Last spring I had a chance to visit two of the Evergreen Cooperative Corporation businesses in Cleveland, Ohio – Green City Growers and Evergreen Cooperative Laundry. This was not my first time visiting these operations, or even my second. Over the years I have returned time and again to watch these companies make headway in shaping the new economy. They are part of a growing movement to bring democracy to the workplace through employee ownership – a trend taking root across the United States.

At Green City Growers, a mission-driven company providing dozens of local restaurants with immediate access to hyper-local food, new LED lighting is in place and floats of lettuce and basil are happily soaking up the rays. Our tour-guide, Ernest, has been at the greenhouse for several years. He is a worker-owner who has moved up from an entry level position to assistant general manager who exuberantly shares his life, the work at Evergreen, and his appreciation for a grandmother who encouraged him to become a worker-owner at Evergreen.

The laundry has undergone a transformation since I last visited. The Cleveland Clinic has contracted with Evergreen to provide the workforce for their new laundry facility, an impressive operation can wash 30 million pounds of linens annually. Four worker-owners will be taking a trip to Minneapolis to learn how to repair and maintain the new, German-manufactured laundry equipment. Another second-chance worker, Charles, has been with Evergreen laundry since it first opened in 2009. He now has a seat on the board, voted in by his peers. Through Evergreen’s Home Ownership Program he purchased a home for no more than the cost of his monthly rent. Tymika, a second chance worker who has put in many hours in the laundry, now heads up two divisions that prepare linens for the Cleveland Clinic’s surgery rooms and family care centers. She motivates her workforce with enthusiasm, and the occasional offer of pizza (in the break room).

Kendeda has been supporting Community Wealth Building efforts like Evergreen since 2009, in an effort to build economic prosperity for all within the means of the planet. Our funding over that decade has focused on advancing economic systems change that starts at the community level. These include worker coops, community land trusts, anchor institution procurement strategies, and municipal and local public enterprise,

The Kendeda Fund believes that democratic employee ownership can be a transformational way for communities to redefine prosperity, making them more vibrant places to live, more resourceful in hard times, and more capable of retaining the wealth they generate. While employee ownership is not our only strategy in this realm, we view it as a vital expression of democracy in action and an approach worthy of deeper investment.

Starting this year, we are making a new set of commitments – $24 million spread across four organizations over the next five years – specifically to expand democratic employee ownership in the United States. Through grants to The Fund for Employee Ownership at Evergreen Cooperative Corporation, Project Equity, ICA Group, and Nexus Community Partners we aim to raise awareness of alternative models for wealth building in America while empowering thousands of workers who have traditionally lacked economic security. The focus is on converting existing small and medium-sized businesses to democratic employee ownership to stem the tide of business closures, and give employees a chance at ownership.

Our four partners will help to retain small businesses in local communities by transitioning companies from private ownership to employee ownership. Kendeda’s funds will directly enable more than 100 business transitions, and those businesses will model the opportunity for many more. Kendeda anticipates that transitions to democratic employee ownership will be seen as an accessible option for many retiring business owners who can look to these recent examples as inspiration, and who can turn to these leading organizations for the technical and financial know-how to ensure businesses grow and employee-owners thrive.

Kendeda believes that small businesses are the backbone of local economies. They help to ensure that communities are vibrant, retaining the wealth they generate, and resourceful during hard times. Together, The Fund for Employee Ownership at Evergreen Cooperative Corporation, Project Equity, ICA Group, and Nexus Community Partners are shaping the future of business ownership in America, and transforming how the public and private sectors — including investors — approach small business succession, retention, and legacy preservation.

There are many different ways to democratize companies and empower workers. The Kendeda Fund has chosen to focus on employee-owned cooperatives because they offer an accessible governance structure for small- and medium-sized businesses at risk of closure when the owners retire.

Each of the organizations we are supporting is providing its own working definition of Employee Ownership, focusing on democratic principles for participation and decision-making. That said, the transitioning companies are all for-profit enterprises, with management structures and leadership teams that seek efficiency and strategy to ensure that businesses are growing and earning a profit.

