POCA’s Finances or Transparency is a Currency

One of POCA's goals is financial transparency. Transparency means different things to different people; it can mean just displaying a bunch of spreadsheets, liability and equity columns, profit and loss statements, with no context and no explanation. But is it really transparency if you can't understand it unless you are an accountant? We don't think so, which is why this page on POCA's finances comes with a narrative.

First, some financial history and financial context.

Like the business model that individual community acupuncture clinics use, the business model that CAN used and that POCA is using is a social business model. That means: the goal is not to accumulate a lot of money in the business, or for anyone to be able to take money out of the business in the form of profit. The goal is to do as much good as we can do, as long as we can break even and remain sustainable. If there are profits, they will be reinvested into the business.

When we founded CAN, the goal was to get the word out about community acupuncture – mostly to acupuncturists — while preserving the spirit behind the business model. The easiest way to do that was to create a membership-based website and a culture that encouraged acupuncturists to freely share information and support (you could call this social capital). The object of acupuncturists paying for CAN memberships was to generate enough income to maintain a fairly sophisticated website in order to organize the social capital/ information and support that members were offering each other. There was enough interest in CAN that membership fees generated a little more money than that, which we used to provide travel stipends for volunteer CAN Board members to meet once a year, and to partially fund the Community Acupuncture Documentary. CAN's total budget and income was less than $20,000 per year.

As more and more community acupuncture clinics opened, it became clear that making acupuncture accessible to lots of patients over the long haul was going to require more sophisticated systems than we had. During the recession, banks stopped offering credit to small start-up businesses, and CAN members kept bringing up microlending. Clinics, if they successfully made it past the start-up stage, faced all the problems and opportunities of becoming employers. We realized that community acupuncture's survival might require a new focus on economics rather than ideology. At the same time, our social capital – the goodwill generated by the model amongst both acupuncturists and patients – was growing exponentially, and yet we had no way to tap it, organize it, or convert it into financial capital.

After a lot of flailing about and a lot of research, we stumbled across the idea of creating a multi-stakeholder cooperative. It seemed to solve a great many of our problems at once, especially the problem of credit; a cooperative is uniquely designed to make loans between its members very easy. As our accountant commented, POCA is essentially a bank for social and financial capital: a bank created to support the community acupuncture movement. Running a bank, however, requires considerably more infrastructure than simply running a website, which is mostly what CAN was.

Because there is, currently, nothing that resembles POCA in the U.S., we have no idea how much social and financial capital we are going to be able to raise and organize and mobilize. We have high hopes, but very little else to go on. And so designing POCA's budget is uniquely challenging.

The first priority is to break even. One of POCA's requirements that is different from CAN's requirements is the need for paid staff. It is not wise to run a membership organization that is designed to include at least 100,000 members, and that hopes to raise millions of dollars in capital, with volunteers alone. POCA has a part-time membership coordinator and a part-time financial coordinator, who are supervised by POCA's volunteer Board of Directors. Both of these positions can grow to full time if POCA's budget allows. The minimum that POCA needs to break even and to continue to exist is a small part-time staff, an office, a computer, a phone, a bank account, and a website. We thought it was safe to assume that POCA could at least generate the same amount of money that CAN generated, by offering its famously comprehensive website to acupuncturists for a membership fee, and by our calculations, that money allows POCA to stay open for business as a bank for social and financial capital. It doesn't allow POCA to actually do business, however, just to keep its doors open for the possibility. In order for POCA to do business, it needs more members than just acupuncturists.

What POCA can accomplish will be directly proportionate to how many members POCA has, and how much time, energy, and money those members are able to offer the cooperative. POCA is a social business; the dividends that the members of the cooperative receive will not be financial, but social. It costs about $7500 to set up a brand new community acupuncture clinic; that's the cost of 300 Community Member/Patient POCA memberships. If 300 patients invest $25 into POCA, the dividend they could receive is a $7500 microloan to support a new community acupuncture clinic in a city that doesn't have community acupuncture. The going rate for a small, private acupuncture school is about $3 million, so if 120,000 patient members each invest $25 into POCA, the cooperative might be able to start its own acupuncture school to train community acupuncturists. The only limits of what POCA can accomplish are how many people are willing to contribute their social and financial capital to the community acupuncture movement.