Building a Collaborative Ecosystem for Worker Cooperatives

Madison, WI

Population: 100,000 | Government type: City | Topic: Empowering Workers

Photo: Borgen Magazine

OVERVIEW

Grocery, housing, and worker cooperatives have a long history in the city of Madison. In 2014, the city committed $3.2 million dollars over five years to support worker cooperative development. The initiative represents a long-term vision for creating quality and sustainable jobs, contributing to a healthy economy in Madison. The five years of committed funding—as opposed to a one or two year window—provided a sufficiently long period of time to develop appropriate processes and programs, build in flexibility to adjust as they are tested, and establish a solid vision and foundation for the program. Assured funding prevented year-to-year operations focused on securing more money through rapid results to the detriment of establishing a strong program. 

The city saw this initiative as an opportunity to tie its economic development strategy to the goal of increasing economic equity in Madison. The city also viewed worker co-ops as a tool to stabilize neighborhoods and communities by keeping businesses in the area. Madison, like the rest of the country, is facing a wave of retiring baby-boomers who own local businesses. Rather than close their doors, business owners can sell their businesses to the employees, who can run the business collectively as a worker co-op. Worker co-ops are viewed nationally as a tool to keep small businesses open and retain quality jobs in our communities.

The Madison Cooperative Development Coalition (MCDC), a collaborative of community-based organizations, business resource specialists, and cooperative developers led the effort to build the program, which is now in its fourth year. MCDC provides education, technical assistance, and financial grants to co-ops and community organizations. 

MCDC receives the majority of the initiative funding from the city, with a portion set aside for the revolving cooperative loan fund, which is administered through the Madison Development Corporation. The aim is to expand the existing cooperative ecosystem in the city and broaden community interest and support for the worker co-op model. 

MCDC engages in public education efforts, partnering with the Madison Library system and community organizations to conduct cooperative 101 trainings on the benefits of the cooperative model. Residents interested in creating a co-op then work with MCDC staff to explore their vision and apply for a $10,000 Cooperative in Development (CID) grant that can cover start-up services, with no formal business plan required. This is critical seed money for low-resourced communities that need lawyers, marketing advisors, accountants, and so on, to develop their co-op. They’ve provided 10 such grants thus far. MCDC also provides tailored technical assistance throughout the process, helping startups with everything from drafting articles of incorporation and by-laws, to connecting individuals to service providers who know cooperatives and can provide specific expertise. 

Most of the cooperatives that are currently in the pipeline are low-capital startups. While the revolving loan fund can cover capital loans up to $50,000, it has only served one loan thus far to an existing co-op, Union Cab Cooperative, to upgrade its paratransit fleet. MCDC is also participating in a KIVA match fund (a no-interest, no-fee, crowdfunding microfinance platform) with the city of Madison, and will be able to endorse cooperatives who can then receive a matching grant for a total of $15,000 to support their operations.

Collaborative Governance

Community-based organizations saw the funding as a way to meet specific community needs with the formation of worker cooperatives and helped ensure their communities turned out to support the initiative. CBOs are integral partners to this work because they are most deeply connected to the issues and needs faced by their neighborhoods and communities. They play an important role in spreading the word about MCDC and the resources available to their constituencies. Local labor unions also advocated for the funding as part of a broader coalition. 

The Madison Worker Cooperatives (MadWorC), a peer-to-peer network of worker cooperatives in the city, played a central role in advocating for the funding and creation of the initial investment and revolving loan fund. This network facilitates a foundational principle of cooperatives: Co-ops helping Co-ops (principle #6), both locally and beyond. For example, Isthmus Engineering Cooperative pivoted in the 2020 pandemic to engineer face shields and distribute them for free to homecare co-ops in Wisconsin and across the country. Communities need value-based enterprises to serve people and meet community needs. An ongoing culture of learning, movement building, and education around cooperatives as solutions to worker empowerment and local economic development is critical to ensure wider use and success. 

As the city’s request for proposal (RFP) came out, there were ongoing meetings with representatives in the cooperative world and community organizations to inform the work and contribute to the vision of the initiative. The city, along with MCDC organizers, worked closely with CBOs to ensure the BIPOC community had access and knowledge of the opportunities available through the fund, and an opportunity to participate in the vision and development of MCDC. MCDC provides grants to community organizations to provide education on worker co-ops and to build organizational capacity to help incubate new cooperatives. So far MCDC has given out four $30,000 grants and one $10,000 grant to CBOs.

Emphasis on equity

Worker cooperatives have a significant ability to support and strengthen underserved marginalized communities. Many worker cooperatives are tools to serve community needs and provide culturally relevant services, as opposed to conventional businesses driven by profit maximization. By building alternative structures that center and empower workers in their community and neighborhoods, worker co-ops build community capacity and wealth, as well as democratic workplaces. This is particularly important for low-wage industries such as child care, home healthcare, and cleaning services, where workers suffer from poor conditions, exploitation, a lack of job security, and lack of say in their workplace environments.

The growth of the worker co-op sector nationally is being driven by women and BIPOC. Roots4Change, for example, is an immigrant co-op run by six immigrant Latinas that operates a community wellness program in Dane County (where Madison resides). They are all first-time business owners. Roots4Change provides culturally relevant and language-specific family wellness support including doula services, postpartum peer support, trauma, healthy equity, and other family services. 

Another way in which these cooperatives address inequity is by tackling issues that affect communities of color. Black women disproportionately serve in-home care roles for elderly individuals and often face difficulty in finding child care for the second and third-shift rotations. Georgia Allen, a founder of the Black women-led homecare co-op, Soaring Independent Cooperative, decided to take steps to create parallel cooperatives to better address the intersection of home care and child care. Soaring Independent is working with Northside Planning Council, a long-established community nonprofit that received an MCDC grant, to develop a childcare co-op to address this need. 

While worker co-ops are businesses and must be successful to keep the doors open, they fundamentally put people over profit. They are therefore a tool to serve the needs of our communities while still upholding our values. Worker co-ops are driven by the workers themselves and provide an opportunity to create the workplaces they want to be a part of. Co-ops are locally-driven, reflecting the culture of the people and the community they’re in. They represent democratic workplaces that put worker-owners at the center and allow for value-driven decision making. Worker cooperatives are a tool to empower individuals, their families, and the communities they serve through cooperation and shared purpose.

Analysis

• Local control: The cooperative model is flexible and usually legally governed through ownership and governance law. Usually, there are minimum requirements for incorporation including annual elections and establishing a board. Localities should assess their state law to determine eligibility requirements. 

• Local government dynamics: The council was largely supportive of the effort, although the mayor took the lead on the initiative. 

• Policy impact: community wealth building is a strong disruptor of inequity, although it takes time to create. These efforts build long-term economic equality and power for workers, particularly in vulnerable communities.

Last updated: January 19, 2021

If you’re interested in learning more, please contact info@localprogress.org

READY FOR MORE INSPIRATION? KEEP EXPLORING: