Descentralization of the CSEs: deepening their connections

Community Social Enterprises have been a key focus of the WPF work these past two years. This brief document was written for  people participating in these innovative entities to set up key meetings for the coming year. We make it available here because it also provides a good summary of what has been accomplished and what lies ahead this coming year, 

Descentralization of the CSE deepening their connections

Windshield wipers are bigger than rearview mirrors, because the road ahead is larger than the road you leave behind.

This is the draft of a text in light of the assembly to be held on January 7th. It is a text written with a lot of anticipation. Improving the CSEs in the service of communities is what motivates us. For that purpose we are reading the context, the progress made, we are looking “through the rearview mirror” at other organizations. On that basis we are looking at where to go and how to build new futures.

1.    The seeds of death and life

Dawn tells you what the day will be like, goes the saying in Spanish.  An organization tends to be what it was in its beginnings. That genesis lasts between 3-5 years during which period a group organizes and approves their rules.

There are organizations that begin with enthusiasm, but do not set their rules, do not analyze their processes, and do not innovate their actions in the face of harsh realities. These organizations turn hierarchical, where the people who hold titles tend to take advantage of other people´s resources and the network itself for personal benefit. They are organizations that after reaching a certain level, do not grow any more and begin to fall apart. This happens for several reasons, some of which are:

  • The vertical and authoritarian structures on which our societies move, from the family, State, Church and any other organization, which are all absorbing.
  • The prevalence of the law of the jungle which penetrates  any new organization
  • The spirit of capitalism where everything is money and money in the short term, at the cost of human life and nature, which blurs our vision
  • The weakness of indigenous and peasant institutions which are not able to find their own wellsprings, which is why they are susceptible to being coopted.

Community Social Enterprises (CSEs) in San Juan del Río Coco (SJRC) are our concern. They are in the genesis phase. We started with a store, we added other stores, the distributor and the peasant market, we moved into coffee and beans. We did it with resources of people from the communities themselves and from outside the communities. Even though the store and roaster are in one community, at least in three of them, both are supervised separately. Looking at Figure 1, what do we see?

  • Certain degree of centralization in functions, decisions and resources in the distributor/supervision in the town.
  • Because of the strength of the communities with their stores and the fact that the administrators participate in the bean and coffee trade, there is a certain degree of counterweight from the communities
  • Through the resources of their shareholders there is distribution of earnings and this is a decentralizing force, which is why an accounting is done to the shareholders
  • There is dependency on a few people, even though this has gradually improved, step by step, with a strong role on the part of Freddy, Elix, the store administrators, the superviser and the person in charge of the distributor. The CSEs have a base of 10 people[1].

What is most distinctive of the CSEs is the fact that we have tried to constantly do self study  in order to innovate in terms of actions and rules. Also the CSEs have made progress in having a group of administrators who combine technical, administrative skills, honesty and effort.

Excessive centralization or excessive decentralization leads to the death of an organization. A balance is needed depending on the circumstances in which it moves, which is like getting “the perfect soup”: neither too salty nor too bland, neither too much fat nor not enough bone stock…

2.    Reasons to look for “the perfect soup”

Why the turn to a more decentralized form of organization? We need to read the context that we are living in Central America and the world. The brutal inequality in which we live is essentially the result of centralizing decisions and concentrating wealth. The destruction of the planet is the effect of the domination of the market where “money attracts more money”. The CSEs need to show a different path.

First, what most concerns us is the sustainability of the CSEs. In the history of organizations, we see that the great majority of them are sustainable based on centralizing themselves, but they are like spiders, once their heads are crushed (“ the leader”), they fall apart like a deck of cards. We are looking for sustainability inspired in the starfish, which has no known head and when it is cut in half turns into two starfish.

Secondly, we want each part of the CSEs to be autonomous, understanding autonomy to be having more connections. Autonomy is not separating oneself and isolating oneself. Organizations that centralize instead separate from and isolate their member organizations, we see this in some second tier cooperatives where the first tier cooperatives function in an isolated way and dependent on one or two people. The CSEs should deepen their connections with communities, their members, and organizations that go beyond country borders, and that connection should be mediated by accepted rules arrived at through consensus.

