Webinar: The Cooperative Growth Ecosystem Part of the Building Inclusive Economy Series

January 29, 2016To learn more, visit www.CitiCommunityDevelopment.com

Building the Inclusive Economy Series

Welcome and introduction to the“Building the Inclusive Economy” series

Tina Corea, Citi Community Development

Agenda1.      Tina Corea, Citi Community Development

Welcome and introduction to Building the Inclusive Economy series

2.      Cy Richardson, National Urban League 

3. Joyce Pisnanont, National Coalition for Asian Pacific American               Community DevelopmentRole of intermediaries and business development

4.     Melissa Hoover, Democracy at Work InstituteOverview, historical context, opportunities and success factors

5.     Hilary Abell, Project EquityCase studies and lessons learned

6.     Q&A

Examining worker cooperatives’ potential to address structural inequality, asset building &  wealth creation

Addressing structural inequality, asset building and wealth creation

Cy Richardson, National Urban League

National Urban League

Much of the Urban League’s work centers on community‐based economic development and how to bring economic empowerment and prosperity to underdeveloped, marginalized and underserved communities, particularly communities of color suffering from institutional racism and economic inequality. 

• Cooperatives can enable African Americans to have more control of their income, wealth creation, and work situation — particularly if it’s a worker‐owned co‐op

• African Americans have a long, but little‐known history of cooperative business development.

• Today many black worker cooperatives are located in underserved neighborhoods and were created by people of color and immigrants as a form of economic empowerment.

http://nul.iamempowered.com/

• A primary barrier to groups seeking to form a worker cooperative is equity capital. 

– Need to better understand the potential the conversion model holds for company owners that wish to sell to their employees as a worker‐owned cooperative. 

– Surveys and focus groups facilitated through the Urban League’s Entrepreneurship Centers suggest few African American small business owners, looking to exit their industry or retire, are even aware that they can sell their business to their employees as a co‐op and defer capital gains. 

– **There is more work to do to evaluate the economic impacts of cooperatives on their members and communities, particularly asset building and wealth creation, increased economic activity and job creation, and leadership development.

http://nul.iamempowered.com/

Understanding Opportunity and Impact

Role of intermediaries and business development

Joyce Pisnanont, National CAPACD

www.nationalcapacd.org

www.nationalcapacd.org

www.nationalcapacd.org

www.nationalcapacd.org

Overview, historical context, opportunities and success factors

Melissa Hoover, Democracy at Work Institute

What is a worker cooperative?

• A worker cooperative is a values‐driven business that is owned and controlled by the people who work in it. 

• Members (workers) invest in the business 

• They share profits

• They share decision‐making responsibilities at the governance level*

Some benefits of worker cooperatives:

• Create high‐quality locally rooted jobs

• Retain local community‐serving businesses

• Democratize wealth and address inequality at its root: ownership and assets

• Build skills and leadership among workers who may have limited access to these opportunities. 

OVERVIEW

GROWTH OF WORKER COOPERATIVES

Labor-intensive industries

People locked out of the job market

First-time entrepreneurs Contractors and contingent workers

Values-based businesses

WHO and WHY?

Entrepreneurs exiting

In 2016, people are using worker cooperatives to enter, not exit, the economy.

HISTORICAL CONTEXT

MUTUAL AID SOCIETIES * STRIKE SUPPORT * ECONOMIC SELF‐HELP *

“Consequently we find that the spirit of revolt which tried to co‐operate by means of insurrection led to widespread organization for the rescue of fugitive slaves among Negroes themselves, and developed before the war in the North and during and after the war in the South, into various co‐operative efforts toward economic emancipation and land‐buying. Gradually these efforts led to co‐operative business, building and loan associations and trade unions.” – W.E.B DuBois, 1906

Long history of cooperative enterprise in communities of color

HISTORICAL CONTEXT

Cooperatives and the Civil Rights Movement, a story: 

The Progressive Club (consumer coop, Johns Island, SC) ran a Citizenship School with SCLC that trained civil rights leaders from A. Philip Randolph to Ella Baker and Fannie Lou Hamer to Congressman John Lewis (D‐Ga.)

GROWING OPPORTUNITY & INTEREST FROM CITIES

Cooperative Conversions: business owners sell to their employees 

• Coming “silver tsunami” of retirements• Will be particularly acute in 

communities of color• Potential small business closure crisis• Opportunity for the largest 

generational wealth transfer in history

Workers to Owners national collaborative to support and expand cooperative conversions, especially in communities of color.

