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Project Equity and Shared Capital Cooperative launch

Accelerate Employee Ownership 


Below are a few questions and answers about the announcement. For more information, please read the official press release here.

Accelerate Employee Ownership is a collaborative initiative of Project Equity and Shared Capital Cooperative to expand employee ownership and create and sustain high-quality jobs in local communities. 

This initiative was launched in 2019 with a seed investment from the Quality Jobs Fund, a collaborative project of the New World Foundation and the Federal Home Loan Bank of San Francisco

1. What is the launch of Accelerate Employee Ownership by Project Equity and Shared Capital Cooperative all about?

This is the public announcement of the launch of a new collaborative initiative, Accelerate Employee Ownership, whose purpose is to retain small businesses, keep them locally-rooted, help business owners retire well, and to bring the opportunity of business ownership to the employees. The initiative, enabled by a $5M seed investment from the Quality Jobs Fund, supports the sale of small businesses from small business owners to ownership by the employee base, most often as a retirement and succession plan for the selling owner.


2. What are Project Equity and Shared Capital Cooperative’s specific roles?

Project Equity and Shared Capital Cooperative, two national organizations, have brought together their complementary capabilities and strong track records of small business support to launch Accelerate Employee Ownership.

Project Equity raises awareness of employee ownership by partnering with a wide range of “business connectors” including local, regional and state governments to educate small business owners about this powerful and under-utilized succession option. Project Equity then provides expert guidance and hands on support every step of the way to help selling owners create their succession plans and transition their businesses to employee ownership. This strategy cements their legacy and gives them market value (often with significant tax benefits) for their life’s work.

Shared Capital provides financing for the sale of the businesses as they transition to employee ownership and to help the new employee-owned companies to grow and thrive. Shared Capital’s specialized small business financing is tailored to the unique needs of these business and is designed to be flexible and affordable.


3. Why is Accelerate Employee Ownership necessary?

The integrated approach that Accelerate Employee Ownership offers creates a path to business ownership for individuals in low-to middle-wage jobs and addresses the twin problems of low job quality and inevitable job loss as baby boomer business owners sell into the marketplace as they retire. Transitions to employee-owned businesses contribute to reversing the job loss cycle, building local equity, and creating renewed entrepreneurial opportunity in these companies.

The U.S. economy struggles to create quality jobs that offer wages high enough to allow working families to purchase homes in safe, nurturing communities where they can raise their families.

Combine this challenge with the decline of locally-owned small businesses that is only growing as the Silver Tsunami of baby boomer retirements sweeps our communities. Nearly half of small business owners nationally are baby boomers, who we know will continue to retire in droves over the next  5-15 years. The Silver Tsunami will have a huge impact on communities as small business owners will likely close or sell their businesses to out-of-area buyers, private equity or corporations. This puts local jobs at risk, further concentrates wealth, and squanders the legacy of small business ownership in communities.

Instead, Accelerate Employee Ownership provides an alternative that supports owners to retire, leaves the businesses they built intact and creates quality jobs and wealth-building opportunities for working families.


4. Can you explain the three-state focus of California, Arizona and Nevada?

Initial seed funding for Accelerate Employee Ownership comes from the Quality Jobs Funds of the New World Foundation which itself is seeded by the Federal Home Loan Bank of San Francisco. FHLBank San Francisco is a member-driven cooperative helping local lenders in Arizona, California, and Nevada create opportunity and change lives for the better. The tools the Bank provides foster homeownership, expand access to quality housing, seed or sustain small businesses, and revitalize whole neighborhoods. Accelerate Employee Ownership has a commitment through the Quality Jobs Fund for this seed funding to primarily be focused on these three states, with the opportunity for select investment nationally, and an additional explicit interest in investment in rural communities. As Accelerate Employee Ownership raises additional capital, it will expand its focus nationally.


5. How will local city governments benefit by partnering with Project Equity to take part in Accelerate Employee Ownership?

By transitioning small businesses to employee ownership when their owners retire, the city will retain its local small businesses, protect jobs, build local equity, and create renewed entrepreneurial opportunities, thus developing a more sustainable local economy. Through employee ownership transitions, cities can also help avoid further wealth concentration and address wealth gaps.


6. How will small business owners benefit from having their businesses transitioned into employee-owned businesses?

For most business owners, their business is their retirement nest egg. Employee ownership provides a market value sale that often has significant tax benefits, boosting the value of the sale for the retiring owner. The sale to employees also helps create a lasting legacy for the business by continuing the business service in the community and supporting the long-term financial well-being of valued employees.


7. Explain the significance of creating quality jobs

Our communities are full of hard-working individuals who fight for economic security in the face of poor quality jobs and daunting wage and wealth gaps.

The Quality Jobs Fund positions the challenges we face as a nation in this way, “Finding a good job is increasingly difficult in the United States. A ‘flexible’ work environment is code for irregular schedules and part-time hours; health and benefits packages are being reduced in the new gig-economy; wages are lagging far behind the rise in cost of living; and people are expected to work longer and produce more with no time, or low incentives to climb the ladder and gain financial security as they struggle to make ends meet.”

Accelerate Employee Ownership works to ensure that people who work hard are paid enough to live with dignity and create opportunities for themselves and their families. Employee-owned companies help to rebalance the relationship between corporate profits and employee earnings and reverse income and wealth inequality.


8. What is the benefit to employees whose small business employer is working with Accelerate Employee Ownership?

Employees will have the opportunity to become business owners through becoming members of an Employee Stock Ownership Plan (ESOP) or a worker-owned cooperative. Dozens of studies demonstrate the positive impact for employee-owners of this shared entrepreneurship approach, from better wages and benefits, significant increases in household net worth, professional development opportunities and more stable jobs.

