Why We Need A Cooperative Ownership Revolution

The Evergreen Coop in Cleveland Ohio provides an example of how cooperative and community owned enterprise help rebuild communities. The following extract is  from Chapter 4 of Towards a New Form of Economic Development: Why the Need for an Ownership Revolution Has Never Been Greater. a dissertation by Jerome Birolini. Schumacher College, MA Economics for Transition. 2014

Evergreen Cooperative and the Green City Growers

Green City Growers by Beverly Moseley, U.S. Department of Agriculture

The Evergreen Cooperatives is a group of worker-owned businesses launched by Cleveland’s largest foundations and anchor institutions. Even though the launch of the Evergreen Cooperatives Initiative is much more contemporaneous than the development of the CHT or CSCB, it emerged in an analogous context where a growing lack of decent and stable economic opportunities was leading to the impoverishment of local residents and the destabilization of inner-city neighbourhoods. After years of disinvestment and job dislocation, the city of Cleveland and the region of North-Eastern Ohio started to be faced with startling unemployment and rampant levels of poverty. With the aim to rebuild neighbourhoods and improve the economic opportunities of the people who live there, the Cleveland Foundation established the Greater University Circle Initiative in 2005 (from now on, the Greater University Circle Initiative will be referred to as the GUCI), a multi-stakeholder collaborative initiative made up of local institutions as diverse as the Cleveland Foundation, City of Cleveland, Cleveland Clinic, University Hospitals and Case Western Reserve University. The initiative was designed to break down the barriers between the area’s major anchor institutions (having an economic self-interest in having vibrant and healthy local communities) and some of Cleveland’s most economically distressed neighbourhoods. The GUCI initially tried to dynamise its local economy by offering various kinds of incentives destined to the private sector. The reasoning was that those incentives would attract the private investments and create the jobs which would eventually help address some of the challenges faced by the city’s most disinvested communities. Nevertheless, the coalition soon realized that this strategy would prove costly and ineffective. On the one hand, private investment and for-profit corporations tend not to be rooted in place and generally relocate as soon as more favorable economic conditions appear somewhere else. On the other, such type of local economic development usually does not offer the members of marginalized communities more than a temporary access to low paying jobs which do not enable them to build equity, therefore leaving them locked in the poverty trap. In other words, by transferring scarce resources from the public to the private sector such a policy would further fuel income and wealth inequality and would therefore not help solve the problems faced by the city of Cleveland but rather accentuate them. In 2006, social entrepreneur and co-founder of the Democracy Collaborative, Ted Howard, gave a talk in which he outlined the great transformative potential held by anchor institutions in terms of community wealth building. The arguments advanced by Howard caught the attention of some of the members of the GUCI and eventually led to the reworking of the group’s local economic development strategy. The coalition started to consider how a cooperative anchor institution strategy could help them achieve their goal and two years later, the Evergreen Cooperative Initiative was born. Its strategy would be to improve the ability of communities and individuals to increase asset ownership, anchor jobs locally and ensure local economic stability by creating new green community-owned and -run businesses and then redirecting a portion of the significant procurement power of local anchor institutions towards those newly-created, locally-rooted businesses.

The Evergreen cooperatives were established on the model of the highly successful Mondragon Corporation (for further information on the Mondragon Experiment please refer to the Appendix C – The Mondragon Corporation and the Emilian Model). For instance, Evergreen decided to incorporate a holding company (the Evergreen Cooperative Corporation) which is now responsible for keeping the long-term vision of its founding members while acting as a source of continuity for all of its cooperative enterprises. Its model of governance also emphasizes the network aspect of the Mondragon system. Evergreen functions as a connected group of mutually-supportive cooperative businesses, each of which is owned and controlled by its workers but also part of a worker-owned and worker-controlled association (in this case the Evergreen Cooperative Corporation). Finally, Evergreen has put in place the Evergreen Cooperative Development Fund, a non-profit revolving loan fund which provides funding for the expansion of existing cooperatives and seed capital for the creation of new ones. The fund currently has approximately USD 200 million of assets under management and invests in individual Evergreen companies as deeply subordinated debt at a 1 percent interest rate.

The Evergreen Cooperative Initiative currently consists of four cooperative ventures: the Evergreen Cooperative Laundry, Evergreen Energy Solutions, Green City Growers Cooperative and the Neighbourhood Voice. The Evergreen Cooperative Laundry is the greenest and most energy-efficient industrial laundry in northeast Ohio providing laundry services to major local institutions such as hospitals, clinics and hotels while helping them reduce their carbon footprint. Evergreen Energy Solutions is a community-based clean energy and weatherization company which designs, installs and maintains photovoltaic solar panels arrays on the rooftops of the state of Ohio. Green City Growers Cooperative is a 3.25-acre (13,150-square-meter) hydroponic greenhouse located in the center of Cleveland. It currently produces about 3 million heads of lettuce and leafy greens and three hundred thousands pounds of herbs every year for the residents of the Greater Cleveland. Finally, the Neighbourhood Voice is a free, 10,000-circulation, citizen-driven newspaper which covers worker co-op activity in Cleveland and other issues of concern to residents. Between them, the three cooperative businesses (i.e. the Evergreen Cooperative Laundry, Evergreen Energy Solutions, Green City Growers Cooperative) currently have close to 150 worker-owners, most of whom were formerly in the ranks of the long-term unemployed, hold prison records or have struggled with substance abuse. The long-term objective of Evergreen is to expand into a diversified network of small for-profit cooperatives employing up to 5,000 people.

