Radical Routes is a secondary co-op. All of its members are member co-ops who benefit and financially engage in two major ways:
- member payments and working group activities
- the loan mechanism - borrowing money to fund projects (mostly housing)
¶ Member payments and Working groups
Members make a quarterly payment towards the running of the working groups, which provide services, tools, training, support and administration for the network and the individual members. This includes everything from childcare at gatherings to making sure expense claims get paid, by way of mediation support and creating legal documents!
Members pay in, and set the budgets which get paid out.
Working groups have core members who can sign off payments, and other volunteers who help out in various ways.
¶ Loan Mechanism
The more fiddly side of the Radical Routes finance structure is the loan mechanism. This is better known and a little bit more complicated.
Rootstock (soon to be merged with RR) is an investor co-op that individuals and co-ops can put money into. It then proceeds to give that cash to Radical Routes in exchange for shares. This is where most of RR's cash comes from. Rootstock is entirely set up to secure money for Radical Routes, and RR members are required to members of Rootstock, so that they have democratic control of that source of finance.
Radical Routes then has a load of cash, which means it can lend that money to co-ops. We only lend to our members, and we charge an interest rate that we can vary, but has stayed fixed for the last couple of decades! It is supposed to cover the admin costs of the loan mechanism, both in RR and Rootstock, and provide enough interest to Rootstock investors that it's worth their while keeping their money with us.
The Rootstock interest rate is officially 3%, but most investors ask for less than that. The Radical Routes interest rate is 6%. The rate we pay money from RR to Rootstock is decided annually, and depends on who needs the money most out of the two organisations.
This means we can keep on lending money, always making enough money to cover our costs, and when the cash is repaid, we can start lending to new co-ops. This has been running functionally for a long time.
¶ Bits and bobs
Radical Routes has a single long term loan that has been invested in RR for most of its life time, and is likely to be donated to us eventually.
Radical Routes has a few different bank accounts with 'ethical' banks.
Radical Routes contracts a 'finance worker', currently Catalyst Collective, to do the book-keeping, reporting and financial admin work for RR (and Rootstock has an admin worker too). This is funded half from the loan mechanism and half from working group budgets, as it supports both sides of the finances.
Radical Routes finance group helps Radical Routes set the budget, and helps housing co-ops put their loan applications in. There's some specific powers granted to finance group, but it should always be the member co-ops making the big decisions.