Cooperative Business Fund

When we first put forward our Cooperative Business Fund initiative, there were already numerous businesses in Carbondale up for sale with no buyers. Rumors at the time have proved true, and more local businesses have entered the market. Most of these businesses are not failing for lack of business – they are operable businesses that people of Carbondale cherish and that employ residents.

Shortly after we published the Carbondale Spring website, the Southern Illinoisan ran an op-ed declaring that “the Carbondale Strip is poised for rebirth!” We totally agree with the headline: it is indeed. And we’ve got a pretty cool idea about how to re-birth it.

But our reincarnated, new-born strip won’t be exactly like the old one. We want to experiment with a different model of how to work, own, and do business. Traditional businesses are owned by an individual, a family, or a group of share-holders, and they employ workers who work for a wage. If the business makes profits, that money goes to the owners, not to the employees. Employees, therefore, are actually not very invested in the success of traditional businesses, and generally don’t have a say in how it is run, how it grows, and why it exists. In a worker-owned cooperative, the people that work at the business also own the business. If the business makes profits, they split them or decide to do something else with them. The workers are themselves invested in the growth, direction, and meaning of the business.

According to an extensive recent study by Leeds University Business School based on over two decades worth of international data on worker cooperatives, worker owned and managed companies “are more productive than conventional businesses, with staff working ‘better and smarter’ and production organized more efficiently.”

There are lots of interesting examples of worker-owned cooperatives, and lots of different ways they can be organized. Some are run without any management hierarchy, with workers all making decisions collectively; some vote in a manager; some vote in a board who hires a manager, and so on. If you’d like to learn more about the idea, check out this helpful FAQ compiled by the Democracy at Work Institute.

If we imagine a network of worker-owned cooperatives, things get even more interesting. Worker cooperative networks possess the ability to tap into a locality’s institutional employers. By strategically identifying institutional needs, worker-coops can cut costly imports and provide services locally — a laundry service for a hospital, that also serves cooperative restaurants; a cooperative of local farms providing fresh food for public schools, the University, and the hospital. These institutional anchors can be as large as a university or as small as a community kitchen. A similar idea is being tried in Cleveland (among many other places), with great success. Evergreen Cooperatives operates a laundry facility, a hydroponics greenhouse, and a solar energy company. Their website explains the shift in thinking their approach is based on:

“The initiative was designed to create an economic breakthrough in Cleveland. Rather than a trickle-down strategy, it focuses on economic inclusion and building a local economy from the ground up. Rather than offering public subsidy to induce corporations to bring what are often low-wage jobs into the city, the Evergreen strategy calls for catalyzing new businesses, owned by their employees. Rather than concentrate on workforce training for employment opportunities that are largely unavailable to low-skill and low-income workers, the Evergreen Initiative first creates the jobs, and then recruits and trains local residents to fill them.”

This is working in a portion of Cleveland. It is working to create living wage jobs for people coming from backgrounds in poverty; it is working to keep cash-flow in the city; it is working to build resilience for the coming changes to the climate; and it is working to build an economy that is insulated from the effects and fluctuations of the wider market. This gives us reason to believe that our idea can work here.

If the city of Carbondale has an interest in retaining locally-owned businesses in town and on the Strip, perhaps the standard question of ‘how to attract investors’ is the wrong question. Instead, the city should be looking for ways to encourage workers to become invested in the continuity and success of those businesses by transitioning them into worker-owners. This was the essence of our proposal as offered last February.

We now have a more developed vision of how this Cooperative Business Fund might function. It will have two parts: first, we will make use of a common financial tool, a Revolving Loan Fund (RLF), to provide capital to workers to purchase their workplaces. The RLF would provide low interest loans to those who want to convert existing businesses into worker cooperatives, thus making those funds continually available to workers throughout the city. Second, the Cooperative Business Fund would provide grants to low-income and marginalized people who want to start worker-owned cooperatives, and grants for building local ecologically resilient supply chains.

