Rainbow Grocery Cooperative is a worker-owned and run food cooperative located in San Francisco, California. Founded in 1975, Rainbow Grocery is a member of NoBAWC and the United States Federation of Worker Cooperatives.
History
Rainbow Grocery began as a bulk food-buying program by followers of Guru Maharaji (Prem Pal Rawat), a spiritual teacher San Francisco in the early 1970s; it quickly became a secular project. The buying program was coordinated by an ashram member who worked with the People's Common Operating Warehouse of San Francisco, a political project using food distribution as a form of community organizing and political education. The People's Warehouse was striving to build a “People’s Food System,” including a network of small community food stores throughout San Francisco.
In the summer 1975, Rainbow Grocery opened a storefront on 16th Street in the Mission District of San Francisco. At this time, the People's Food System already had two stores in San Francisco: Seeds of Life, in the lower Mission District, and Noe Valley Community Store. The ashram members who organized the opening of Rainbow Grocery did so largely by studying and copying the operations of the Noe Valley store. Rainbow Grocery opened exclusively reliant on volunteer labor. After a first few months, there was enough income to pay the project's two most active workers. As the store became increasingly successful, it was able to bring more workers on as paid staff, although people were generally not brought on to payroll until after several months of consistent volunteering. As the staff at Rainbow grew larger, the need for more defined organizational relationships also increased.
For the purpose of simplicity, Rainbow was started under the legal ownership of two of its founders. Though the store operated collectively, this meant that these two people were responsible for reporting Rainbow's operations on their tax forms and were responsible for any debts or lawsuits. In 1976, ownership was transferred to a nonprofit corporation. When incorporating, Rainbow simply adapted the corporate documents of the People's Warehouse, which included the Warehouse's statement of six political principles underlying the People's Food System. Including the six principles was done, in part, as an attempt to appease people at the Warehouse's who thought Rainbow was not political enough. Adapting the Warehouse's incorporation documents also simplified the legal work of incorporating. Unfortunately, the Warehouse's legal model was not very appropriate or functional. The Warehouse had written up their incorporation documents with the hopes of obtaining tax-exempt charitable status, which they were unable to do. While Rainbow's workers already knew Rainbow Grocery would not qualify as a tax-exempt charity, they still incorporated using the nonprofit model of the Warehouse.
Rainbow started generating financial surpluses soon after incorporating as a nonprofit. In order to avoid generating a taxable profit, Rainbow distributed its financial surplus by increasing worker compensation and investing in expansion. Rainbow's first substantial expansion, in 1978, was the opening of a general store (selling vitamins, dry goods, housewares, books, clothing etc.). It was located a few doors down from the grocery store. The general store initially ran at a considerable loss and became a significant financial drain on the grocery store. This situation eventually reversed and the general store became a strong support to the financial health of Rainbow Grocery.