Good morning, my name is Maru Bautista and I am Co-Director of Cooperative Development at the Center for Family Life in Sunset Park, Brooklyn. For the last 10 years, the Cooperative Development Program has incubated worker cooperatives alongside low income, immigrant communities, mostly in Sunset Park, Brooklyn but also across New York City.  We have developed 10 successful cooperative businesses, providing training and technical assistance and worked with over 300 community members who have been part of the worker cooperatives. We have also trained and provided technical assistance to 75 people from 30 different organizations, seeking to learn about cooperative development in their own communities.

I have seen worker ownership transform people’s lives. Every day, millions of people work in unsafe environments, experience exploitation and wage theft, are denied basic rights, face discrimination inside and outside their workplaces, are job, house, food and health insecure. Sunset Park residents, historically immigrants and historically low income, come through our doors at the Center for Family Life requesting social services to meet their most basic needs, but also come in dire need of employment. What worker cooperatives do is provide much more than safe and dignified employment to their worker owners, but they provide a path for personal and professional growth. Members experience a social and economic safety net that they hadn’t experienced before. Being part of a group of people that want to improve their lives together is very powerful. Collaborating with one another on a daily basis, sharing the burden of starting a business, learning how to start, run and sustain it while figuring out how to support one another, resolve conflicts and challenge existing industry standards by putting their rights as workers front and center, is a life altering experience. I have seen members who were unsure about their own abilities, felt overwhelmed by what it means to start a business, or doubted their time investment, become leaders in their own cooperative and in their community. I have seen so much pride and excitement in the children of worker owners.  A small child recently came to me and asked me if I knew her mother, just like that. We were in the hallway. I asked, “who is your mother?” and she said her name. I see hundreds of people on a weekly basis, but I knew who her mother was. She was proud to tell me her mom had been president of the largest cleaning cooperative in New York City, Si Se Puede! We Can Do It! Cleaning Cooperative. She is only 9 years old and knows her mom plays an important role in her community. She is 9 years old and already feels proud of her mom who overcame obstacles when coming to this country. I am positive the example her mom is giving her is changing her life, is demonstrating her that she can accomplish anything she wants, and she play an important role in her community.

For New York City’s cooperative development efforts, having the support from City Council for the last three years has been instrumental in allowing us to expand our work. We have doubled the number of worker cooperatives and increased the quantity AND quality of technical assistance support. Cooperative development organizations have been able to create a strategy together, and work in more collaboration than ever before. I humbly ask that the Philadelphia City Council approves legislation that would fund cooperative development, specifically to fund technical assistance; support the conversion of existing businesses to worker cooperatives; and support the development of a Cooperative Development Fund. I believe these actions to be key in strengthening the cooperative ecosystem in Philadelphia, and by allocating 1 Million dollars every year for the next 5 years, would allow organizations in Philadelphia to have a strategy that gives enough time for cooperative development. A lesson we have learned here in New York City is that we should not set goals of starting worker cooperatives on a yearly basis, but have a strategy where we support startup and existing cooperative businesses and conversions through a longer period of time. Ensuring funds for five years is enough time to see the full impact of worker cooperative development. It takes time to start, grow or convert a cooperative business, I humbly ask that you fund these processes with the time they require, and that you vouch for all the workers who are struggling to create a new life through business ownership.

Today is a really important day for worker ownership in Philadelphia. With careful consideration of the positive social and economic impact of worker cooperatives in communities across the country, the existing and potential supports that can strengthen communities take control of their present and future, and the acknowledgment and recognition that we need to invest in workers becoming owners, I am certain that Philadelphia will become even more of a worker cooperative city than it is today.

Thank you for your time and consideration.

In cooperation,

Maru Bautista

The New York City Department of Small Business Services (SBS) is pleased to submit this testimony to the Philadelphia City Council to outline the Worker Cooperative Business Development Initiative (WCBDI), a New York City Council initiative that is administered by SBS.

Income inequality is a critical concern for all New Yorkers, and Mayor de Blasio has made tackling this issue a central goal of his administration. At SBS, we are working hard to open doors for New Yorkers across the five boroughs – focusing on creating stronger businesses, connecting New Yorkers to good jobs, and fostering thriving neighborhoods. The New York City Council has made progress in achieving these goals through the Worker Cooperative Business Development Initiative. The Worker Cooperative Business Development Initiative provides free, high quality and hands-on services to all New Yorkers, including immigrant and women entrepreneurs.

Mayor Bill de Blasio and the New York City Council launched the Worker Cooperative Business Development Initiative (WCBDI) in 2014. The initiative is currently in its third year. In year one, New York City Council distributed $1.2 million across 11 partner organizations. With this funding, the Initiative partners provided business education services to prospective entrepreneurs, supported and helped expand existing worker cooperatives, helped create new worker cooperatives and assisted small businesses with converting to the worker cooperative model.  In its second year, the initiative received $2.1 million. Initiative partner organizations provide direct services to help this business community grow, with administrative support from SBS.

As entrepreneurial businesses, worker cooperatives face many of the same issues encountered by all New York City small businesses, including access to capital, affordable space, and access to technical assistance. Additional support was given to partner organizations and businesses through SBS’ network of NYC Business Solutions Centers. At these centers, a business owner can access a set of nine free services to help start, operate and grow their business in New York City. At the onset of the initiative, SBS developed and launched the educational offering “Ten Steps to Starting a Worker Cooperative” at multiple NYC Business Solutions Centers throughout New York City to provide additional information to those interested in the model. At the end of the first year, the initiative helped create 21 worker cooperatives with 141 jobs, and provided one-on-one technical assistance services to 24 existing worker cooperatives. Services provided by partner organizations included hands-on business incubation, legal services ranging from incorporation to creating bylaws, financing assistance in the form of providing loans and crowdsourcing opportunities, and providing specialized training in industry-based skills—to name a few of the services offered.

In year two, the budget for the initiative was increased to $2.1 million by the New York City Council and the funds were distributed to 14 organizations and SBS. Initiative partners continued to support the 21 worker cooperatives created in the previous year while also actively working to create new worker cooperatives, support existing worker cooperatives, help businesses transition into the worker cooperative model, and provide educational services on this business model. This allowed partners to grow the initiative while also focusing on scaling the businesses it helped create in the previous year.

