Pandemic turns to collaborative business model

Cash register illustration with three green hands up icon

Illustration: Sarah Grillo/Axios

Interest in co-ops has surged during the pandemic.

Why it matters: Advocates see alternative business models of worker ownership as a way out of income inequality, a way to give power back to employees and build community wealth.

  • Margo Dalal, executive director of the Detroit Community Wealth Fund (DCWF), a partner commercial lender, told Axios that these values ​​are becoming a higher priority after COVID-19 has fueled conversations about racial inequality and workplace conditions.

By numbers: From 2019 to 2021, the number of worker cooperatives in the U.S. increased 30 percent, according to the State of the Industry report. The report identified 612 businesses, but estimates the actual number is closer to 1,000.

Big picture: Cooperatives have a long history. There are prominent examples like Ocean Spray, but the number of democratically owned businesses is still small. Notable local businesses include consumer-owned Detroit Peoples Food Cooperative and worker-owned Pingree Detroit.

  • Structures vary. Generally, workers or members own and have decision-making power over the business, and individual livelihoods are tied to performance.

What are they talking about: Karen Tyler-Ruiz, executive director of the local Center for Community Enterprise (C2BE), told Axios: “During this pandemic and all racial and civic unrest, people need an alternative to what doesn’t work.”

Yes, but: This model is unfamiliar to many, and it can be difficult to find start-up capital from investors who may not have as much control as traditional companies.

enlarge: The lack of government data on the subject makes it difficult to paint the landscape of local cooperatives.

  • The Detroit Cooperative Economy Network Directory lists 28 cooperatives or businesses of similar quality in the area.

Plot: Melissa Hoover, co-executive director of the National Institute for Democratic Work, told Axios that some of the new interest in cooperative ownership is not coming from startups, but existing traditional business owners looking to retire and sell to workers.

  • In recent years, both C2BE and DCWF have turned their attention to helping traditional businesses transform.

more importantly: Juan Carlos Dueweke-Pérez, owner of local marketing agency Featherstone, said he was in discussions with employees about making employee ownership part of a long-term succession strategy.

  • He told Axios it felt like the “right next step” because it involved employees and reflected Featherstone’s “family style” values.

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