn't work.

I've rarely seen a co-op or non-profit organization that functioned effectively without paying at least some of the people to do some of the work. Those who have tried to go the 100% volunteer route have almost always limited their effectiveness. I'm not saying that it can't be done, but I am saying that it's rare.

If an organization is fulfilling its goals without any paid help, then by all means it should continue to do so. But if the group hasn't made much progress in years, and there's not a large battalion of volunteers eager to do the work, then it's time to consider greasing the wheels to get things rolling.

It's notable that those most staunchly opposed to compensating leaders are often the most staunchly opposed to picking up the slack themselves. That was my initial experience with the Inter-Cooperative Council. Every year the members elected five people to be the main coordinators for the group -- or rather, they tried to elect five people, but there were never even five people running for the five positions. This was out of a membership of around 160. Folks, this is a serious leadership crisis. When nobody wants to help run the organization, the organization is in trouble. And compensating people to do a job is an excellent way to generate interest in the job. It's certainly not the only way, but it's still very, very effective. I pushed for years for the group to offer some modest compensation to its leaders. When the group finally took its first baby step in that direction, it wasn't long before they had willing candidates for every office -- and sometimes multiple candidates for the same office! The compensation wasn't the only factor involved in the renewed interest, but it was certainly important.


What qualifies for compensation?

Some might ask why only some people should be compensated when all the members of a co-op contribute labor. That's a good question, and it has a good answer: Because not all the work is equal. If few people want to do the work you're considering paying for, that's a good clue that that work is challenging enough that few people want to do it for free. Things that make a job worth paying for include:

  • Long hours, big time commitment
  • Boring, repetitive, or uninteresting work
  • Big responsibility
  • Lack of interest in the absence of compensation

This is very different from house labor in a typical co-op, which is usually fewer hours, less of a responsibility (not that's it's not important, but it's not the same thing as overseeing a million-dollar budget), and which is required of house members whether they get paid or not (i.e., a guaranteed workforce). ICC coordinator positions are a stark contrast -- they require more time, more responsibility, and nearly no one wants to do them without at least some form of modest compensation.


What could you get out of compensating leaders?

You would never compensate leaders just for the hell of it. You would do only so if you need more interest or more accountability in your leadership positions. Here are some benefits from compensating leaders:

  • More people will be interested in applying to do the job.
  • You can even have contested positions. With multiple people interested in a job, all of a sudden the organization has a choice as to whom to pick. This can result in more qualified people in those positions, and happier members since they actually had an opportunity to play a part in the selection.
  • Leaders will be less likely to feel taken advantage of if they're receiving anything tangible for their efforts.
  • Members have an easier ability to hold leaders accountable. Once someone is paid to do a job, they're really expected to do it, and to do it well. How easy is it to hold someone's feet to the fire over doing a poor job when they were doing it for free?


How and how much to pay?

Compensation can be tricky because you have to make certain not to run afoul of labor laws. If your method of compensation makes it seem like the leaders are workers then you'll be subject to various labor laws and required to pay payroll taxes. It will definitely pay to consult with an attorney beforehand to design a way to reward leaders that won't run you afoul of the IRS. ICC's method is to award scholarships, in the form of a discount off monthly room charges.

Starting from scratch, it's hard to figure out exactly how much compensation will be fair, and effective in recruiting potential leaders. Probably the minimum is around $4-5/hr. for students who will be spending around 4-8 hours a week on their projects. Yes, that's below minimum wage, but the point isn't to make leadership positions into a job (unless the organization can afford it), it's to make the positions attractive enough so that people will take them. Nobody would take a job for $4-5/hr. But someone might decide to serve their co-op for $4-5/hr. -- while they wouldn't want to serve their co-op for $0/hr.


How to afford it?

Of course, money is always a concern. Many co-ops and nonprofits operate on a shoestring budget and rightly wonder whether they can afford to pay their leadership. A better question might be: Can you afford not to? Or more specifically: How much is good leadership worth to you? That's what it comes down to. Imagine an organization with active, effective leaders, who got stuff done, moved the organization forward, and motivated and involved the rest of the membership. Clearly that is worth something. The only question is how much. $1000, $5000, $10,000? The answer of course will be unique to every organization, but the thing to focus on is how much an improved organization is worth.

And remember, you can always start small and increase the compensation if it doesn't elicit the desired effects. And you can always scrap the whole thing too if you decided it didn't work out.



If you compensate your leaders you want to make certain you're getting what you pay for. If anyone can get the compensation no matter how poor of a job they do, then it may turn out that they do a fairly poor job. The board of directors should decide what criteria has to be met to consider the job done and compensation earned, as well as who will make the determination whether the criteria were met. Yes, it's a little more hassle, but it helps ensure that the work is getting done and getting done properly. It's another good check on organizational performance.


Closing: A story

The Yellow Bike Project is an Austin group which fixes up old bikes, paints them yellow, and leaves them around town for people to use for free. At a recent meeting a member suggested that the group apply for grant money which could be used to pay coordinators to hold workshops on bike repair for kids and people having to do Community Service work. Up until then 100% of the work had been done by volunteers, and nobody was ever paid anything for their service. While the grant proposal was being discussed, one of the founders of the project said that the organization said it was time to reflect: the organization was seven years old and they hadn't made nearly as much progress as they'd hoped. They have all these dozens of old bike frames and parts lying around that weren't getting fixed up and into the hands of the community. He said that it was clear that the volunteer-only model wasn't working, and that if paying coordinators a modest amount was what it took to get the ball rolling, they should do so. Interestingly, this founder pointed out that over the years whenever someone suggested paying coordinators HE had been the one to shoot it down, but after seven years he had a change of heart, and decided that paying coordinators was the only way to kick the organization into high gear.

I tell this story this story to point out that even those who are staunchly opposed to the idea of compensating leaders can change their minds once enough time passes that they can see that the volunteer-only model didn't work. The problem is, many people in co-ops are brand-new, and won't even stick around that long. That's why I wrote this essay, in hopes of providing some ideas that it might otherwise take several years of experience to convince you of. Of course, you don't have to take my word for it, but trying to base your decisions and opinions on the long-term rather than the short-term is usually a good idea.

(By the way, at that Yellow Bike Project meeting detailed above, someone dissented to the proposal to pay coordinators, so it died -- YBP works on consensus and so one person has the ability to stop the show. This is one reason I don't like consensus, because it's minority rule, giving the greatest power to the smallest number of people -- in this case one person. That one person kept the organization from moving forward. But my problems with consensus is another topic for another time.... :)   )

--MBJ, April 2004

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