Currently in year three with $2.2 million across 13 organizations and SBS, one of the organizations – the Center for Family Life – supported through the Initiative is adding a new feature to its programming that equips other nonprofits with the tools to create worker cooperatives. This allows other nonprofit organizations to incubate their own worker cooperatives, increasing and scaling the impact of the Initiative. The majority of WCBDI program beneficiaries are immigrant and women entrepreneurs based in New York City.

SBS will be releasing a report on the second year of the initiative in January 2017. We look forward to continuing to support the New York City Council and partner organizations and their work on the Worker Cooperative Business Development Initiative.

View the Black and Brown Workers Collective testimony as a pdf.

View Professor Borowiak's testimony as a pdf here. View the appendix to his testimony as a pdf here.

Good afternoon Councilman Jones and members of the Committee, my name is Rania Campbell-Cobb and I am the Sustainability Director at Friends Rehabilitation Program, a city-wide Community Development Corporation (CDC) specializing in housing and social services. 

Friends Rehabilitation Program (FRP) is a Quaker-based provider of affordable housing social services. With over 500 units of housing, FRP is working to develop safe, sustainable housing and economic development among marginalized communities in the Philadelphia area. FRP is planning to develop a worker cooperative incubator for returning citizens.

Returning Citizens and Philadelphia

In partnership with The Supervision to Aid Re-entry (STAR) Court, FRP offers job training to returning citizens in building maintenance and renovation in our “Revive and Restore” program. STAR Court and Revive and Restore participants are all individuals identified as being more likely to recidivate when navigating the transition from prison to their home community. In the program’s first year, over half of all program graduates were placed in full time employment, and only two out of the program’s first nine participants recidivated. Why has this program been a success? In addition to job training, Revive and Restore participants learn to build a team culture and find the social supports necessary to navigate re-entry.

Why Worker Cooperatives?

Our program graduates are eager to support their families and communities with quality career opportunities. FRP is eager to further develop quality career opportunities for returning citizens. Stable work opportunities reduce rates of recidivism considerably, and cooperatives offer opportunities for work that are more stable than other corporate or small business models. Additionally, cooperatives build strong social support systems through the work of group decision making, practices of conflict resolution, and a commitment to equality and accountability among members. Cooperatives offer both quality work opportunities, and critical social supports to members of our communities facing difficult transitions and circumstances.

Cooperative businesses have lower failure rates than traditional corporations and small businesses. Cooperatives create quality jobs, stable businesses, and community wealth. Jobs at cooperatives tend to be longer term, provide better wages than similar jobs in conventional companies, and are associated with increased local spending. By using the worker cooperative model, entrepreneurs of myriad backgrounds are better able to build a successful business, and gain access to dignified, stable work.

FRP plans to incubate returning citizens working cooperatives in the green building trades in order to improve Philadelphia’s housing stock, energy consumption, and support resiliency in our city’s communities. Based upon what we have observed in our work and in the communities we serve, we believe that cooperative business models are poised to tackle a number of intersecting social and economic issues faced by marginalized communities in Philadelphia. We urge you to fund technical assistance for cooperatives, contribute to a cooperative loan fund, and fund conversion education. Cooperative development is crucial to the strengthening communities most in need in Philadelphia, and we hope you will join us in this work.

Sincerely,

Rania Campbell-Cobb
Sustainability Director 
Friends Rehabilitation Program

The Democracy Collaborative is a national research institute whose work with cities across the US and beyond focuses on supporting the emergence of a new framework for inclusive economic development, grounded in broad-based ownership models that build community wealth. Too much urban economic development continues to operate on the assumption that opportunity for low-income communities can be best created by subsidizing businesses and development projects those communities have no stake in and then waiting for economic benefits to trickle down—and far too many communities, especially urban communities of color, are still waiting.

Encouragingly, however, as we have documented extensively in our 2015 report Cities Building Community Wealth, an increasing number of municipal governments are beginning to embrace models of economic development which aim at directly creating opportunities in the communities that need them most. Our work, and the work of others, on the ground in cities across the country confirms this shift towards a development model that puts inclusion in the local economy first. In Cleveland, Ohio, the support of the municipal office of economic development played a key role in helping us launch the Evergreen Cooperatives, a network of worker-owned businesses creating living wage jobs in some of the city’s hardest hit neighborhoods by leveraging the purchasing power of nonprofit anchor institutions.  In Rochester, NY, Mayor Lovely Warren, with our help, is developing a non-profit cooperative business incubator as a job creation and retention strategy. At our 2016 convening on “Cities Building Community Wealth,” supported by the Surdna Foundation, we highlighted similar efforts underway across the US, including in both New York City and Madison, Wisconsin, where city councils have approved legislation authorizing municipal financial support for inclusive cooperative development.

We see cooperative businesses as a key broad-based ownership model with several key advantages over traditional business development structures.  Most obviously, cooperative ownership democratizes wealth at the community level, giving everyone a stake in the economic institutions they depend on.  By supporting cooperative development, municipal governments are not only creating jobs, but also directly building assets of community residents. Cooperative businesses—oriented towards broad participation and connected to a social mission—also facilitate the development of civic capacity and community leadership.  And perhaps most importantly, cooperative business models address several key problems of “leakage” associated with traditional economic development models.  With broad-based community ownership, the capital invested in and created by cooperative businesses is far more likely to stay embedded in the local economy, and the profits generated by these businesses, designed for durable local ownership, are far more likely to recirculate locally. In other words, facilitating the development of cooperative business produces “sticky” prosperity that is oriented towards job retention by design.

As the Council considers the merits of cooperative business models and evaluates proposals for how municipal support could help these models scale, there are emerging national best practices that could inform the design of such support. In particular, our research has identified that:

• Educating current and potential business owners about the availability of cooperative business models is a simple and cost-effective strategy for beginning to grow the local cooperative economy. Existing small business resource centers can easily play this key role.
• The development of cooperative business development infrastructure and ecosystems is a more cost effective strategy, with greater impact, than a focus simply on individual cooperative business development projects. Whether the legal, technical, business development, and financial services needed to build cooperatives is provided by directly by a city agency or through community-rooted nonprofits, supporting and sustaining such services is a key strategy for municipal governments that want to develop the cooperative economy.
• Financing oriented towards broad-based ownership structures is still a developing field, and city governments can play a key role in helping connect existing resource streams—like federal community development funds—to cooperative development.
• There is a growing consensus that facilitating the conversion of small and medium sized businesses as an owner succession strategy could play a key role in municipal job retention strategies.
• Place-based nonprofit anchor institutions like universities and hospitals can play important roles as stakeholders in community-focused cooperative business development, especially if they intentionally shift their purchasing dollars towards local cooperative business.

