Steve Dubb, Research Director, The Democracy Collaborative Community Wealth Building Creating the New Economy Rocky Mountain Employee Ownership Center conference Denver, Colorado September 7, 2013 Steve Dubb, Research Director, The Democracy Collaborative sgdubb@yahoo.com www.community-wealth.org

Building the New Economy Restoring Ecological Balance “To avoid the tragedy of leaving a ruined world to our children and grandchildren, we humans must reduce our aggregate consumption to bring it into balance with Earth’s biosphere and simultaneously act to heal and nurture Earth's regenerative systems.” Source: New Economy Working Group 3

Building the New Economy Restoring Equitable Distribution “A growing body of research evidence suggests that societies that share wealth and work equitably among all their members enjoy greater physical and emotional health, stronger families and communities, less violence, and healthier natural environments.” Source: New Economy Working Group 4

Building the New Economy Restoring Democratic Community “Living democracy is true popular sovereignty—government of the people, by the people, for the people ... Most concretely, it is a daily practice of civic engagement through which popular sovereignty finds expression as part of the essential fabric of community life.” Source: New Economy Working Group 5

Making the New Economy Real: How do you do it? Three key principles • Decentralization (subsidiarity) • Democratic planning (especially at regional and local levels) • Democratization of Wealth (pre-distribution) (Community Wealth Building) Bottom line: Rebuilding community is critical to restoring the planet & people, but you can’t restore community unless community becomes a meaningful economic basis for ordinary people. 6

Democratization of Wealth Community Wealth Building • promotes common ownership of productive assets • anchors capital and jobs locally • stops the leakage of dollars from communities • supports individual and family wealth building • generates revenues to finance public services • leverages anchor institutions for community benefit • contributes to local economic stability 7

Family Wealth Building Public Ownership or Investment Continuum of Wealth-Building Strategies BROADENING OWNERSHIP OVER ASSETS AND CAPITAL Family Wealth Building Shared Equity Community/Worker Ownership Public Ownership or Investment Individual Development Accounts Microenterprise Family Self-Sufficiency Program “Baby Bonds” & child savings accounts Earned Income Tax Credit volunteer assistance programs Alternatives to predatory lending Nonprofit financial education programs Community Land Trusts Limited Equity Housing Cooperatives Deed restriction (inclusionary zoning) Mixed ownership (Market Creek) Program-Related Investments CDC/CDFI equity investments or joint ventures Community benefits agreements Anchor institutions (eds, meds, churches, museums, libraries) ESOPs or worker cooperatives Consumer, producer, or purchasing co-ops Credit unions Community corporations CDC or CDFI direct ownership Social enterprises Commons-based enterprises (e.g., Wikipedia, Creative Commons licenses) Municipal enterprise State & local venture investments Public pension fund ETIs (economically targeted investments) Public leases: land & transit development Stock warrants in exchange for granting tax breaks (fair exchange) Trustee ownership (e.g., Alaska Permanent Fund) www.Community-Wealth.org 8

A Growing Movement ESOPs: Members, Millions CDFIs: Assets, Billions

An Integrated Community Wealth Approach Putting the Pieces Together Create culture of wealth building and ownership at the individual level Create community owned enterprises that provide living wage jobs and anchor business in low-income communities Link community businesses with anchor procurement needs Individual wealth building Community ownership Anchor Institutions Key Components

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 • Increasingly concerned with sustainability • Typically public or non-profit “social mission”) • Largely untapped potential

Ways to Leverage Anchor Institutions Sources of Leverage Available Means Potential Benefits $1 trillion a year in purchasing power, 5% of all employees • Use of endowments • Employment policies • Local purchasing • Real estate investments • Technical assistance • Business incubation • Non-profit support work • Revitalized neighborhoods • Increased local hiring, livable wages • Affordable housing • New retail development • Small business expansion • Increased nonprofit capacity Real estate, endowment assets Research & technical expertise 12 12

Henry Ford Health System (Detroit) Transparent Sourcing Policy: contracts of $20K or more must go out to public bid, making more contracts accessible to MBEs and WBEs Set purchasing target: $100M purchasing goal from MBEs and WBEs; reached $86M; purchasing relationships with 660 minority-owned suppliers Source Detroit: partners with other anchor institutions to drive portion of $1.6B in purchasing locally; $16.5M (about 1%) transferred to date

What is a social enterprise? Nonprofit-owned business. Business itself is often a for-profit (i.e., a for-profit subsidiary of a nonprofit organization. Business has a “double bottom-line”—must contribute to the “mission” of the nonprofit while earning a profit, or at least reducing program costs.

Pioneer Human Services - Seattle (WA) Nonprofit founded in 1962 to serve clients – ex-offenders and drug abusers Initially nearly 100% grant funded Today employs 700 people, most from their client base, in network of their own for-profit businesses (hotel, catering, manufacturing) $55 million revenue; almost no grant funding Anchored in the community

What is a CDC? Community development corporations are locally based non-profits that promote investment in low and moderate income communities. Over 51% of board are community residents. Founded as part of civil rights movement, goal is to allow low-income residents to exert economic control over their communities. From practically no CDCs 40 years ago, there are thousands today (2005 survey: 4,600).