Central to each one of its cooperatives is a system of capital accumulation designed to allow the worker-owners to participate in the wealth creation process. Besides partaking in operation management and organizational governance, the worker-owners of the Evergreen cooperatives receive living wages and have the right to a portion of the firm’s profits. In return to a USD 3,000 investment into the cooperative (which is funded through a 50-cent per hour payroll deduction), they receive a percentage of each cooperative’s profits which is based on a formula that includes length of employment, annual hours worked and salary. The typical worker is expected to build a USD 65,000 equity stake in their business after eight years on the job.

The success of the Initiative’s first three for-profit ventures can be attributed to a combination of factors: – First, Evergreen has put in place a formal business development process whose role is to carefully design new business models and ensure their future viability. Any new business idea must meet a number of criterias including: matching the needs of its local anchor institutions, employ at least 50 people from the local community, be profitable and be a local champion in terms of ecological sustainability. The multi-stakeholder collaboration which underlies the business development process is a key factor of success which almost secures the profitability of new cooperative ventures by providing them with a guaranteed source of revenue before they even start operating. – Second, the GUCI provides the Evergreen Cooperative Initiative with the funding, the expertise as well as the guidance necessary to make every single cooperative successful. For instance, the support of a number of public and private institutions was crucial to ensure that the Evergreen Laundry Cooperative would be properly capitalized. In total USD 5.8 million were secured from the following sources: USD 1.5 million from the Department of Housing and Urban Development and the City of Cleveland, USD 1.8 million in New Markets tax credits, $750,000 from the Cleveland Foundation, and $1.5 million from two banks. – Finally the Evergreen cooperatives would be nothing without the commitment, the passion and the professionalism displayed by its worker-owners who seem to have embraced the culture of solidarity as well as the ecologically sustainable vision promoted by the Initiative.

A study performed in 2013 by the Cleveland Foundation accounts for some of the results achieved by the GUCI in its first nine years of operation. In such a short period of time, the accomplishments of the initiative are nothing short of exceptional. They include: – An institutional partnership and a multi-anchor approach which has become a model for cities around the U.S. and beyond, – A business growth and retention program that resulted in more than USD 200 million of local investment since 2008 (the physical developments included the redevelopment of Uptown Cleveland, the improvement of local transit systems, and many more), – The creation of three new employee-owned businesses that serve institutional needs, employ economically-disadvantaged neighborhood residents and build community wealth, – The regeneration of community life through the network-building programs which connect local residents with each other and with institutions to develop new community projects.

Despite its short track record, Evergreen’s continued viability and expansion (in terms of revenues, jobs and enterprises) offers a strong message of hope to the economically-distressed communities, cities and regions around the Globe. Thanks to a creative and collaborative economic initiative, and by capturing some of the city’s major economic flows and leverage them to the benefits of the communities living there, the GUCI was able to revitalize the local economy of some of Cleveland’s most marginalized and disinvested neighbourhoods. The benefits of the Evergreen model go far beyond the economic and include coalition building, workforce development, neighbourhood regeneration, sociological empowerment, enhanced ecological sustainability, and increased urban sustainability and stability. According to Lily Song, they also recast the responsibility of anchor institutions, many of them beneficiaries of public funding, with respect to their surrounding communities. What the GUCI and the Evergreen Cooperative Initiative are currently achieving is within reach of any locality. Like CHT and CSCB, Evergreen demonstrates that the empowerment of impoverished communities and the reduction of wealth and income inequalities does not require the investment of vast sums of money but rather the cooperation and commitment of a group of enlightened individuals.

These are very important lessons indeed for both the precariat and the public sector. The establishment of a collaborative multi-stakeholder coalition as well as the economic cooperation secured from the city’s major anchor institutions provide each co-operative with a guaranteed source of revenue which somehow insulates them from the pressures of an unrestrained market. This, in turn, gives Evergreen the possibility to transfer the control and ownership of the whole Initiative to its members (whereas such a distribution of power would not have been possible – or would have put the whole initiative at risk – in an environment as competitive and as fast-changing as the one faced by CSCB). Thanks to its elaborated and dynamic system of governance and ownership, the Evergreen Cooperative Initiative achieves what CSCB could not, namely, to provide marginalized and distressed individuals not only with a living-wage job but with a wealth creation mechanism and the opportunity to become the owner of their job, something that most of them would not even dare to dream of. By so doing, it provides them with the tools necessary to build their own wealth and therefore to become the masters of their own faith. In other words, Evergreen provides much more than mere economic empowerment, it gives an invaluable sociological and psychological empowerment.

For the public sector, the message is clear: alternatives to the traditional and private forms of economic development (proposed by capitalists and socialists alike) exist, and they work. By vesting ownership in community stakeholders (as opposed to investor-driven corporations) and by directly harnessing the economic power of existing local assets (as opposed to letting it be subject to the forces of an unregulated market), collaborative social-public partnerships have the potential to enable community-led economic developments that are effective, just, ecologically-regenerative, inclusive and equitable.

Yet the transition from our current political-economic system which systematically promotes and pushes for private forms of enterprising, to one that supports economic democracy and mutual practices while handing the power over to the community will be far from easy.

But why is that so and what can we do about it?

See the P2P Foundation Wiki for further examples from Chapter 4 of ‘Towards a New Form of Economic Development: Why the Need for an Ownership Revolution Has Never Been Greater’ by Jerome Birolini.


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