John Duda
Director of Communications
The Democracy Collaborative
jduda@democracycollaborative.org

Good afternoon. My name is Peter Frank and I am the Executive Director of the Philadelphia Area Cooperative Alliance. Thank you Chairman Jones and all members of the Commerce and Economic Development Committee for the opportunity to testify on the benefits of cooperatives in Philadelphia.

PACA represents existing cooperative businesses throughout Philadelphia and supports the development of new co-op businesses ranging from small neighborhood preschools; to worker co-ops in industries that typically have low pay and difficult working conditions; to food co-ops that anchor commercial corridors; to housing co-ops; and credit unions.

There are over 170 co-op businesses in the Philadelphia area, with at least two in every councilmanic district. PACA works directly with 20 existing co-ops that operate in Philadelphia whose combined membership is over 16,000 and growing by about 16% a year. Their combined payroll and benefits is over $15 million per year, and that number is also growing. We are also working with 24 start-up co-ops in the city and are building a pipeline of future co-op entrepreneurs.

There are many community benefits from co-ops. They provide access to essential services when other businesses are unable or unwilling to serve their communities. They build community wealth for low-income communities. They address social issues and have a mission beyond the services they provide, but they don’t rely on charity to serve their communities. The business is the engine that fuels the social purpose for which they exist. Worker co-ops build leaders, providing a path for personal and professional growth as workers move from employees to owners. What unites all co-ops is that they are community owned and controlled. Community ownership of cooperative businesses ensures that they survive and thrive for generations by staying relevant to the needs of their communities.

The growth of the cooperative sector creates new jobs and increases tax revenue for the City. Co-ops reduce dependence on social programs by arming the communities most in need with the resources to address their community’s issues.

We’re here to share real examples of how co-ops are already serving Philadelphia, how co-ops are forming to serve the needs of immigrants, returning citizens, and low-income communities of color. You’ll hear from Mexcon, an immigrant-owned construction company in Philadelphia. You’ll hear from Childspace a worker co-op day care business with 3 locations in West and Northwest Philadelphia. You’ll also hear from Weavers Way Co-op, a food co-op that has vitally served their Northwest Philadelphia community for decades.

We’re also here to share real examples of how other cities are effectively investing in co-ops. Our ask for support from the City is based on the emerging best practices from these other cities.

The potential for growth is huge. In the last couple of years we have seen significant interest from people looking to start a co-op to address a community need or societal issue. Unfortunately, there are inadequate resources available to support these co-op entrepreneurs. PACA is doing the best that we can to serve them, but the demand is much greater than what we and other local co-op business developers can offer.

I also want to acknowledge that existing city programs for small business development have supported some co-ops in Philadelphia, which you will hear about in a moment. The kinds of supports that we are asking for are complementary to what is available to all small businesses in Philadelphia, and is targeted at what we know holds people back from opening co-ops in their communities.

Specifically, we are seeking $2 million per year over a 5 year period to fund technical assistance for start-ups and expanding co-ops, educate business owners about the potential to sell their business to their workers as a succession plan for retirement, and to create a revolving loan fund that can fill the gap in financing that is available to co-ops. We’re also interested in exploring procurement opportunities for co-ops from the City as well as from anchor institutions, including hospitals and universities.

Funds for technical assistance would be particularly focused on immigrant populations, returning citizens, communities of color, and low wealth communities. The co-ops would be provided with free or low-cost support for the development of business plans, feasibility studies, market analyses, capitalization plans, incorporation documents and legal fees, leadership training, project management, and co-op governance training.

Profitable businesses close every year because retiring business owners fail to adequately plan for the future ownership of their business. These businesses could be sold to their employees by forming a worker cooperative or an employee stock ownership plan (ESOP). This ensures that jobs are retained and that the businesses continue to operate in Philadelphia.

We are seeking to establish a low-interest revolving loan fund dedicated to co-op start-ups for people who are typically excluded from access to finance. This will require that technical assistance is part of the lending process, which is necessary to assure the proper planning needed for the success of the co-op is made available.

Using city funding to start a revolving loan fund will maximize our impact by creating a self-replenishing pool of money. The fund will offer a flexible source of capital that can be used in combination with more conventional sources, acting as a bridge between the amount a cooperative can obtain from private lenders and the amount needed to start or sustain the co-op.

We look forward to working with City Council and City agencies to invest in Philadelphia’s neighborhoods and build wealth for those who need it the most through cooperative business development.  

My name is Javier Garcia Hernandez. I am one of the co-owners of Mexcon, a General Construction company that is operated by immigrant workers from Mexico.  We have been in operation for two years and employee 20 workers. We have been in the process of converting our business to a worker co-op, because we know that for us to stay working together we have to help one another sustain our business.  

The reasons as to why a coop model is to our benefit are:

    First, the cost of doing business is so high that only as a group we are able to manage.

1. Insurance: We pay about $3000 dollars per month on insurance that the City of Philadelphia requires in order for us to do work. We must have General Liability, Auto Liability, and Workers Compensation policies.
2. Equipment: We are constantly buying equipment to do our work and much of the equipment needed to do our work is expensive especially when it comes to safety equipment that protect us from getting injured.
3. City bureaucracy: The cost of obtaining permits, taxes and licenses often adds to our cost of operating.
4. Worker protection: As a coop we look after our own safety and security we care about each other because aside from being a coop we are more like a family. We had worked for other companies where we felt exploited, underpaid, and exposed to dangerous working conditions, which was one of the biggest reasons as to why we decided to work for ourselves.  Working for ourselves no one yells, shouts, or asks us to do unsafe work, we are able to protect ourselves.

