Building Community Wealth Through Cooperative Ownership Ted Howard 28 January 2013 Cardiff, Wales
EVERGREEN COOPERATIVE INITIATIVE Generate Wealth for Stabilize Neighborhoods Create Jobs Residents BUILDING COMMUNITY WEALTH TO TRANSFORM CLEVELAND AND CHANGE LIVES
Evergreen Design Elements Community Wealth Building that: • promotes broader ownership of productive assets • anchors capital and jobs locally • stops the leakage of dollars from communities • supports individual and family wealth building • reinforces local resilience • generates revenues to finance public services • leverages anchor institutions for community benefit • contributes to local economic stability
Continuum of Wealth-Building Strategies BROADENING OWNERSHIP OVER ASSETS AND CAPITAL INDIVIDUAL COMMUNITY GOVERNMENT Family Wealth Community/Worker Public Ownership Shared Equity Building Ownership or Investment – Anchor institutions – Individual – Community Land – Municipal enterprise (eds, meds, churches, Development Accounts Trusts – State & local venture museums, libraries) – Limited Equity – Microenterprise investments – ESOPs or worker Cooperatives – Family Self-Sufficiency – Public pension fund cooperatives – Deed restriction Program ETIs (economically – Credit unions (inclusionary zoning) targeted investments) –“Baby Bonds” & child – Community – Mixed ownership – Public leases: land & savings accounts corporations (Market Creek) transit development – Earned Income Tax – CDC or CDFI direct – Program-Related – Stock warrants in Credit volunteer ownership Investments assistance programs exchange for granting – Social enterprises – CDC/CDFI equity tax breaks (fair – Alternatives to – Commons-based exchange) investments or joint predatory lending enterprises (e.g., ventures – Trustee ownership Wikipedia, Creative – Nonprofit financial – Community benefits Commons licenses) (e.g., Alaska Permanent education programs Fund) agreements The Democracy Collaborative www.Community-Wealth.org
Community Wealth Building Knowledge/Action Hub Integrated CWB Programs, Research & Advisory, Metrics
What is an Anchor Institution? • “Sticky capital” that doesn’t get up and leave • Typically among the largest employers in most major metropolitan areas • Local economic engines: employ large numbers of people; purchase large amounts of goods & services • Vested interest in surrounding communities • Typically non-profit • Largely untapped potential
Types of Anchor Institutions • Universities • Hospitals • Local Governments • Museums • Performing Art Centers • Sports teams • Other Cultural Institutions (theaters, zoos, etc.) • Churches/Mosques/Temples/Synagogues
Economic Dimension of “Eds & Meds” • Annual Procurement: o Hospitals: annual procurement $750 billion o Universities: $373 billion o More than $1 trillion; 6% of GDP • Endowments: o Hospitals: $500 billion o Universities: $300 billion
Benefits of Local Procurement Building a network of inter- Better vendor Increasing connected servicing/better access Local local vendors, to critical goods and employment/ Procurement Local Procurement purchasers, services in crisis benefit to anchors : benefit to stabilizing situation/decrease financial community : neighbor- carbon footprint/lower institutions, hoods costs training and higher education
Leveraging University Resources for Community Economic Benefit • University of Pennsylvania: procurement, community school, community health program • University of Cincinnati : $100 million in mixed use development • Duke : housing land trust, Latino credit union financing • University of Illinois : CDC, $24 million mixed-use project • Trinity College : endowment investment • Portland State : training for community-based organizations, neighborhood redevelopment
