Cooperative Support Ecosystems

Description and History

Setting up and maintaining a successful cooperative enterprise can be a challenging task. From initial financing to managing day-to-day operations and governance to engaging in broad scale, place-based advocacy to advance a more enabling environment for cooperativism, the work of cooperative economics is a collective endeavor.

Thankfully, according to Minsun Ji, Executive Director of the Rocky Mountain Employee Ownership Center, “Following the Great Recession, innovative nonprofits have increasingly stepped up to incubate worker cooperatives in marginalized communities by providing organizing assistance, winning funding, and dedicating staff and resources to launching and sustaining worker cooperatives in their early stages” (2024). These cooperative support ecosystems are often place-based coalitions of organizations offering business support services and technical assistance as well as cooperative incubation and accelerators to directly build cooperative capacity. 

Some of the earliest examples include Nexus Community Partners (founded in 2004 in Minneapolis, MN), the California Center for Cooperative Development (founded in 2007), the Rocky Mountain Employee Ownership Center (founded in 2012 in Colorado), and and the New York City Worker Cooperative Business Development Initiative (launched in 2015 by the City’s Department of Small Business Services). To bolster this activity on the national level, Cooperation Works!, a national network of cooperative developers, was established in 1999. The United States Federation of Worker Cooperatives (USFWC) set up the Democracy at Work Institute in the early 2010s to build capacity to support the growth and development of worker cooperatives and democratic workplaces. 

Further, because of the unique history of cooperativism in rural America, the United States Department of Agriculture (USDA) has also long provided federal funding to support cooperative development in the agricultural and energy sectors (USDA n.d.). More recently, for example, the 2014 Farm Bill authorized the establishment of the Department’s Interagency Working Group on Cooperative Development, which provides research, technical assistance, and funding to cooperatives involved in rural development.


Cooperative Support Ecosystems, Inclusive and Democratic Enterprise, and the Community Wealth Building Wedge 

Cooperative support ecosystems can play several important roles in expanding the cooperative sector, including: 

  • Supporting cooperatives to prepare to receive and build out innovative and flexible capital stacks to finance their enterprise while simultaneously organizing local and regional funders and federal capital streams to channel trust-based dollars into their communities’ entrepreneurial ecosystems; 

  • Providing back-end support services (e.g. administrative services, operational support, HR, finance and accounting), especially for nascent enterprises, and other forms of legal and financial technical assistance; 

  • Working with aging business owners on succession planning and facilitating employee ownership conversions; 

  • Researching, organizing, and lobbying for more enabling legislation and strategic policy to expand the local, regional, and/or industry-specific cooperative sector; 

  • Serving as an intermediary to facilitate public/private procurement contracts for nascent and growing cooperatives; 

  • Collaborating with partners in the broader cooperative ecosystem (e.g. local governments, community foundations, financial institutions, etc.) to secure better technical and financial resources for cooperative enterprise; and/or

  • Providing popular education and training (as part of broader narrative strategies) to transition our economy out of extraction and into cooperation. 

In these ways (and more!), these ecosystems serve as the critical backbone of the cooperative sector. With the proper support and incentives, locally-rooted democratic economies driven by cooperative firms become possible. Demonstrably, the 70,000 worker Mondragon network in the Basque country, or the thousands of worker cooperatives clustered in Italy’s Emilia Romagna region have proven their ability to provide stable, long-term opportunities for inclusive growth and to support high degrees of technical innovation largely due to a whole ecosystem of support around them, including banks and educational institutions. Stateside, small investments in worker cooperative development capacity have also demonstrated a significant impact. For example, a relatively small amount of funding from New York City—currently less than $4 million annually—has sparked an increase in the number of worker co-ops in the city from 12, when the effort started in 2014, to 80 by 2018. 


Examples

The examples below are intended to showcase different types of organizations within these broader regional ecosystems. They vary in the geographies and sectors they serve as well as in what, specifically, they are able to offer to cooperative businesses. For example, start.coop is an example of a cooperative incubator and accelerator. The Rocky Mountain Employee Ownership Center is a preeminent example of many other place-based, regional centers of its kind around the country that provide a slew of technical assistance services to cooperatives. Industrial Commons specifically serves cooperative and other social enterprises in the manufacturing center and Evergreen is a cooperative itself which provides business support and funding to other cooperatives. 


start.coop

Start.coop is a national organization working to scale the next generation of cooperatively owned businesses through a series of accelerators, incubators, and cohorts. Acknowledging the paucity in cooperative-friendly capital, not only does start.coop incubate new/pre-revenue and accelerate scalable/post-revenue cooperatives, they also provide consulting services and fiscal sponsorship to several organizations in the cooperative ecosystem. They also foster meaningful partnerships with and organize economic development organizations as well as values-aligned funders to address the racial wealth gap head on (start.coop n.d).

Since their first cohort graduated in 2019, start.coop has supported 36 cooperative enterprises who have raised more than $50 million dollars from impact investors, loan funds, and philanthropy and provided high-quality jobs to over 12,000 workers (start.coop n.d.)