    Second, by working as a coop we provide a better service to our costumers and our community.  As workers who own our business we have an incentive to do our best work. It is our reputation on the line, and each one of us is responsible for the quality of our work of which we own and take pride in. As a result the demand for our services has increased, and clients refer us through word of mouth. We have experienced this phenomenon with homeowners and investors that we have been working for throughout the Philadelphia area. We are proud to say that we are booked for the next five months with work for more than twenty workers.

                Creating a coop for us seems like our only way out of poverty. We are recent immigrants with no credit or other financial support. We don’t have the extended families that we can reach out to for help, or a rich friend that can lend us financial support. At Mexcon we are building a family, so we take care of one another. We want to continue working together. We thank PACA for their generous support in helping us organized our group by providing technical expertise and assistance, as well as their willingness to help us design a business plan, trainings, and a working model that benefits not only me and my coworkers but our broader community as well.

                We are in the beginning stages of forming our coop, and are in need of much help. We hope you can help us sustain our business by providing support to start-ups like mine and other existing cooperatives business.  We hope that you can provide support to groups like PACA so they can continue to provide support to us and many other coops.  We hope that in the future we can reach out to you, or to those that you support, and ask for financial help to fund our own projects. Every year we flip many houses for investors but yet we cannot afford to work on our own apartments or projects as we continue to pay high rents, being gentrified to other neighborhoods.

                When I see my coworkers desperate for work, desperate to put food on their tables to feed their families, I think of the power of coops. I am grateful to PACA for helping us become a coop. They have opened their doors for us to grow by supporting our coop. But there are more groups out there who want to start co-ops, and need access to business supports and money for start-up. I am here to ask you for help. I am here to ask you to keep our family working together in what I believe is the most equitable and sustainable way of during business in our community, one in which not only I benefit but those around me also benefit, like a rising tide that lifts all boats, we go up together, we grow together as a coop, like a family.  

Thank you.

Sincerely,

Javier Garcia Hernández

Mexcon

Good morning Councilman Green, members of the City Council Commerce and Economic Development Committee, members of the Philadelphia Area Cooperative Alliance, and allied cooperators.

My name is Dr. Julia Jean-Francois, Co-Director of the Center for Family Life in Sunset Park, Brooklyn, and I am a proud native Philadelphian. 

10 years ago, the Center for Family Life launched an initiative to support cooperative business development in a low-income, largely new immigrant community in Brooklyn, New York. 10 years later, the numerous businesses that we have helped to incubate have generated more than 8 million dollars in income to these low income workers through dignified work in safe, well-paying jobs. The women and men who participate in Sunset Park based cooperative businesses like the We Can Do It! Cleaning cooperative, the Beyond Care child care cooperative, the Golden Steps Elder Care Cooperative, Trusty Amigos pet care cooperative, United Handyman or Sunset Scholars tutoring cooperative have not only found a path to income generation, but they have also found a path to leadership development. Through their work as cooperative executives, many have become civic leaders in our community. Cooperative business owners’ families and children are strengthened not only by the income that they generate through their cooperatives, but also by the confidence, self-esteem and hope in the future that is achieved through the development of a small business. Women and men in cooperative businesses find a platform to build assets and to build a business that can grow to help many others in the community in the future.

Four years ago, the New York City Council took the bold step to allocate significant discretionary funding to a group of not for profit cooperative development organizations and in so doing, we have greatly increased the number of cooperative businesses operating in New York City and engaging hundreds of low income workers in work that generates a fair wage and that is organized by contracts that uphold the dignity and value of the workers.

In fiscal year 2016, the New York City Council allocated over 2 million dollars to continue this effort. Further they have passed legislation that holds the New York City Department of Small Business Services accountable for tracking the numbers of cooperative businesses that they assist, and that hold contracts with City government agencies.

A decision by the Philadelphia City Council to allocate funding to cooperative business could support funding for technical assistance to Philadelphia residents who seek to launch cooperative businesses, funding to aid in the conversion of existing small businesses to cooperatively owned and operated businesses, and a cooperative loan fund.

Given the tangible and profound impact that the development of cooperative businesses has had on New York City, I am honored to be here today to recommend that the Philadelphia City Council joins New York City, Madison, Wisconsin and many other municipalities large and small, that support legislation and initiatives that increase the numbers of cooperative businesses in this city.

Good afternoon, and thank you for the privilege of testifying today. My name is Esteban Kelly and I am the Executive Director of the United States Federation of Worker Cooperatives (USFWC).

We are the only national grassroots membership organization specifically for worker cooperatives and democratic workplaces in the country. We advance worker-owned, -managed, and -governed workplaces through cooperative education, advocacy, and development. Our Federation represents over 160 business and organizational members representing over 4,000 workers across the country. We organize through local cooperative networks while building power with national and international partners to advance an agenda for economic justice rooted in community-based, shared ownership.

I live in West Philadelphia, and I am joined today by some members of the Federation’s Board of Directors which is 100% democratically elected by our members.

Our board is 2/3 comprised of immigrants and people of color, representative of the leadership of the worker cooperative sector. The worker cooperative workforce is 60% people of color and 68% women. The current swell in new cooperatives comes from people who have traditionally been excluded and exploited by our economy, who are using co-ops to opt in by creating their own jobs and becoming business owners.

Six years ago I was one of those people. I joined together with 5 friends to form a worker co-op training and consulting business to support organizations, including other cooperatives, whose missions are to advance economic justice. It’s called AORTA Coop, short for the Anti-oppression Resource & Training Alliance. Together the six of us had a clear vision, an abundance of leadership, and a growing client base, but even we, with our extensive pedigree of college and graduate degrees struggled to access the technical assistance specific to cooperatives necessary to incorporate and launch our business. It took us four years to do so given the minimal supports there are to fund technical assistance and legal support.

As the Executive Director of the US Federation of Worker Co-ops I work to make it easier for cooperative businesses to start-up and thrive, but there is still work to be done. I hear stories every day from converting businesses, start-ups, and incubated projects how challenging it is to source the necessary technical assistance to launch and grow their businesses. Co-ops need support, like any business, with the development of business plans, feasibility studies, market analyses, capitalization plans, incorporation documents and legal fees, and project management. They also need unique assistance with governance training and leadership development that is specific to the model. Additionally, traditional lenders avoid our businesses because they aren’t familiar with them and often require that every worker in the cooperative co-sign as a guarantor– a prohibitive barrier for most of our businesses.

