New Cleveland Fund Will Acquire Businesses and Sell Them Back to Workers

///New Cleveland Fund Will Acquire Businesses and Sell Them Back to Workers

New Cleveland Fund Will Acquire Businesses and Sell Them Back to Workers

Tameka Thomas had returned to society after a five-year prison sentence, and a month after her release, she landed a job with Evergreen Cooperatives in Cleveland with help from a re-entry transition program. “I thought it was going to be really, really hard to find employment when I came home,” Tameka Thomas says. “I am so thankful for Evergreen for giving me a second chance and for believing in me and just trusting in me and just giving me the opportunity to prove to everyone that even though I made a mistake, that mistake doesn’t define me.”

While Thomas was grateful for the job when she landed it, she didn’t realize that she had found herself in a cooperative business — that is, a business where the workers collectively own the business, make major management decisions and share in the profits.  “You understand the importance of filling these orders that we have, as opposed to coming to work and ‘Why do we have to push out a thousand scrips? Why do we gotta do that?’” Thomas says. “Becoming an owner-operator, you know: if we don’t meet this quota, we don’t get paid. If we don’t fill this order, we lose customers. So, you just tend to have a different outlook.”

She thrived in the environment, and is now a department supervisor. “I started out on the production floor, and I worked my way up,” Thomas says.

Evergreen Cooperatives launched in 2008 to create living-wage jobs in seven low-income Cleveland communities. Instead of trying to lure corporations offering low-wage jobs, the coalition behind Evergreen Cooperatives aimed to catalyze worker-owned businesses with the idea that low-income residents could be trained for the jobs created. Currently, Evergreen employs more than 250 people at three core businesses: an industrial laundry, an urban greenhouse, and an energy-efficiency contractor. The laundry recently took on the Cleveland Clinic as a client, as Next City previously covered.

Now, however, the organization is looking to expand via a different pathway. Today, Evergreen Cooperatives announced the launch of the Fund for Employee Ownership, an investment fund aimed at supporting the conversion of existing businesses to cooperative or Employee Stock Ownership Plan (ESOP) models.

As it did with the original Evergreen network, the nonprofit research and advocacy group Democracy Collaborative is supporting the launch of the Fund for Employee Ownership. The fund will leapfrog the start-up process, explains Jessica Rose, chief financial officer at the Democracy Collaborative. Typically it can take many months, even a year or more, to train employees before they’re prepared to purchase a business from its existing owner. The Fund offers to buy-out owners when they’re ready to sell or retire, and then get to the hard work of converting to employee ownership. “We’re excited about the opportunity to accelerate that process of developing more employee-owners,” Rose says.

The businesses that undergo conversion will be professionally managed but employee-governed. “One hundred percent worker-owned, one worker, one vote basis,” Rose says. “The workers will be participating in meaningful decisions: what management to hire; how to deal with profit; board governance.” Joining the Evergreen network will also allow companies to economize by sharing back-office support, Rose explains, and to benefit from a team that “knows what it takes to run a participatory business.”

The change in strategy from starting new businesses to converting existing ones, Rose says, aims to acknowledge the fact that the baby-boomer generation is retiring. “That opportunity is a national story,” Rose says, acknowledging that while the Fund currently is focused on Cleveland and northern Ohio, the vision is to develop a model other communities can implement.

Employee-ownership has other champions among those focused on helping millions of business owners think through what to do as they consider retirement — a phenomenon that could have major consequences for cities.

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