Worker coops need support to get started and become successful. As a still relatively uncommon business form, the legal process of incorporating a cooperative can be challenging. Simple “templates” do not yet exist, and cooperatives in formation will need legal assistance. Workers who have not previously owned their own business may need training in business and management skills, and the developing business may need financing to grow. While in theory these needs are not dissimilar from those of other business startups, in practice banks, attorneys, and economic development agencies are often unfamiliar with cooperatives and may not know how to evaluate and assist them. And as collectively-managed enterprises, cooperatives have another, unique set of training needs. Their owners need to develop collaboration skills and knowledge about democratic management models and enabling technologies.
Recognizing these needs, and the potential for worker cooperatives to redress growing income inequality and contribute to a strong local economy, several cities have recently made major investments in creating a local support infrastructure for worker cooperatives. Beginning in 2015, New York City has invested over $8 million in more than a dozen organizations that support worker cooperatives in various ways. These include Green Worker Cooperatives, which offers a 70-hour Coop Academy that helps teams go from business idea to cooperative through training, mentoring, legal assistance, and an ongoing peer support network; the Working World non-extractive loan fund, and other organizations that offer legal, conversion, training, and business development support. With this investment, New York has become the fastest growing region for worker cooperatives in the country, according to the 2017 State of the Sector report from the Democracy at Work Institute.
Other cities are making similar commitments to cooperative development. Madison, Wisconsin, a city with a long history of worker-owned cooperatives, has allocated $3 million of city funding over five years. The city was already home to a number of cooperative support organizations, including the University of Wisconsin Center for Cooperatives (UWCC) and MadWorC, a coalition of Madison worker cooperatives. Galvanized by the attacks of Governor Scott Walker on Wisconsin’s labor unions and a 2013 report finding that Madison has the greatest black/white racial economic and educational disparities of any city in the country, a number of Madison community organizations, unions, and city officials became interested in cooperatives as a tool for economic empowerment.
In 2015, the city released a request for proposals to support worker cooperative development targeted to low-wage workers and communities of color. A group of 28 organizations came together as a coalition to write what became the only proposal submitted. The Madison Cooperative Development Coalition (MCDC) includes community-based organizations, such as Centro Hispano and the Chamber for Black Economic Empowerment, unions and labor groups, local credit unions and cooperatives, and a number cooperative development organizations. The project aims to support conversions of existing businesses to cooperatives and help create new cooperatives to fill community needs and create economic opportunities.
A unique and powerful feature of the program is a focus on broad building capacity to support cooperative development within the community and labor organizations, rather than keeping it in the hands of dedicated coop developers. As Anne Reynolds of UWCC, one of the lead writers on the proposal, told a UW researcher, “Most of the people around the table came with a tremendous amount of cynicism about how grants operate and how nonprofits operate in communities, especially when they see that the purpose of the grant is to support low-income and people of color communities…I think we quickly realized that … needed to be upended in order to actually be successful.” By the end of the five year project, Madison should have a dense network of coop-savvy organizations, embedded within the community, to support developing coops.
So, is a multi-million dollar city budget necessary to support coop development? No. Other cities have taken a more grassroots approach to growing cooperative businesses. Cooperation Jackson aims to build a solidarity economy in Jackson, Mississippi through a network of cooperatives and cooperative support infrastructure. They operate a coop incubator that has so far launched farm, compost, and lawn care cooperatives; a community land trust that is protecting housing and land from gentrification; and a cooperative education and training center. They are currently developing a community production center with a fabrication laboratory and 3-D printing maker space, scheduled to open in 2019. A cooperative bank is in their long terms plans.
Another resource to provide initial support to folks interested in starting or converting to cooperatives are the regional Small Business Development Centers (SBDCs). Funded by the US Small Business Administration (SBA), the New York SBDCs are a statewide network of centers that provide no-cost assistance to entrepreneurs and small businesses. Similar networks exist around the country. Precisely what programming they offer is up to each individual center. However, the 2018 Main Street Employee Ownership Act — discussed further in the third post in this series — directs the SBA to works with SBDCs to provide more information and assistance to businesses looking to start or convert to employee ownership.
In New York State, we are fortunate to have two longtime cooperators on regional SBDC teams: Frank Cetera, at the Onodogaga (Syracuse) SBDC and Andrew Delmonte in Buffalo. Frank has been supporting coops beyond the Syracuse area for years, most recently with a webinar series last summer on Pathways to Ownership. Andrew runs the Buffalo SBDC Social Enterprise Center, providing specialized assistance in planning, incorporation, and impact assessment to cooperatives, benefit corporations (B Corps) and other social enterprises.
Frank and Andrew are now teaming up to help other New York SBDC offices support coop development, preparing materials for both advisors and cooperators, and making site visits to SBDCs around the state, including here in the Hudson Valley. Frank also tells me that they are able to co-counsel with a local advisor, providing more specialized support when needed. (Indeed, Andrew helped the Kingston Food Coop find the Buffalo-based lawyer who was able to help us navigate the state incorporation process. Thanks, Andrew!)
So we already have the beginning foundations of a local coop support ecosystem here in the Hudson Valley. Let’s see what we can do now to grow it!