Cooperative Capacity

1 Business Development

2Ecosystem

Development3

Inside the business

The business

Outside the business

WHAT IS COOPERATIVE DEVELOPMENT?

Success factors and scale modelsECONOMIC DEVELOPMENTwith worker cooperatives

ECONOMIC DEVELOPMENTwith worker cooperatives

Know and replicate thesuccess factors for scale

in worker cooperative development

• appropriate capital: patient, equity‐like• linked technical assistance: accompanies capital• connections to local markets: anchors, procurement  • supportive policy: incentives, procurement, enabling 

legislation

Case studies and lessons learned

Hilary Abell, Project Equity 

We see multiple paths to scale

Start and grow SMALL businesses

Start and grow BIG businesses

Convert EXISTING businesses

Worker coopsat scale

From an ecosystem perspective, the question is: How can diverse actors create an ecosystem that accelerates growth along any or all of these pathways?

www.project‐equity.org | info@project‐equity.org

Cooperative Home Care AssociatesBronx, NY

WAGES/ProsperaOakland, CA

Worker Coop Startup Roadmap

FeasibilityFeasibility Predevelop‐mentPredevelop‐ment StartupStartup GrowthGrowth MaturityMaturity

Assess possible business opportunities and readiness to take on coop development.

Raise funds for first 1‐2 years of development; assemble team for coop management, training and technical assistance; develop business plan.

Recruit and train founding employees / worker‐owners; secure startup loan and open for business; convene advisors and potential board members.

Build sales, operational efficiency and customer base; create ongoing training program for employees/worker‐owners; strengthen board governance and worker‐owner participation.

Grow sales to point where coop can pay its full management and operational costs; create plan for ongoing business and human development.

Up to 5 years3‐6 months 6‐12 months 3‐6 months 3‐4 years

© Project Equity 2016www.project‐equity.org | info@project‐equity.org

A different approach: worker cooperative conversions

(1) The creation of a new business entity that is a worker‐owned cooperative (most typically)

(2) A sales transaction to sell the existing business to the worker coop, typically financed by an outside lender, by the selling owner or by issuing non‐voting equity shares 

(3) A transition of roles and culture among new worker‐owners to take on the ownership responsibility of the new entity and run it under democratic governance 

© Project Equity 2016 www.project‐equity.org | info@project‐equity.org

New Era WindowsChicago, IL

Cooperative Conversion Roadmap

ExploreExplore AssessAssess PreparePrepare ConvertConvert SupportSupport

Initial proponent poses idea, gathers information, and gets people interested.

Assessment team forms, does financial feasibility analysis, current state / gap analysis and, if merited, initial employee education & coop design; defines decision process and timeline.

Conversion team forms, secures valuation, identifies financing options, drafts management & decision‐making frameworks for new coop, drafts by‐laws, commits to sale; employee and ownereducation.

Buyers & sellers execute financing option and complete sale transaction.Conversion team finalizes bylaws, executes management & governance structures.

Consultants or internal team provide training & support for new worker‐owners, support implementation of governance, management & decision‐making processes, help owner with exit or evolving role.

CULTURALTRANSFORMATON

DECISION TO ASSESS

DECISION TO PURSUE

FORMAL COMMITMENT

CONVERSION TRANSACTION

© Project Equity 2016  www.project‐equity.org | info@project‐equity.org

Cooperative Growth Ecosystem Framework

Essential Elements

Member skills & capacity

Financing

Cooperative Developers

Technical Assistance

ImportantElements

Business Supports

Connection to Market

Policy

Advocacy Partnerships

Environmental Elements

Values‐Driven Businesses

Attitudes & Culture 

Cooperative Education

© Democracy at Work Institute and Project Equity 2016

Questions?

Tina CoreaCiti Community Development

Cy RichardsonNational Urban League

Joyce PisnanontNational CAPACD

Hilary AbellProject Equity

Melissa HooverDemocracy at Work Institute

christina.corea@citi.com

crichardson@nul.org joyce@nationalcapacd.org

hilary@project‐equity.org

mhoover@institute.coop

Speaker Contact Information

Thank YouTo learn more about the series and to download the report, visit: www.citicommunitydevelopment.com