Yet what we know is that worker co-ops have a massive impact on local communities, fundamentally altering the structures of extraction that siphon wealth off of communities. Instead, worker co-ops build community wealth. They offer not only more jobs, but good jobs. Jobs with dignity. Jobs where the workers drive the priorities of the business and make all of the decisions for how to allocate earnings and distribute them to the workers, their families, or their local communities. When the businesses or the economy are not doing well, the workers come together to decide how to endure. Often times instead of firing workers, they will share in a collective pay cut, or halt new initiatives for the sake of preserving reliable incomes and stabilizing their families.

Co-ops, as the UN declared in 2012, “Build a Better World”. Even Pope Francis has cited co-ops as the key economic strategy for eradicating poverty and establishing responsible, sustainable economic livelihood around the world. In his native country of Argentina, cooperatives now account for 10% of the GDP, and a productive, democratic workforce.

What makes worker co-ops so beneficial as a business model that serves communities?

Worker cooperatives have proven to be an effective tool for creating and maintaining sustainable, dignified jobs; generating wealth; improving the quality of life of workers; and promoting community and local economic development, particularly for people who lack access to business ownership or even sustainable work options. According to United for a Fair Economy: “One of the main barriers to business ownership for people of color is access to start-up capital…. [Worker cooperatives make] business ownership more accessible.” (Source: State of the Dream 2013)

• Worker cooperatives build local wealth: At a worker cooperative, profits do not go to distant investors, but instead go directly to the workers. As a result, the money stays grounded in the local economy, building community wealth. With ownership in the hands of workers, who are usually living and spending locally, these companies stay connected and accountable to their communities.
• Worker cooperatives create quality jobs: Workers have a meaningful role in the business, as they contribute to and benefit from the success of a company they co-own. Jobs at worker cooperatives tend to be longer-term, offer extensive skills training, and provide better wages than similar jobs in conventional companies. Furthermore, worker cooperatives offer opportunities for greater participation in management and governance decisions that help the business succeed.
• Worker cooperatives create meaningful change for underserved populations: The New York Times concludes, “by placing workers’ needs ahead of profits, they address the root cause of economic disparity.” (3/23/14) More than half of worker cooperatives in the United States today were designed to improve low-wage jobs and build wealth in communities most directly affected by inequality, helping vulnerable workers build skills and earning potential, household income and assets

In light of this, The US Federation of Worker Cooperatives has counseled many cities from Boston, to Oakland, to Cleveland, Oakland, and Minneapolis to support and invest in cooperative development and jobs that will stay in their cities for the long-term. In Austin, TX, Rochester NY, Madison WI, and New York City millions have supported new business development, including through procurement policies, technical assistance funding, and access to capital. 

Earlier this month I spoke with the U.S Department of Commerce, who along with the Census Bureau, USDA, Department of Housing and Urban Development, Labor Department, and Department of Energy, are part of an Inter-agency working group on cooperative development. Cooperatives have emerged as the chosen model for public support in the private sector and the superior small business model here and throughout the world. As the poorest major American city, I know how much Philadelphia has to gain from adopting the cooperative model as a cornerstone of revitalizing our neighborhoods going– as our model aspires– farther, faster, together.

Click here to view Donna Leuchten Nuccio's testimony as a pdf.

My name is Teresa Mansell.  I am president of Childspace Management Group, a worker cooperative that operates high quality childcare programs in the city of Philadelphia. I was one of three mothers who opened the first childcare center in 1988 in Mt. Airy. Our second center opened in 1992 in Germantown, and, in 1999, a third center was opened in West Philadelphia.  All three centers are Keystone Star 4 rated; the Commonwealth’s highest quality level a childcare program can achieve. Childspace currently serves over 200 middle and low-income children from infants to school age.  There are 50 employees.  Fifteen are worker-owners.

After a year on the job, employees are given the option to join the coop and become a worker-owner. One share of stock is purchased for $5.  A $245 membership fee is paid over the next year through payroll deduction.  Each member receives one vote on board matters. The board meets monthly and is open to all employees.  Financial information and reports from board committees are shared with the membership.

Worker owners participate in corporate governance and management in ways they never imagined they could. The Childspace model has enabled women of color, who work in an industry notorious for its low wages and limited career advancement, to develop skills that allow them to gain self-confidence to become an officer of the company or chair of a committee.  And, because we are the only worker-owned child care business in the country, Childspace owners are often asked to tell their story of how being a coop member has impacted their lives.  Voting to offer health care benefits, voting to expand operations, and voting on pay increases are some of the decisions owners make for the good of the business and for the good of our employees.  Establishing the policies that govern the organization are what owners say is most important to them.  This is reflected in our low staff turnover rate.  Continuity of caregivers is very important in providing high quality childcare.

It was evident from the outset that education held the key to our success. Childspace provided and continues to provide training and education opportunities to current and potential owners. The knowledge gained while learning to operate the business and workplace democracy, carries over into their lives as parents and enriches the community in which they live.  Educating our employees on policy and advocacy work around issues affecting the childcare field as well as workforce issues are also a part of Childspace’s ongoing commitment to educating our members and employees.  Our worker-owners have come before this council to advocate for paid sick time, high quality pre-k and now for your support of cooperatives. 

Childspace is committed to continuing education for owners through technical assistance, training and professional development opportunities so we develop the necessary tools to make informed decisions regarding our business.  However, being in an industry with a very low profit margin, we are limited in the amount of funds we are able to dedicate to this aspect of our company.  We have pieced together funds to support are of this work, but it is a challenging to find a consistent source of revenue. Childspace would welcome the opportunity to receive technical assistance from experts in the cooperative field for at a reduced rate or nominal fee, which could allow us to redirect resources to enriching programs for the children we serve. 

A cooperative business such as Childspace is unable to go to a commercial bank or credit union and obtain a loan or line of credit without each worker owner guaranteeing the loan even though we are a $2 million company. A friendly financial option would help during times when cash flow is an issue, such as what we experienced eight years ago during the state budget impasse. 

Authorizing the Committee on Commerce and Economic Development to hold hearings regarding the development of co-ops in the city and how to support their growth will enable more of us to tell the story and allow you to delve deeper into the positive way cooperatives impact our lives.