Rocky Mountain Employee Ownership Center (RMEOC)

As one of the most co-op-friendly states in the US (Holguin and Wiener 2023), Colorado is home to the Rocky Mountain Employee Ownership Center (RMEOC), one of 13 recognized by the National Center for Employee Ownership (NCEO n.d.). Founded in 2012—nearly three decades after the first of its kind, the Ohio Employee Ownership Center—RMEOC supports co-op incubation and conversation while also conducting research and advocating for co-op friendly policies. RMEOC has also been on the forefront of the social cooperativism movement in the United States (Ji 2024) and is one of nearly 40 loan funds in Seed Commons’s network of non-extractive financiers of cooperativism in the country.

Most recently, RMEOC was recognized for “organizing workers, raising capital, [and] shaping public policy” to launch Drivers Cooperative–Colorado, a driver-owned rideshare alternative to Uber or Lyft (Ji 2024). 

The Industrial Commons

Based in Morgantown, North Carolina, a rural town in the Western part of the state with approximately 17,000 residents, The Industrial Commons (TIC) was founded in 2015 as a nonprofit organization dedicated to revitalizing this small town’s rural economy. 

Like many other towns in the region, Morgantown was no stranger to economic collapse, rooted largely in the fall of the textile manufacturing industry in the 1990s which took good quality jobs—and wealth—out of Western North Carolina (May 2024). In response, TIC was founded to revitalize the sector, leveraging existing local assets with a more cooperative approach. 

Today, TIC serves as an incubator for regional cooperatives—like the Carolina Textile District, Material Return, and Good Books—and a business developer for current and future manufacturing workers (Howard 2022). Beyond traditional workforce development, TIC provides funding for small, democratically-run, minority-owned businesses through their Capital for the Commons loan fund, supports transitions to worker ownership of existing businesses, and develops low-cost housing options and shared space for social entrepreneurs and their enterprises (TIC 2024). 

In their 2023 Rural Wealth Blueprint, TIC reported that they had created 85 direct jobs across their mix of social enterprises and supported over 140 businesses, generating $64 million in wealth for the region (TIC 2023). 

Evergreen Business Services

One illustrative example of institutionalizing cooperation among cooperatives is the Evergreen Cooperatives in Cleveland, Ohio. One of the most recognized models of community wealth building in the US, the Evergreen Cooperatives were launched in the early 2000s in partnership with the Cleveland Foundation and The Cleveland Clinic to provide good quality jobs across a network of cooperative enterprises in the city. Today, the Evergreen Cooperatives employs 320 Clevelanders across their growing portfolio of employee-owned businesses (Kahn 2021). 

Alongside the first business, Evergreen Cooperative Laundry, the Cooperatives launched Evergreen Business Services (EBS), a subsidiary of the Cooperative Corporation dedicated to developing new businesses in line with Evergreen’s mission. As a business support service cooperative, EBS doesn’t only provide back-end office support and technical assistance to existing cooperatives within the Corporation, but also conducts feasibility studies and engages in business planning and consulting to incubate new cooperative firms in the region (EBS n.d.). EBS also owns and manages the Fund for Employee Ownership which directly invests in small-to-medium-sized business conversions in the region (Fund for Employee Ownership 2023). In these ways, EBS enables Evergreen to aggregate its impact and expand the cooperative sector in Cleveland. 

Challenges and Limitations 

Cooperative developers and leaders have long noted the limitations of the US legal regime with regards to the operations of nonprofit cooperative incubators like those described above. One can make a similar case for the limitations of the financing available to cooperative enterprises (Ji 2024). For example, in the Small Business Anti-Displacement Network’s Toolkit, researchers write, “The Small Business Administration’s 7(a) loan program does not apply to cooperatives because of a personal guaranteed requirement, which stipulates that anyone owning more than 20% of a business must guarantee a loan with personal assets. This requirement is not practical for co-ops with many owners” (Alvarez et al 2024). As such, Ji advocates, instead, for the increasingly popular, global model of social cooperatives, “cooperatives organized explicitly to provide services and economic opportunities to disadvantaged populations, and which often are allowed preferential tax rates” (Ji 2024). 

Indeed, federal level engagement, be it through legislation or programming, with cooperative development is necessary to scale the sector across state lines. For example, while much of the funding for small business development and incubation trickles down from the federal government—namely from the US Economic Development Administration, the US Department of Agriculture Rural Business Development Grants, and U.S. Small Business Administration’s Small Business Development Centers (SBDCs)—there has been little to no unique engagement with cooperative development among these agencies. But, excitingly, in July 2024, the US Department of Labor announced a new Division of Employee Ownership and named Hillary Abell of Project Equity (a non-profit helping convert existing businesses to worker ownership) as its inaugural Division Chief (USFWC 2024). 

Taking It Forward

Small business support ecosystems abound across the United States today. From neighborhood business incubators to small business associations to community improvement districts, there is a real commitment among local elected officials, governments, and funders to preserve local businesses and keep money circulating locally (Alvarez et al 2024). Additionally, there is beginning to be a stronger understanding of why leveraging worker ownership can create quality jobs and expand access to work for excluded workers. As such, the impact of redirecting even a small amount of economic development dollars from corporate retention efforts—like subsidies to big businesses—cannot be overstated. By both expanding the reach of these ecosystems and infiltrating existing spaces with a cooperative ethos, a thriving cooperative sector in the United States with wealth building opportunities for all is inevitable. 

Additional Resources