Third, it is important that communities have more ownership over their organizations, make them their own and use them as theirs. Centralist organizations have their own expressions: “The company of Fabiola”, “organizations of WPF” and “company with a lot of money” – it is like when they say “the cooperative of Mundito”, or the “cooperative of Luisa”, this shows the strength of the elites reproduced by all these people, and at the same time reveals the fact that people detect it and describe it as such, as elitist organizations. These expressions make the CSEs appear as if they were spiders, and this can carry risks for the CSEs. If the communities take ownership over their organizations, “the money will be attracted” by the communities and not the reverse.

3.    Path of decentralization as more connections

The idea of decentralization in the CSEs is not isolating nor separating themselves. It is deepening the connections among the different parts and building a better future. It is awakening and cultivating an awareness that small stones and big stones are equally important to build a pyramid, a house or a bridge.

In these two years we have a dozen people who understand and move the CSEs. We also have stores, roasters and services like harvest collection and drying the harvest in the communities themselves. How is it possible to decentralize in the sense of deepening connections?

  • That people get more interested in their initiatives. That there be more connection in a community between shareholders and clients (store and roaster), and from there communities connect more through the distributor, coffee-bean processing mill. Horizontal connection.
  • That each community administer their store, roaster and other services that they organize. That in each community their surplus be distributed in accordance with the actions of their shareholders. That each community analyze their possibility of growth based on their own efforts and make the decisions that are theirs to make, including the investments to be made. And that each community work on their strategy about how to attract more shareholders.
  • That the communities be the owners of services like the coffee harvest collection-processing-commercialization, and  the distributor for the stores.

Sounds good. How do we organize it?

3.1  Organization

Figure 2 shows the initiatives which we are working on.

  • Communities with their initatives (store, roaster) have shareholders, shareholder assemblies and their respective supervisors.
  • The two services, coffee commerce (CC) and the Distributor, Store and Peasant Market (DSPM) are also governed by their assemblies, whose members are representatives of the communities that are the owners of those services: see purple arrows going in one direction in Figure 2. In the case of CC it is in alliance with WPF and through that we reach the US – an alliance which is working on a new model for commerce in coffee.
  • The percentage of the distribution for the social fund, maintenance-investment and individual profit sharing will be similar for all the communities and services. It is the basis of the connection.
  • Every 3 months, prior to the quarterly distribution of profits, the advising team will supervise each community and each service, basically to review the good work of the supervisors.

Let us get a little more specific. Let´s begin with the communities.

  • Community is a geographic place represented by its shareholders who invest in stores and roasters who are in their geographic space, and who invest in the DSPM and the CC.
  • Each community with their store and roaster is supported by its shareholders and their respective assemblies. In their first assembly (March 2022) in each community with their shareholders they must choose outside shareholders who have requested buying shares in that community and set the amount of their shares, as well as name their supervisor (see Box 1). For that purpose, the supervisor of the CSEs on March 10, 2022 will provide the data on the value of the store and the roaster, the amount that they must reach with the shares. The supervisor will also provide a table with the social fund and the maintenance fund in proportion to their shares.
  • A community can have shares in other communities; also people from other communities can have shares in another community, their acceptance is decided by each community. This avoids social inbreeding.
  • The shareholders of the community where the store and the roaster are will have a minimum of 51% of the shares. If they do not reach this amount in the beginning, they must define in their assembly a strategy to achieve it in year 1.
  • Monthly supervision will be carried out by people that are named by the assembly for each store. Each administrator records data on paper and on the laptop, does their respective cash count. This monthly supervision will be published on the CSE whatsapp.
  • Communities will be the shareholders of the DSPM and the CC
  • Each community will name their representative of the DSPM and CC for a two year term. Once that period has ended they cannot be re-elected so that they might scale up to other forms of organization.

