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Cooperatives: Part of the Community Economic Development Toolbox


The renewed interest in cooperatives comes not only from those interested in starting a business or social enterprise, but from 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  also brought broader visibility to the cooperative model.

The cooperative option can be a solution to local, sector-specific challenges, such as providing small farmers a way to access wholesale distribution channels and connect to the growing market demand for local food. It is relevant to larger-scale economic development discussions, too.  A business's ownership structure will guide its strategic direction and financial decisions, the consequences of which can have broader community impacts.

Cooperative Economic Impacts

The Center's 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 Economic Impacts of Cooperatives in Wisconsin report identified almost 800 active cooperatives, acounting for $27B in revenue, $2.5B in wages, and almost 64,000 jobs. 

A calculator to estimate cooperative impacts can be linked to through the Economic Impacts of Cooperatives in Wisconsin webpage.


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 resources to 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 Cooperative?

Other resources and technical assistance include:
Great Lakes Cooperative Center
Ohio Employee Ownership Center
CooperationWorks! cooperative development network
Democracy at Work Network (DAWN)


Community Wealth-Building

Cooperative development is also occuring in the context of a broader initiative to build community wealth. The following are a few examples.

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 Evergreen 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 here.

Worker co-operative replication models are examined in this article in Grassroots Economic Organizingm #3, volume 2.


Cooperative Conversion

Conversions to the cooperative model can take many forms such as buyouts or transitions.

Converting Existing Businesses to Worker Cooperatives - an interview with Melissa Hoover

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, August 2011

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

Independent Pharmacy Cooperative - wholesale purchasing

CoopMetrics - business intelligence tools

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 Agencies (CESAs)

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 Business

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 accessed here.

*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: This brief article also describes the program.