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The Case for Employee Ownership

Why philanthropy and government should invest in this powerful business model

The case for employee ownership is undisputed. As philanthropists and government leaders grapple with how to address both long-entrenched and newly-emerging forms of economic insecurity amid the COVID-19 crisis, there is no better time to look to effective but lesser-known solutions, such as employee ownership. Employee ownership has transformative effects on employee-owners and compounding benefits to their families and communities that will stand the test of time. When successful businesses become employee-owned, they create better working conditions, increase worker voice, and facilitate asset building for employee-owners—all while boosting business survival rates and keeping local economies strong.

The Case for Employee Ownership summarizes the evidence that broad-based employee ownership, in both Employee Stock Ownership Plans (ESOPs) and worker cooperatives, is a great value proposition for businesses, workers and communities, and shares some ways that state and local governments and philanthropic institutions are engaged in promoting it. The paper makes a strong case for increased investment by both government and philanthropy to help scale employee ownership.

Published May 2020


 

Participatory Management

Participatory management is a management philosophy and approach in which employees at all levels of an organization are engaged in planning and decision-making to optimize organizational effectiveness. PM emerged in the first half of the 20th century, spurred by the research and frameworks provided by Kurt Lewin and Rensis Likert, among others. The term gained wide recognition in the 1970s and 80s but has largely dropped from management literature since then, replaced in part by discussion of High Involvement Work Practices (or HIWPs), a similar concept.  PM is of particular interest to advocates and practitioners of employee ownership (EO) because of the synergistic relationship between PM and EO, and it is increasingly relevant to any business or organization given the growing value that workers and companies see in employee engagement. This paper is an overview of high involvement cultures at work and includes a case study on New Belgium Brewing, which is 100% ESOP and democratically managed.

Published February 2018.

 


 

Succession planning for purchasing cooperatives and their members

Purchasing cooperatives are a special type of highly engaged independent small business networks. A purchasing coop is itself a business, one that is owned by its member businesses—typically in the same industry—that come together to aggregate their purchasing power and receive other network benefits. Most purchasing coops exist to help independent businesses remain independently-owned. Some that may be more familiar include ACE Hardware, True Value and Carpet One. And, there are many in the business-to-business space that are less well known but provide vital services to local businesses around the United States.

One of their challenges is that, from our research, an estimated half of the member business owners are over age 55. Succession planning is critical to maintaining member companies in purchasing coops, and in any small business network. Project Equity partnered with National Cooperative Bank and the National Cooperative Business Association to look at how purchasing cooperatives can retain their member businesses through succession planning and employee ownership transitions.

Published July 2017.

 


 

Investment Capital for Worker Cooperatives

While the impact investing field has taken off in recent years and has influenced mainstream banking priorities, worker cooperatives are not yet a viable option for a typical impact investor interested in ‘investing with purpose.’ In these two publications, we address the question: What would it take for an investor to be able to easily target part of their investment portfolio to worker-owned cooperatives, to ‘mainstream’ the practice of investing in worker cooperatives?

Published: April 2017.

 


 

The Lending Opportunity of a Generation

LendingOpportunityOfAGenerationThis publication, jointly authored by Cooperative Fund of New England, Project Equity, and Democracy at Work Institute, answers Frequently Asked Questions about lending to worker coops that we often hear from lenders. This “primer” helps lenders learn about the opportunity and also details, about structuring deals from other lenders with experience with worker coop conversions. The publication includes five case of coop conversion financing.

Published: January 2016.

 


 

The Cooperative Growth Ecosystem 

CooperativeGrowthEcosystemThe Cooperative Growth Ecosystem framework encourages diverse stakeholders in the field of community economic development to invest in inclusive economic development by fostering cooperatively owned enterprises within a broader entrepreneurial “ecosystem.” It helps answer the question, “How can all the actors in a place work together strategically to turn the demand for worker cooperatives into the supply of what is needed to create them?”

Project Equity co-developed the Cooperative Growth Ecosystem framework, with the Democracy at Work Institute and piloted it as an analytical and strategy tool looking at five regions around the country.

Published: January 2016.

 


 

Case Studies: Business Conversions to Worker Cooperatives

Case Studies Business Conversions to Worker Cooperatives CoverThis collection of case studies shows a range of examples of how specific businesses have converted from traditional business structures to become worker owned. This is an important reference for businesses considering converting to a worker coop, as well as any individual who would like to learn more about the specifics of the worker cooperative conversions.

Published: April 2015.

 


 

Bay Area Blueprint: Worker Cooperatives as a Community Economic Development Strategy

This paper describes a project in the Bay Area of California to create a local action plan for moving towards scale and impact of worker cooperative development by engaging multi-sectoral actors. It includes a framework for assessing the opportunities in a local region to increase worker coops to benefit low wage workers, and takeaways for other regions that want to apply a similar approach.

Published: March 2015.

 


 

Worker Cooperatives: Pathways to Scale

Worker_Cooperatives_Pathways_To_Scale_CoverThe field of worker co-op development is just beginning to create the infrastructure and knowledge base needed to increase its scale and impact. This paper aims to help build the field of U.S. worker co-op development by providing a current view of the cooperative landscape and by analyzing factors that inhibit or promote cooperative development

Published: June 2014.

 

 

Interested in learning more?

Just released!

New studies in regions across the U.S., including Washington StateBerkeley and Long Beach, CA show millions of businesses at risk and point to employee ownership as a solution.

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