Distributor, Store and Peasant Market

  • Communities hold 100% of the shares of the DSPM.
  • One or two supervisors from the communities supervise the DSPM
  • There will be 2 people responsible for the DSPM: one person in the distributor and bringing in products, and another person dealing with the store and the peasant market. Payment will be a fixed amount until DSPM is able to achieve profits where 30% of those profits is equal to or greater than the fixed amount.
  • All products from the communities will come through the community stores, except for those people who take their product directly to SJRC. The profits between the store and the DSPM for products that go through the stores will be shared 50-50.
  • The beans that are the object of the alliance between SJRC and Waslala will be under the responsibility of the supervisor of the distributor, at least in its first phase.
  • The amount of the salary for both people will be defined by the new assembly of the DSPM (March 2022).

Coffee Commerce

  • Communities hold 100% of the shares.
  • One or two of the supervisors of the communities will supervise the service of the CC.
  • There will be one person in charge with a fixed salary or will earn 30% of the profits, something yet to be studied. It would seem that we need a person who would organize the distribution of roasted, ground coffee in the country, starting in the communities and who would organize a network of coffee shops including other investors. Maybe the best market is in the country itself.

3.2  Rules

The rules already approved in the CSEs are essentially the same rules that are going to govern each community.

We will only have to add some referring to:

  • The fact that the communities are the owners of the DSPM and CC
  • The payment of the people who coordinate the DSPM and CC
  •  50% of earnings for the store and 50% for DSPM with peasant products that the stores send to the peasant market
  • Things that involve the CC…,

4.    Prospects

Shaping this decentralization process understood as a deepening of connections, we will have:

  • Every 3 months 7 assemblies will be held (5 in communities and 2 around the DSPM and CC) – assemblies are learning spaces, in their time we will work on guides about how we can grow in these spaces. Let us note that the CSEs will be very assembly focused, something that it is important to encourage and make happen.
  • Each community will be interested in knowing how they are doing with the distribution of profits, the progress in each community.
  • Every 6 months we will organize an Encounter of Board members from the 7 assemblies, an important space for building a common vision, to learn from  experiences and to work on common challenges – the idea of exchange as the other face of trade, we should be thinking about it, in some communities in Honduras they hold a “corn festival” or “corn cob festival” where the entire community comes together once a year.
  • Certificate programs which will be very important, we might organize them jointly with Waslala. Throughout this year we have held a series of Encounters.

5.    Calendar-plan

Calendar of activities in the process of the reorganization of the CSEs
Date Activities People responsible
Nov 23 to Dec 7 Explain to people the rules around coffee Freddy, Fabiola, Elix, and administrators of Samarkanda, SJ Ojoche & San Antonio
Dec 8 Report on volume of coffee collected and notes on visits made Fabiola, Elix & Freddy
Dec 9 Decision with WPF René
Dec 10 Reaction of CSE Fabiola, Freddy & Elix
Dec 11 First draft of decentralization proposal of the CSEs René
Dec 11 – Jan 7 First draft on calculation of shares by communities * Fabiola
Jan 7 Assembly Board
Jan 7 – Feb 7 Supervisors are chosen Each community
March 1-4 2 days Encounter of administrators, candidates to be supervisors participate; 2 day formation of supervisors Fabiola & René
March 7-11 Internship of supervisors in stores and roasters Store administrators
March 10 Send refined version of report on shares, in addition to the financial report to CSEs Fabiola
March 14 – 28 Each community holds their assembly and defines their shares and amount that fits with the amount of assigned shares Coordination of communities
April 8 CSE Assembly: results of assemblies in each community and the DSPM are reviewed Board
* For each community: 1) value of the roaster (what it cost plus investments) and the store; 2) value of DSPM shares; 3) social fund and maintenance fund that depend on number of shares

Final note:

Please write with any comments. Remember that your ideas have enormous value.

René Mendoza

San Juan Rio Coco, November 30, 2021


[1] Really there are more people, like  Claudio, Ernesto-Cristina, Toño, Carmensa-Flavio, Uriel, Aura…They are leaders with enormous capacities in different areas:  Toño-Ernesto-Chango in coffee, Carmensa-Cristina in providing follow up on processes, Claudio in organization. We need to take better advantage of them. Now with the decentralization all these people will be able to participate a lot more effectively.

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