Two of the businesses Project Equity has supported in employee ownership transitions will be featured at the Launch Event for this initiative. These businesses demonstrate some of the important ways in which employee ownership creates quality jobs. At Niles Pie Company of Union City, CA, employee-owners received the equivalent of $4.50 per hour from 2018 profit sharing. A Slice of New York of San Jose, CA, raised wages within a year of becoming a worker cooperative and switched their year-end bonuses to patronage dividends, generating an estimated 20% increase due to tax savings.


9. What companies have already benefited from Accelerate Employee Ownership?

Two companies in California have already received transition financing through Accelerate Employee Ownership.

Adams & Chittenden Scientific Glass, a twenty-five-year-old Berkeley-based manufacturer of specialized laboratory glassware, decided to transition their company ownership to their employees. Its baby boomer owners recognized that employee ownership succession would retain both their business and its jobs in their community, AND help them find a buyer. Tom Adams put it this way, “When it came time for us to think about succession, the thought of finding someone to buy us out, given our distinct manufacturing niche, seemed improbable.” They were the first California small business that financed the sale of the business to the employees with a loan through Accelerate Employee Ownership.

California Solar Electric, a leading solar design and installation business located in rural Grass Valley, California, is the second company to receive financing for its transition to employee ownership. California Solar Electric finalized its transition to employee ownership in August of 2019, creating a path to ownership for its 26 employees. Selling owner Lars Ortegren isn’t retiring imminently, but believes this transition makes the business all that much stronger. As he put it, “I strongly believe that if everyone is working on building a business and putting energy into the company it should be partially theirs. Everyone getting the benefits of ownership feels right to me. The more practical piece is retaining good people; because they own it, they will stick around longer.”


10. Why is the launch of Accelerate Employee Ownership in Long Beach, California?

Partnering with cities is one of the central strategies that Project Equity utilizes for raising awareness of employee ownership, and “getting it on the menu” for small business owners. Project Equity has engaged with the city of Long Beach to assess the succession risk of its small businesses and published high level results that show there are over 2,500 businesses in Long Beach that are 20 years old and at risk due to likely need for succession planning. These businesses together employ an estimated 46,700 individuals and generate over $12.3B in small business revenue. Through this launch event, and in the coming months, Long Beach businesses will be invited to learn more about local succession options and Project Equity’s services.

We are pleased to highlight Project Equity’s partnership in Long Beach with the city of Long Beach, LISC-LA and Citi Community Development by hosting our launch event in the city. Now, Accelerate Employee Ownership also offers financing for Long Beach businesses transitioning to employee ownership.

In addition, Project Equity has multiple partnerships in Northern California and across the country, including in communities as diverse as Minnesota, North Carolina, Washington State and Florida.


11. What exactly will small business owners experience?

The initiative helps owners through the process of transferring their businesses to employee  ownership. From learning about employee ownership options and assessing feasibility, to pre-to-post transactional support, to tailored financing, Accelerate Employee Ownership is one of the most comprehensive efforts underway to boost employee ownership in the country.


12. How can business owners access Accelerate Employee Ownership?

Interested business owners can contact Project Equity directly to set up a free consultation and discuss their business succession options, their retirement goals, and learn more about how employee ownership transitions work.

About Project Equity

Project Equity is a national leader in the movement to harness employee ownership to maintain thriving local business communities, honor selling business owners’ legacies, and address income and wealth inequality. Headquartered in the San Francisco Bay Area, Project Equity works with partners around the country to raise awareness about employee ownership as an exit strategy for business owners, and as an important approach for increasing employee engagement and wellbeing. Project Equity provides hands on consulting and support to companies that want to transition to employee ownership, as well as to the new employee-owners to ensure that they, and their businesses, thrive after the transition. Visit www.project-equity.org.

About Shared Capital Cooperative

Shared Capital Cooperative is national loan fund and federally certified Community Development Financial Institution (CDFI) that provides financing to cooperative businesses and housing throughout the United States. Base in Minneapolis-St. Paul, Minnesota, Shared Capital has a 40 year track record of successfully financing cooperatives.  Shared Capital’s mission is to build a just, equitable and democratic economy by investing in cooperative enterprise with a focus on providing financing to co-ops to create wealth in low-income and economically disadvantaged communities. Visit www.sharedcapital.coop.

 About the Federal Home Loan Bank of San Franciscohttps://sharedcapital.coop

The Federal Home Loan Bank of San Francisco delivers low-cost funding and other services that help member financial institutions make home mortgages to people of all income levels and provide credit that supports neighborhoods and communities. FHLBank San Francisco also funds community programs that help members create affordable housing and promote community economic development. FHLBank San Francisco members are headquartered in Arizona, California, and Nevada and include commercial banks, credit unions, industrial loan companies, savings institutions, insurance companies, and community development financial institutions. Visit www.fhlbsf.com.

About the New World Foundation
The New World Foundation, an endowed public charity, is committed to unparalleled national and global on-the-ground philanthropic expertise. Over the course of the Foundation’s 65-year history, the Foundation has been a trusted ally for both its grassroots social justice work and its national civil rights policy efforts. Administering significant disbursement of charitable funds in 15 states, the Foundation is distinctly positioned to be nimble and flexible on the frontlines of innovative community change, make long-term mission-aligned investments, promote sustainability with both new projects and longstanding work, and serve as a hub for next-level program and community impact. Visit www.newwf.org.


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