Childspace is proud to be a part of the growing cooperative movement in Philadelphia. Thank you for your time.

OP-ED

Las Cooperativas construyen oportunidades más justas de trabajo para poblaciones multiculturalmente diversas

La ciudad de Filadelfia tiene la oportunidad de crear trabajos más justos, sostenibles y apoyar a la economía local siguiendo un modelo de negocios de cooperativas en auge en el país. Este Octubre 24 el Comité de Desarrollo de Comercio y Economía del Consejo de la Ciudad de Filadelfia, celebrará una audiencia para abordar el tema sobre cómo la ciudad podría apoyar el crecimiento de los negocios de cooperativas.

El modelo de negocios de las cooperativas tiene una tradición de organización comunitaria social no sólo en el estado de Pennsylvania, sino en todo el  país e incluso a nivel internacional. En algunos países de Centro y Sudamérica, las cooperativas han sido una forma de organización para rescatar la economía local por las afectaciones que causó la entrada de productos de importación con los tratados de libre comercio que han forzado a tantos latinos a emigrar a este país. No es de extrañar que las cooperativas sigan siendo un modelo a seguir para la comunidad latina. Para poblaciones que no cuentan con oportunidades de trabajo justo, pero que sin embargo contribuyen significativamente a la economía de este país, las cooperativas son una oportunidad más justa para contribuir a la economía local. Un estudio presentado por el Institute on Taxation and Economic Policy al principio de este año mostraba como las poblaciones de inmigrantes indocumentados contribuyen a la economía de los Estados Unidos pagando $11.6 billones en impuestos locales y estatales en 2013,  incluyendo $590 millones recolectados en Nueva Jersey, $139 millones en Pennsylvania y $12 millones en Delaware.

En 2014 la Ciudad de Nueva York aprobó un fondo de $1.2 millones de dólares para apoyar el crecimiento de negocios de cooperativas de trabajadores propietarios,un paso histórico para el movimiento cooperativista. Tan sólo en el primer año la Iniciativa para el Desarrollo de Negocios de Cooperativas de Trabajadores (WCBDI por sus siglas en inglés) reportaba la creación de 21 Cooperativas de Trabajadores. Por mencionar un ejemplo, la Cooperativa de Cuidado de Adultos Mayores Golden Steps con liderazgo de mujeres inmigrantes latinoamericanas que opera en Sunset Park - la cual fue creada con apoyo de la incubadora Centro de Vida Familiar que recibió el apoyo de la iniciativa WCBDI.   Angelina Cázares, una de las miembras propietarias de Golden Steps menciona como este modelo de negocio le ha permitido adquirir nuevas habilidades no sólo en el entrenamiento de los servicios que ofrece la cooperativa, sino también en el manejo de operaciones y desarrollo de su negocio. El hecho de que las trabajadores propietarias estén involucradas en la organización del negocio de su cooperativa en la toma de decisiones ha sido por ejemplo un factor de retención, comparado al modelo tradicional de negocios de la industria como la del cuidado de adultos mayores en la cual las empleadas abandonan el trabajo constantemente.

Las cooperativas también son una oportunidad única para poblaciones de inmigrantes indocumentados, los cuales puedan organizarse para adquirir cobertura de seguro médico, dental así como la posibilidad de desarrollar su plan de retiro. Otro de los beneficios para los trabajadores propietarios de cooperativas es el hecho de tener salarios justos, ya que son los mismos trabajadores quienes a través de sus mecanismos de toma de decisiones determinan los salarios, a comparación de empresas que los explotan, muchas veces sabiendo que no cuentan con documentos o representación en este país. En este sentido, el movimiento de cooperativas es un modelo de justicia no sólo económica si no también para la justicia inmigrante.

El movimiento cooperativista juega un papel esencial en el crecimiento de economías locales, de trabajos sustentables y más justos. En la Ciudad de Filadelfia, algunas cooperativas existentes ya establecidas van desde cooperativas del cuidado de niños, cooperativas de sindicatos de taxistas,  cooperativas de trabajadoras del cuidado de personas, por mencionar algunas. Apenas un mes atrás el Philadelphia Area Cooperative Alliance lanzó su programa 20 círculos de estudio,20 cooperativas, en el cual se inscribieron 20 negocios que están transicionando o convergiendo hacia la formación de nuevas cooperativas. La diversidad de los grupos es impresionante, no solo en la demografía de las y los integrantes, sino también de las industrias y sectores que representan. Desde grupos que quieren conformar cooperativas de viviendas, librerías de préstamo de herramientas, cooperativas de trabajadores independientes de medios, trabajadores de construcción, cooperativa de curanderas, entre muchas otras más. Hay tres grupos de latinos en esta composición: Mexcon, un grupo de contratistas de reparaciones de edificios, Cooperativa PWA, en el ramo de la construcción, y South Philly Barbacoa, un restaurante que promueve y defiende los derechos de trabajadores inmigrantes.

Las cooperativas están ganando momentum como una forma de organización para enfrentar condiciones de explotación al crear trabajos dignos para trabajadores propietarios a lo largo y ancho del país. Hoy en día la Ciudad de Nueva York ha invertido $5.5 millones de dólares en el desarrollo de cooperativas de trabajadores. Madison, Wisconsin se prepara para invertir $5 millones en los siguientes 5 años con el  mismo propósito. Estas ciudades saben muy bien que el dinero invertido quedará en las mismas comunidades, con ganancias que serán invertidas localmente. El movimiento cooperativista es un modelo de organización radical para los movimientos de base que buscan la equidad económica, social así como la estabilización de vecindarios marginados, creando empleos justos que empoderan a los trabajadores y a sus comunidades.

Quiero extender una invitación a la comunidad de Filadelfia a atender esta audiencia para escuchar a expertos locales y nacionales en una disertación de cómo el desarrollo de cooperativas puede combatir la  inequidad y de cómo la ciudad puede apoyar a las cooperativas para construir una economía local sostenible. Usted tiene una cita el día 24 de Octubre en City Hall en el cuarto 400 a la 1:00pm.

