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Cooperatives: Part of the Community Economic Development Toolbox
There is a renewed interest in cooperatives. The interest reflects a
range of perspectives, from those interested in starting a business or social
enterprise, to those with policy, economic
development, or job retention responsibilities. Cooperatives are a tool for
economic self-determination, and in this characteristic many see the potential
for addressing a variety of economic challenges that have emerged since 2008.
The UN's designation of 2012 as the International Year of Cooperatives has also
brought broader visibility to the cooperative model.
The cooperative option is being examined
in a wide range of contexts. It can be a solution to local, sector-specific
such as providing small farmers a way to access wholesale distribution channels
and connect to the growing market demand for local food. And it is
relevant to larger-scale economic development discussions, where
the broader effects of ownership on a business’s strategic direction and financial decisions
could be considered.
In 2009, the University of Wisconsin Center for Cooperatives undertook a study
to describe the magnitude of cooperative business activity. The Research
on the Economic Impact of Cooperatives project identified 29,000 cooperatives
that accounted for revenue impacts of almost $653 billion, over 2 million jobs,
and over $3 trillion in assets. The full report is available here.
Models of Cooperative Development
Cooperative development can follow a process similar to any small business
development. The process is initiatied by a group of motivated people who
see an opportunity, and seek out
support their cooperative start-up effort.
A list of practical tools for cooperative start-ups can be found here:
Cooperative Equity and Ownership: An Introduction
How Do You Start a
Other resources and technical assistance include:
Great Lakes Cooperative Center
Ohio Employee Ownership Center
CooperationWorks! cooperative development network
Democracy at Work Network (DAWN)
Cooperative development is also occuring in the context of a broader
initiative to build community wealth. The following are a few
The Mercado Central in Minneapolis
is run by Cooperativa Mercado Central, a member-owned cooperative of 48 small
businesses in Minneapolis. Founded in 1999, the project has been key to
transforming the formerly blighted East Lake Street corridor. The success
of this project also fostered the founding of the
Latino Economic Development Center.
The Evergreen Cooperatives of
Cleveland, Ohio are a network of for-profit, employee-owned, green businesses
that are supported by the
Cooperative Corporation. This entity provides the business
development, strategic guidance, and other support services that can promote the
success of each cooperative business. It also works with other anchor
institutions in the city to develop these sustainable economic networks that
will benefit Cleveland residents and neighborhoods over the long term.
An Oakland, CA nonprofit started 15 years ago to help low-income immigrant
Latinas achieve economic security through cooperative business ownership.
Women's Action to Gain Economic Security (WAGES)
acts as an incubator to build and support successful cooperative green cleaning
businesses, and provides resources so that its model can be replicated.
In 1985, a small town in northern Quebec successfully used the cooperative model
as part of its efforts to reopen a shuttered sawmill that was the community's
main source of jobs.
Boisaco has weathered the cyclic ups and downs in the forestry sector since
then, its cooperatively-owned
structure providing the flexibility to do so. A situation summary and
a link to a case study is
Worker co-operative replication models are examined in this
article in Grassroots Economic Organizingm #3, volume 2.
Conversions to the cooperative
model can take many forms such as buyouts or transitions.
Converting Existing Businesses to Worker Cooperatives - an interview with
Cooperatives and New Business Survival Rates
New business start-ups are looked to as engines of innovation, job creation,
and economic development. The process of starting a new cooperative
business is sometimes seen as unwieldy, since it can require time to develop the
common vision that unites its member-owners. But related cooperative
characteristics may contribute to the higher survival rate of new cooperatives
compared to other new entreprenurial business forms, research from Canada shows.
Survival Rate of
Cooperatives in Quebec, 2008 edition
Co-op Survival Rates in Alberta,
Co-op Survival Rates in
British Columbia, June 2011
Cooperatives and Independent Businesses
Cooperative purchasing of goods and services lets smaller, independent
businesses use economies of scale to manage costs and access resources while
maintaining ownership and control.
Examples of cooperative solutions to meet small business needs:
Common Ground Healthcare
Cooperative - health insurance
Cooperative - wholesale purchasing
CoopMetrics - business
Visit the National Cooperative Business Association's
webpage on purchasing and shared-services cooperatives for more examples.
Cooperatives and Public Shared-Services Cooperatives
Cooperatives purchasing and sharing of resources can be a tool for cities and
counties to more efficiently provide public services at cost while maintaining
public accountability. Some examples include:
Wisconsin Cooperative Educational Service
Western Area City County Cooperative (WACCO)
Dakota County High Performance Partnership (HiPP) Project
Cooperatives and Job Creation/Retention
What role can cooperatives play in creating and sustaining economically healthy
communities? That question was explored at the Madison Cooperative Business
Conference, held June 6-7, 2012 on the UW-Madison campus. Co-sponsored by the
City of Madison, UWCC, and many area cooperatives, the focus was on job creation
through cooperatives. The conference attracted over 150 participants from
southern Wisconsin. Speakers highlighted the impact of successful area
cooperatives, cooperative best practices, and policy initiatives that would
advance business cooperatives.
The conference included a one day workshop on small business succession planning
and the use of employee ownership to maintain thriving local businesses. In that
workshop, Roy Messing, of the Ohio Employee
Ownership Center, described how jobs that are an important part of a local
economy can be suddenly threatened as decisions are made by the business owner
about retirement or the sale of the business.
Succession planning by the business owner that includes the examination of
employee ownership may provide win-win opportunities. Selling to employees may
provide tax advantages to the owner, as well as an opportunity to create a
positive business legacy. Employees retain their jobs, and gain control of
their employment. And communities benefit from the continued economic stability
that is key to long-term economic health. Business situations that are
particularly suitable for worker cooperative conversion are ones with a more
open, participatory culture, are profitable with a sustainable business model,
and with employees that desire to continue and grow with the company.
Conference powerpoints about employee ownership options:
Succession Planning for Your
Converting a Business
to a Worker Cooperative
The conference also featured two
teleconference presentations on how governments are using cooperatives at
the provincial and at the municipal levels:
*Michel Clement, Development Coordinator, Cooperative Development Management,
Department of Economic Development & Innovation, Quebec (Minute 3:50)
Note: this related powerpoint may helpful and can be
*Mayor Gale McLaughlin of Richland, CA, who has appointed a cooperative
development coordinator as part of a broader jobs development program in the
city. (Minute 23:55) Note:
article also describes the program.