New Community Corporation of Newark (NJ) Founded in 1968 by Monsignor William Linder Employs 1,300 Community-based business ownership Developed shopping center that houses community-owned business & services Assets exceed $500M Income recycled to support day-care, after-school programs, health services, Youth Automotive Training Center New Community And RPM Break Ground On New $27.4 Million Housing Development The NCC Family Resource Center takes a holistic approach to services by linking those who seek assistance with resources and information that will empower them to improve the quality of there lives. With the influx of many residents from various countries, this NCC department was created to meet the needs of a growing bi-lingual, immigrant community. Formerly known as The Hispanic Development Corporation, the new Adult Learning Center (ALC) has expanded its services to include the neighborhood’s primarily low-income immigrant populations (from many different countries), who have similar education and social services needs.

What is an ESOP? Tax-advantaged retirement plans for employees. Invest primarily or exclusively in the stock of the employing company. Can borrow money. May own anywhere from a tiny minority share to 100% of the company. Are highly regulated “qualified employee pension plans.”

New Belgium Brewery 456 employee-owners (as of Dec. 2012), nation’s 3rd largest craft brewer Started ESOP in 2000; became 100% employee-owned in 2012 More than $180M in annual sales Employee turnover estimated at 3%

What is a cooperative? Four key types: consumer, producer, worker, and purchasing. All based on 1844 “Rochdale” idea of limited return to capital and “one member, one vote.” Largest sectors in the United States are credit unions (90 million members) and electrical co-ops (40 million members). About 30% of total U.S. agriculture production is marketed by farmer cooperatives. Many familiar businesses are co-ops: e.g., Ace Hardware, Nationwide, Associated Press (AP). Key U.S. growth sectors today are purchasing co-ops (five-fold growth since mid-1990s), food co-ops (double-digit annual growth), and worker co-ops.

Economic Impact of U.S. Co-ops: 30,000 U.S. Cooperatives 73,000 Places of Business Economic Impact of U.S. Co-ops: Assets $ 3 Trillion Revenues $ 654 Billion Wages & Benefits $ 75 Billion 2 Million Jobs 857,000 direct

Namasté Solar (CO) 103 “team” members; one-half are owners 4 to 1 maximum salary ratio One owner, one vote #1 market share in CO 2,000+ systems installed $15 million in revenue

Community Wealth Building Strategy Example: the context of Cleveland, Ohio 26

Business Ideas You Might Encounter Shuttle service to reduce driving Environmentally friendly industrial-scale laundry service Environmentally friendly energy & facility upgrade business Green friendly practices in food service (recycled cutlery,etc.) Business that will recycle non-hazardous medical wastes Solar panel installation on rooftops LED lighting Locally grown organic produce Green roof material growing Tree farm Mattress recycling Document scanning Organic waste facility Inventory management Stormwater infrastructure maintenance Housekeeping service with non-toxic cleaning products

EVERGREEN COOPERATIVE STRUCTURE ECC Board of Directors, 15 members, multi-stakeholder GUC Initiative Transit-Oriented Development Education Housing Community Engagement Evergreen Cooperative Corporation (ECC) Non Profit) Committees: Audit & Finance Governance Strategic Planning Investment Executive Cooperative Businesses Evergreen Cooperative Development Fund (LLC subsidiary of ECC) CDFI Evergreen Business Services (for Profit) Evergreen Real Estate Corp. (for Profit) (for Profit) CDE (for Profit) Structured Fund (non -Profit) Human Resources Accounting IT TA

Building Community Support Identify trusted partners in the community (churches, etc.) Work with local residents to identify their concerns (door-to-door interviews, neighborhood circles, etc.) to forge a shared sense of ownership and responsibility between grassroots and institutional stakeholders. Identify, develop, and support local leadership within local residents, groups and community organizations (coaching, study circles, etc.) Support the development of local community media and information sharing 29

Key Elements to Adapt to Other Cities Project champion: Provide seed capital, raise capital, hire consultants, and “lead the team” Business Development: Recruit democratic management, oversee business planning, and provide technical assistance Community loan fund incubator: Host loan fund Workforce development capacity: Screen, recruit and provide customized training to workers Local political buy-in: City assistance to obtain approvals and state & federal funding Anchor backing: Commit to buy from community-owned business that meet quality standards Atlanta Lettuce Works 30

Recap: Key Principles for Building Community Wealth Start with values Develop productive assets Grow enterprises Lead with demand Strengthen support networks Anchor ownership in community Keep wealth local 31

Steve Dubb, sgdubb@yahoo.com For more information Steve Dubb, sgdubb@yahoo.com