Owners of small and medium-sized businesses look to their peers for wisdom and insight about business strategies. That’s why we are investing in strategies designed to help current business owners see examples of how to transition companies to employee ownership. The work takes many forms: strengthening legal and financial systems, reaching retiring business owners before they make plans to close-up shop, and providing them with the financial resources they need to exit in a timely manner. We need lawyers, accountants, and exit planning advisors encouraging their clients to explore employee ownership. We need employees that see pathways to gain the skills necessary to engage in democratic ownership. And we need investors that provide access to tools and resources. Combined, these efforts will create momentum for employee ownership transitions.

Our goal of 100 transitioned businesses and 2,600 new employee owners over the next five years may sound modest to some, but it represents an important foot in the door. We also hope to see economies of-scale and an increasing appetite for transitions to employee ownership. We will be closely tracking this work in the days ahead. We will also share news and trends about expanding local ownership, improving job quality that addresses the racial wealth gap, and increasing the investment communities that see democratic employee ownership as a necessary — and profitable — strategy for business growth.

At Evergreen we have begun to see what scaling up looks like at a company level. We have also had the chance to meet people whose lives have been transformed by a second chance at work, and a first chance at ownership. With these new grants, we will have a chance to truly scale worker-ownership, and reach more people deserving of first and second chances at jobs with dignity, living wages, and connection to community.

About Our Partners

Housed at the Evergreen Cooperative Corporation in Cleveland, OH, The Fund for Employee Ownership provides mission-driven capital to create quality jobs via employee ownership. The Fund acquires businesses from retiring baby boomers, converts those businesses to worker ownership, and supports them as part of the Evergreen Cooperative Corporation. With Kendeda’s support, The Fund for Employee Ownership will focus on manufacturing and service industries in Northeast Ohio, with special consideration for companies that provide goods and services to the region’s anchor institutions.

“For us, success will be measured by the increase in employee-owned businesses, along with an impact investment model that others are able to replicate.”

—John McMicken, CEO of Evergreen Cooperative Corporation

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. Headquartered in the San Francisco Bay Area, Project Equity drives transitions of successful, often long-standing, companies to employee ownership in order to sustain and foster high quality jobs, workers’ voice and agency, professional development, and community wealth building. It has a 15-year vision to leverage the “Silver Tsunami” to scale-up employee ownership as baby boomers reach retirement age. Project Equity plans to expand its efforts to 10 regions, focusing on the manufacturing sector, mission-aligned, triple bottom-line companies, and businesses with a frontline workforce.

“Community and local government stakeholders are feeling the impact of the Silver Tsunami as baby boomers sell their beloved businesses to out of area buyers or simply close them down. Local leaders are hungry for solutions that support small business retention and build community wealth. We are seeing an upswell of demand for employee ownership from cities and small business advocates across the country, indicating real opportunity for scale.”

—Hilary Abell, co-founder of Project Equity

The ICA Group seeks to change the nature of work by building businesses and institutions that center worker voice, grow worker wealth, and build worker power. With Kendeda’s support, ICA will focus on business conversions in the home care and child care industries, creating and improving jobs in two caregiving sectors that are currently dominated by low wages and few benefits. ICA will also assist business conversions in Massachusetts and New York, two states that are thinking expansively about the opportunities employee ownership can provide to their economies.

“Bad jobs are an endemic problem in the US—jobs that prevent low income workers, especially people of color and those in rural communities, from securing economic stability. “At ICA, we transform bad jobs into jobs worth owning, creating wealth in the communities that need it most.”

–David Hammer, ICA Group executive director

Nexus Community Partners, based in St. Paul, MN, works to advance equitable and just communities in which all residents are engaged, recognized as leaders and have multiple pathways to opportunity. By supporting business conversions to worker-ownership, Nexus aims to ensure communities of color have mechanisms to own the wealth their labor has helped to create. As an intermediary, Nexus supports cooperative ecosystems to leverage the resources of public, private, philanthropic and nonprofit partners. With support from Kendeda, Nexus will focus their efforts on industry sectors that are most likely to employ people of color and have the highest concentration of potential conversions, including manufacturing, construction and health care services.

“Business conversions sit at the intersection of multiple opportunities to build wealth and create sustainable change in our communities. “In addition to business retention and job creation, worker ownership is a powerful strategy for disrupting patterns of gentrification. The model opens on-ramps for folks that very likely have no other entryway to entrepreneurship. In many ways, business conversions are like gifts with the capacity to keep on giving.”

—Repa Mekha, President and CEO of Nexus