These two parts of the Cooperative Business Fund would create a path to building an equitable cooperative network that could retain existing jobs in Carbondale, create new, satisfying work opportunities, and build a resilient regional economy. It would also create a pretty awesome place to live and work. The City could put $1 million into the fund each year, creating a pot from which worker-owners could succeed traditional owners, and from which new cooperative businesses could draw. As we have argued — and will soon argue in greater detail — the city is over-spending on police by about $5 million/year. Setting aside one-fifth of that to create the most worker-friendly city in the country is a pretty good deal when you think about it.

Carbondale is facing some specific problems. One of the problems that Carbondale is facing is that of “business succession” — who takes over the business when an owner wants to retire or move out of the area, but people with lots of money don’t think its a profitable investment? We think worker co-ops provide a helpful solution to this problem: the people who should invest in local businesses are the local people employed by them. It turns out this is an idea that a lot of local workers like. And not just workers. Since we’ve begun the Carbondale Spring, we’ve been contacted by numerous business owners who want to pass their business on to their workers. There are two hurdles that stand in the way: (1) access to capital; and (2) skills and experience in setting up worker co-ops.

The Cooperative Business Fund would address the problem of access to capital. For the second problem, we propose setting up a Chamber of Cooperation: a non-profit co-op of skilled workers whose role is to handle the technical, legal, and financial aspects of transitioning and setting up worker co-operatives. The Chamber of Cooperation would take on some of the most difficult parts of starting a business, easing the path of cooperative entrepreneurs.

But we understand that the City of Carbondale might be hesitant. Its a big shift in perspective, and its sometimes easier to just keep doing the same thing than to take a risk on something new. Even if what you are doing isn’t working.

Seriously, we get that.

So, we’ve decided to ask the Carbondale community — and the wider community of people who support worker-owned cooperatives — to help us jump-start the Cooperative Business Fund. We had initially hoped we could purchase a recently closed local burger joint and re-open it as a worker-co-op, but alas, it didn’t work out. We are currently both soliciting and developing ideas for local worker-owned cooperatives for the Cooperative Business Fund to invest in. This can be an existing business you’d like to transition to a worker-owned cooperative, or an idea for a new business. To share an idea you would like to have considered for funding, please email us at carbondalespring@gmail.com.

We aren’t just looking for any business ideas, though. We are guided by the question: how do cooperative businesses fit in with the ecological challenges we face? One inspiration for a unique approach to answering this question comes from, of all places, a local brewery. The folks who started Scratch Beers set out asking themselves the question, ‘can we brew a completely local beer?’ Their answer at the time: nope. But the process of trying to do it helped to build the relationships that have brought them closer to their goal. This orientation can be applied to other businesses — like a burger joint, for instance.

Our aim, then, is to not only to build worker-owned cooperatives, but to build into those cooperatives what we have come to call “detachable supply chains,” or supply chains that operate within the money economy, but could also, if need be, operate outside of it based on local and regional relationships. A financial crash? The collapse of an unsustainable agricultural system? Political unrest? These are just some of the very plausible scenarios that reveal the fragility of the global economy on which our current mode of life rests. Strengthening these detachable supply chains to adapt to these kinds of threats is what we call building a Resilient Regional Economy.

But that’s just a glimpse of the horizon. At the moment, our plan is firmly rooted in what’s in front of us. Therefore, this coming year, the Carbondale Spring promises the following:

  • With your help, we will establish Carbondale’s first worker-owned cooperative and demonstrate the replenishment of the Cooperative Business Fund.
  • We will set up a non-profit Chamber of Cooperation, a co-op designed to provide technical assistance as well as legal and accounting services suitable to the needs of cooperatives. The Chamber of Cooperation will operate the Cooperative Business Fund, dispersing the loans and grants to create worker-owned cooperatives.
  • We will seek further funds to capitalize both the grant-dispersing and the RLF parts of the Cooperative Business Fund, so that there is enough money to perform conversions of functioning businesses, to assist cooperative start-ups for low-income and marginalized residents, and to build detachable supply chains for our region. We will look for many sources for this money, while continuing our campaign for city funds to be redirected from the fiscally irresponsible Carbondale Police budget.

 

 

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