Webinar: The Cooperative Growth Ecosystem · Welcome and introduction to Building the Inclusive...
Transcript of Webinar: The Cooperative Growth Ecosystem · Welcome and introduction to Building the Inclusive...
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
[email protected] [email protected]
hilary@project‐equity.org
Speaker Contact Information
Thank YouTo learn more about the series and to download the report, visit: www.citicommunitydevelopment.com