Good Morning. My name is Kevin McPhillips and I am the Executive Director and CEO of a new Pennsylvania non-profit organization – The Pennsylvania Center for Employee Ownership. We exist for one purpose….to increase employee ownership in the Commonwealth to dramatically improve the lives of its citizens. We partner with PACA in our joint mission of Employee Ownership. We are a 501(c)(3). We have no government funding, we charge nothing for our services, and we’re here to help you.

I’d like to begin by thanking the distinguished members of Council for the opportunity to share a few thoughts. I commend you for taking the critically important first step that you have done today, to improve lives and decrease the wealth gap that is strangling so many of our citizens; while ensuring fairness and ending workplace abuse. Employee Ownership can do all of that.

I’ll take just a moment to share a personal note. I grew up in Northeast Philadelphia and am proud to say that my father was a dedicated member and leader in City Government for over 25 years. The City, and it’s many extraordinary offerings were centrally important to my family, and myself and continue to be today.  It is within this context that I would like to share a few stories.

What if we could tell you that business owners could sell their companies to employees for fair market value, and the employees would pay nothing for their ownership stake?

What if we could tell you that Employee Owned companies would pay no Federal Tax…..ever?

What if we could say that Employee Owned companies in Philadelphia STAY in Philadelphia?

What if we could tell you that Employee Owned companies are dramatically more productive than non-employee owned companies?

And what if we could say that, in a time when pensions are a thing of that past, employee owners retire with real savings and a comfortable life, without the burden on government?

Well, all of this is true. Thanks to an act of Congress in 1998…..and no one knows about it.

As noted in Resolution 160701, Profitable businesses close regularly when retiring owners could instead convert to a co-op by selling to their employees through a worker cooperative or an Employee Stock Ownership Plan (an “ESOP”).

The creation of Co-Op businesses will be a decided benefit to all of the Philadelphia citizens who participate. My colleagues at this gathering have done a yeoman’s job of describing both the dangers that exist in the workplace, as well as the wonderful benefits that can ensue from co-op businesses.

But not every worker will have the opportunity, or the inclination, to start her or his own business. Rather, there are tremendous opportunities to assist workers through co-op conversions, or through Employee Stock Ownership Programs (ESOP’s). Here are a couple true stories.

In 1988 two twin sisters graduated high school and went to a grocery store chain to seek employment. This grocery chain was an Employee Owned company. The company had only one opening; so one sister took a job there, stocking shelves. The second sister took an admin job at a law firm. Both worked hard and prospered.

Fast-forward 25 years…………

The sister at the law firm religiously contributed to her 401(k), and by the age of 43, had almost $70,000 in her account. Very good for her young age.

The sister at the grocery store did not participate in the 401(k) plan, but rather had her ESOP account. At the age of 43, still stocking shelves on the overnight shift; she had just over $1 million in her account.

In the Philadelphia suburbs, the owner of a Plastics company decided to form a partial (30%) ESOP to attempt to find a way to better compete and energize employees.

Fast-forward 7 years……….

The company, which had been largely flat, had growth of 630%. All employees in the ESOP plan for 7 years (35% of employees) had accounts in excess of $250,000. 51% of employees had over $100,000 in retirement account. Again, with no financial investment. This included blue and white collar, those running machines, admin clerks, warehouse workers and those sweeping floors.

And few know about these programs. Even fewer understand them.

First and foremost, we are imploring City Council to assist to mend the ills and the dangers. Please prevent the abuse, and ensure the future of workers through funding co-ops in the city.

But we are also asking you to work with us. Please help us to help you. Let’s work together to get the message out about co-ops and about employee ownership. Let’s jointly identify the companies that are going out of business due to owner’s retirements, and to the companies who can benefit thousands of workers through ESOP’s. We are here to work on this.

I thank you for your kind attention, and am at your assistance at any time.

Sincere regards,

Kevin McPhillips
Executive Director/CEO
The Pennsylvania Center for Employee Ownership

View the Philadelphia Food Policy Advisory Council testimony as a pdf here.

Testimony of POWER in Support of Cooperative Development in Philadelphia

Submitted by Paula Paul, Economic Dignity Team of POWER

Good afternoon to the Council of Philadelphia, thank you for this opportunity to speak before you, my name is Paula Paul, I’m representing POWER (Philadelphians Organized to Witness, Empower and Rebuild). We are an interfaith organization of 47 congregations, from all across the city, intentionally bringing people together across race, faith, income, and neighborhood, to work for social, economic and racial justice. Together we have a total membership of more than 25,000 individuals and touch each of Philadelphia’s ten city council districts and a majority of Philadelphia’s 44 zip codes.

My congregation is St. Benedict Church/St. Athanasius Parish in West Oak Lane.

POWER is working to transform Philadelphia into a city that works for all of us. Currently, we have three main areas of activity: jobs (which also include a partnership with EQAT, Earth Quaker Action Team with our campaign of Power Green Jobs), education, and criminal justice reform. On behalf of POWER’s economic dignity team, I am here today to support cooperative development as a way to bring community wealth and jobs to our neighborhoods.

As a result of a POWER- sponsored Poverty Summit in the Spring 2016 and a Black Work Matters Report, a ten point program was adopted to address the unconscionable levels of poverty in Philly.  Philly is the poorest big city in the United States -- More than 1 in 4 Philadelphians live below the poverty line ($24,000 a year for a family of 4) and of these households, 12.7 % live in “deep poverty” which is defined as a household income of less than $12,000. This multifaceted ten point POWER program includes raising the minimum wage, unionization of service jobs, a public bank and yes, the development of cooperatives.

POWER included cooperatives in its Ten Point Program to address poverty and bring opportunity to our neighborhoods for the following reasons:

• The mainstream economy has not worked for many of our fellow citizens. While Philadelphia’s official unemployment rate stands at 6.3%, only 52% of adults in the city actually have a job. Finding few opportunities for jobs, many young people end up in prison for drug related activity. Philadelphia also has the highest rate of incarceration in the nation.

• Cooperatives provide another way for people who are left out of the mainstream economy to come together, get training, and develop businesses that provide jobs.

• Cooperatives create and maintain sustainable, dignified jobs, particularly for people like returning citizens and immigrants who do not have other work options.

• Historically, cooperatives have been a way for marginalized communities to bring jobs and services to underserved populations. In the depression, many African American farmers formed co-ops as a way to save their farms and increase production.