Leveraging Hospitals for Community Economic Benefit Henry Ford Hospital (Detroit) • Incentivized local hiring (7% of exec bonuses linked to these goals) • Pays local vendors a month in advance to provide working capital • "Live Local, Buy Local, Hire Local" initiative Sinai Health System (Chicago) • Incubated North Lawndale Employment Network, owner of Sweet Beginnings, a social enterprise employing 74 people • Renovated Hollenbach Sausage Factory brownfield site ($7M project). 12K sq ft. building now houses Center for Families and Neighbors Health Alliance (Cincinnati, OH): • Set and exceeded a $23 million target for purchasing from local minority suppliers. Catholic Healthcare West (San Francisco) • Community Investment Program provides low-interest loans: Since 1992, $49 million loaned out to 88 different nonprofit organizations
University Hospitals (Cleveland) Vision 2010 Construction of major new facilities = $1.2 Billion Results exceeded goals: 93% local contractors Enduring results: worked with 110 small companies, 17% MBE now work with 30 on routine spend 18% of workers 7% FBE local residents
EVERGREEN COOPERATIVE INITIATIVE Generate Wealth for Stabilize Neighborhoods Create Jobs Residents BUILDING COMMUNITY WEALTH TO TRANSFORM CLEVELAND AND CHANGE LIVES
ANCHOR & CULTURAL INSTITUTION PROCUREMENT $3 Billion Annually Cleveland Clinic University Hospitals 4. Cleveland Museum of Art Veteran’s Affairs Medical Center
Neighborhood Challenges NEIGHBORHOOD CHALLENGES Neighborhood Challenges and Indicators
VACANT LAND
POOR & UNSOUND BUILDING CONDITIONS
WATER SHUT OFFS / TAX DELIQUENCIES / FORECLOSURES
NEIGHBORHOODS AT RISK
STRATEGY 1. Focus anchor institution purchasing locally 2. Create new community-based, co-op businesses 3. Green 4. Link to expanding sectors of the economy (e.g., health, aging, energy, food, waste & green technologies) 5. Ensure financing and management to move to scale
OUR PRINCIPLES Co-ownership by co-op workers and other important “stakeholders” Triple bottom line: community, environment, profit Great majority of our workforce hired from GUC neighborhoods Linked to the supply chain of area anchor institutions Family supporting living wage & no-cost health care benefits Distribution of earnings into capital accounts (wealth building) Career ladders for workers Corporate culture of ownership, participation, transparency and accountability Individual co-ops are part of a larger structure that ties them together into a coordinated and integrated network (ECC)
GOALS • Create new jobs for neighborhood residents • Anchor capital so it doesn’t get up and leave • Promote asset accumulation • Stop $$ from leaking out of NE Ohio • Stabilize and revitalize neighborhoods • Develop a replicable model for national impact
EVERGREEN COOPERATIVE CORPORATION • Ohio nonprofit corporation awaiting 501(c)(3) status from IRS • Board includes anchors, funders, coops and GUC Initiative Evergreen Cleveland-area businesses • Provides overall strategic direction for Evergreen Cooperative Transit-Oriented Development system Education • Keeper of the mission Corporation • Owns 20% of each coop Housing (ECC) Engagement Cooperative Businesses Evergreen Evergreen Evergreen Cooperative Real Business Development Estate Services Fund • Holds GCG land • Based at NDC • May later control • ECC has contracted with NDC’s other land in GUC • For-profit LLC owned by affiliate CCAC to manage ECDF • May spawn nonprofit • Future: ECDF will exit NDC and ECC land trust as needed • become a CDFI within ECC Provides shared services (audit, HR, fin mgmt., etc.) • • For-profit coops incorporated in State of Ohio Houses entrepreneurs and • Currently 3 businesses CEOs • • 80% owned by workers; 20% owned by ECC Will have business • % of annual earnings contributed to ECC advisory council • Board: 40% worker-owners; 40% ECC appointed; 20% other Explanation of Acronyms CCAC Cleveland Cooperative Assistance Fund CDFI Community Development Financial Institution ECC Evergreen Cooperative Corporation ECDF Evergreen Cooperative Development Fund ( non profit revolving loan fund) GUC Greater University Circle NDC National Development Council
Questions & Discussion For more information: www.Community-Wealth.org www.Evergreencooperatives.com
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