• Cooperatives build local wealth. At a worker co-op, profits do not go to distant investors, but instead go directly to the workers and owners. As a result, the money stays grounded in the local economy with the workers living and spending locally.

• Cooperatives build skills and participation in the workforce.

• Cooperatives are a way for business owners who want to retire, to transfer their assets to their employees thus keeping their businesses alive and thriving in their communities.

In closing, POWER urges this Council to support cooperatives in two concrete ways. First, provide technical assistance to help get cooperatives off the ground.  Second, create a revolving loan fund for co-ops. One of the main barriers to business ownership for people of color is access to start-up capital.  Therefore a revolving loan fund could make the difference between a success and a failure. 

Thank you for the opportunity to submit this testimony in support of cooperative development.  We hope you share our conviction that the growth of the co-op sector is vitally important in making Philadelphia a city of opportunity that works for all.

Good afternoon Councilman Jones and members of the Committee, my name is Sam Rhoads and I am Executive Vice President of PIDC. I am especially pleased to represent PIDC in front of this committee on the important topic of Cooperatives.

PIDC is Philadelphia’s economic development corporation, formed over 50 years ago as a public-private partnership with the important mission to retain and grow employment throughout every neighborhood of the City.  Over that period of time, we have brought significant focus to stimulating investment of scarce resources including, specifically, flexible financing and complex real estate assemblage into Philadelphia.  While PIDC is historically associated with the industrial sector and often identified with larger projects, the fact is that the large majority of our transactional volume, over 75% by volume, relates to support of small businesses, with a focus on minority and woman owned businesses in low-income neighborhoods.

Towards that end, PIDC has developed a series of flexible financing products aimed at encouraging the small businesses that are the engine of our economy to grow and thrive in our communities.  These products include Contract Lines of Credit, Capital Project Loans, and Working Capital & Equipment financing.  This array is designed to accommodate any range of needs from real estate acquisition and development, to working capital for operating businesses.  The common denominator of our financing is capital that takes higher risk positions then ordinary financing institutions will accommodate, often at lower interest rates.

The result offers multiple impact points for the City’s economy: support of a Philadelphia-based entrepreneur, adaptive re-use of vacant or blighted property, leverage of private investment that our neighborhoods would not otherwise receive, employment opportunities in both construction and operations, and realization of a project that might not otherwise occur, but for our financing. 

PIDC has deployed these tools over many years to neighborhood grocery stores in general, and to cooperatives specifically.  Over the last several years, we have had the opportunity to provide flexible gap financing to Weavers Way in the Northwest section of the City and Mariposa in West Philadelphia. Currently we are working with the Kensington Co-op in hopes of helping them to realize their vision and bring important resources to their community. 

Because of co-ops' innovative ownership structure, obtaining private debt and equity for new developments can pose a significant, if not prohibitive challenge.  In each case, our flexible financing tools in combination with multiple resources including the Reinvestment Fund were able to facilitate completion of the project, eliminate blight by putting vacant property back into active use, create neighborhood jobs, and provide fresh healthy produce. 

In closing, we very much appreciate and support the spotlight that you are shining on cooperatives as an important, grassroots neighborhood development strategy.  We look forward to working with the Administration and City Council in PIDC’s traditional role of facilitating investment into our communities.

My name is Jon Roesser, I am the General Manager for Weavers Way Cooperative Association.  Weavers Way operates cooperatively-owned natural foods grocery stores in Mt. Airy and Chestnut Hill.  We also run two farms, one at Saul High School for Agriculture in Roxborough and the other at Awbury Arboretum in Germantown.  We publish the Shuttle, a community-owned monthly newspaper, and work with an affiliated non-profit, Food Moxie.

Weavers Way has annual revenue of approximately $22 million and employs a staff of about 170.  We are owned by over 6,100 households, most of them around our stores in Northwest Philadelphia, though some live in other parts of the city or the near suburbs.

Weavers Way was founded in 1973 to address a need: to provide reasonably priced, good quality produce for a group of neighbors in Mt. Airy.  From our beginning, we have existed not for profit, but to meet the needs of our members. 

Our emphasis today is primarily to provide our members – as well as our non-members shoppers, as our stores are open to all – with high quality, natural groceries, with a particular emphasis on locally grown and produced foods.  Our vendors include local farmers, bakers, meat purveyors, cheese makers, and others who are reinvigorating Philadelphia’s long tradition of food production. 

We operate our cooperatively-owned business on a “triple bottom line:” People, Planet, Profit.  So all of our business decisions must make good financial sense, but they must also make sense for our community and for our environment.  It is why we don’t sell cigarettes and do not offer plastic shopping bags.  It is why much of our produce is organically grown and we launched Food for All, our needs-based discount program.

Because our business does not operate for-profit, any year-end profit gets returned to our members through a “Patronage Rebate,” a dividend of sorts paid back to our member-owners based on their patronage over the fiscal year. 

The difference between a cooperatively-owned business such as ours and a similar business that’s privately or publically held is simple but important.  We exist to meet the needs of our member-owners.  We are not obligated to out-of-town owners or shareholders concerned with maximizing profit. 

Operating our business as a cooperative requires a certain level of transparency: we are obligated to share with our members how we are meeting our “triple bottom line” through monthly reports to our board of directors – which is democratically elected by our membership – and through bi-annual membership meetings and a year-end report.

Because co-ops do not operate our businesses for-profit, we do not have access to the venture capital available to for-profit enterprises.  This makes starting a co-op, or growing an existing co-op, more difficult than it would be if we operated for-profit. 

We do, however, have the advantage of community ownership.  This allows us to raise capital from our member-owners and to tap into various community resources.  Part of that has, for us, historically involved close relationships with local community leaders, civil servants, and political leaders. 

We are so thrilled to be part of the fabric of our communities.  We firmly believe that Northwest Philadelphia is a better place to live because of our stores and the services we provide our communities.  We are also very interested in growing the cooperative economy in Philadelphia, both by expanding our own business and by helping other cooperatives get started and grow.

Weavers Way is ready, willing, and able to partner with City Council in any efforts you undertake to assist in the expansion of cooperatives in our amazing city.

Thank you for your time and thank you for taking a leadership role in developing co-ops.

View West Powelton/Saunders Park RCO testimony as a pdf.