Summary of Main Street Employee Ownership Act of 2018

The Main Street Employee Ownership Act of 2018: A Step Forward for Economic Development Through Employee Ownership

The Main Street Employee Ownership Act of 2018 (the “Act”) represents the first piece of Congressional legislation in support of employee-ownership in almost 20 years, the Act was passed as part of the massive $717 billion John McCain National Defense Authorization Act.

The most significant provisions of the Act will be to open the Small Business Administration’s (“SBA’s”) Section 7(a) loan program to small businesses that sponsor Employee Stock Ownership Plans (“ESOPs”) and small businesses that are cooperatives. It should be noted that the SBA Section 7(a) program does not itself loan funds directly, but provides significant guarantees to banks and community development financial institutions (“CDFIs”) that allow them to see such enterprises as more credit worthy. The Act also directs the SBA to (i) coordinate its lending practices with funds licensed as SBA Small Business Investment Companies and (ii) have its microloan program to consider employee ownership as an area for investment and lending.

In addition, the Act also directs the SBA to provide through its Small Business Development Centers (“SBDCs”) programs that will:

  • Provide training and educational activities on employee-ownership options;

  • Conduct one-on-one counseling aimed at developing basic business planning tools, to also include consulting on transition issues, governance training, and executive/management education with respect to worker-ownership;

  • Encourage succession planning with a focus on transitioning to cooperatives and ESOPs by:

    • Promoting the successful management of such employee-owned concerns;

    • Assisting employee-owned businesses to meet size standards with respect to financing and contracting programs administered by the SBA;

    • Coordinating with lenders to conduct outreach on financing to support the transition to employee-ownership;

    • Helping small businesses to explore and assess the possibility of transitioning to becoming an employee-owned business concern; and

    • Coordinating with development centers in the Dept. of Agriculture, the Manufacturing Extension Partnership, CDFIs, employee ownership associations and service providers and local, regional, and national cooperative associations.

The Act, however, provided the SBA with no additional funding to carry out any of these programs, so implementation may be somewhat uneven, and may well depend on how well those groups currently involved in promoting employee ownership are able to work with local, regional and state SBA officials in understanding the importance of these promotion and training programs and the impact of the Section 7(a) loan guarantees are to sustaining this most significant area of the overall economy.

And the impact of the coming wave of baby-boomer retirement among owners of small to medium sized U.S. businesses – sometimes colloquially referred to as the “Silver Tsunami” — should not be underestimated. As pointed out by Steve Dubb, in the August 14, 2018 issue of The Non-Profit Quarterly magazine:

Nearly half of US small business owners are baby boomers aged 53 to 71. Collectively, they own 2.34 million businesses, employ 24.7 million people, and have combined sales of $4.14 trillion. It is estimated that 80 percent of these businesses lack a plan for what they are going to do when their owners retire, or if misfortune falls, die unexpectedly (citations omitted).

In short, people’s livelihoods across the nation are at stake, as hundreds of thousands of companies are likely to shut down in the coming decade due to the failure to develop adequate business succession plans, . . . [and] one step to address this situation is to make it easier for the people who work at these companies to buy the businesses where they work.”

The Act, therefore, provides a small, but enormously significant step for promoting employee ownership as a viable tool in the economic development tool box for stabilizing jobs and building community wealth. How well it can accomplish this purpose depends on how aggressively and effectively those committed to employee ownership can convince the SBA to follow the Act’s directives to prioritize employee ownership promotion, training and financing among small business owners, local and state governmental officials charged with economic development, banks and financial institutions that provide credit to small- and medium-sized businesses, and economists and others that craft policy options for promoting job retention and economic growth. Most importantly, those of us who work in organizations across the country that understand the importance of worker ownership and are committed to its expansion must make the most of the opportunities opened up by the Act for getting our message across and making the SBAs directives a blueprint for real action and not well-meaning, but dormant sentiments.

Book Review of Jackson Rising: The Struggle for Economic Democracy and Black Self-Determination in Jackson, Mississippi

Jackson Rising: The Struggle for Economic Democracy and Black Self-Determination in Jackson, Mississippi, By Ajamu Nangwaya, Kali Akuno, Daraja Press, 2017, 312 pages, $29.99 paperback


There has been much interest among those who advocate for worker ownership and economic democracy in the organizing struggles that were undertaken in Jackson, MS, and that led to the election of Chokwe Lumumba as Mayor of Jackson on June 4, 2013.  Building on years of grassroots organizing and running on a well thought-out program of cooperative economic development and participatory political action, known as the Jackson-Kush Plan,[1] the efforts of this successful black liberation candidate to win office in this hardcore deep South city—Mississippi’s capital and the largest city in the state—appeared to auger the launching of a significant program that saw economic democracy as an essential component of the liberation struggle of the black poor and working class.  

Lumumba’s untimely death on February 14, 2014, only some eight months after his election, heightened concerns that the comprehensive platform for change that he had run on would get derailed and possibly be destroyed.  Such fears were exacerbated by the defeat of his son, Chokwe Antar Lumumba, who ran to replace him, by a Black council member put up by conservative white Jackson business interests.  That Chokwe Antar ran again for mayor in 2016, got more votes than his father had, won the primary by 55% and the general election by an overwhelming 93%, and was installed as Jackson’s mayor July 3, 2017, is a clear indication that the movement that had led to this most potentially significant political change in Mississippi is still strong and still moving forward.

What Chokwe Lumumba’s program of economic development and political action, i.e., the Jackson-Kush Plan, was and why it was not derailed by this string of events that would have been enough to undermine a host of other Black liberation political struggles in the United States, is the focus of the recently issued book, Jackson Rising: The Struggle for Economic Democracy and Black Self- Determination in Jackson, Mississippi, Kali Akuno and Ajamu Nangwaya, Cooperation Jackson, Daraja Press (2017).   Indeed, one of the key indicators that this political movement and struggle did not die with Chokwe Lumumba was the Jackson Rising: New Economies Conference held on May 2-4, 2014, a few months after Chokwe’s death, at Jackson State University that attracted over 500 attendees.  The papers presented at that conference form a substantial part of this book.

The book is a collection of 24 essays by 23 different contributors that address various elements of the Jackson-Kush Plan, many of the practical initiatives undertaken by those organizing around the Plan, the history of the organizing that preceded the development of the Plan, the strategies and tactics of Chokwe Lumumba’s campaign and an assessment of the impact and consequences of these efforts.  In her forward to the book, Rukia Lumumba, Chokwe’s daughter, provides a short-hand version of what the book is doing when she says, “Jackson Rising documents the history and intersectionality of the Cooperative Movement and the Mississippi Freedom Movement.”

These essays provide not only the context—both historical and current—in which the principles and programs of the Jackson-Kush Plan were developed, but also go into careful detail about the conceptual underpinnings and practical implementations for each and every aspect and initiative undertaken in carrying out the Plan.  This review cannot do justice to the profound level of detailed explanation the writers have provided as to how and why the various elements of the Jackson-Kush Plan have been carried out and how adjustments have been made to accomplish what the theory proposed in light of the difficulties and obstacles encountered, both those planned for and those that arose unexpectedly.

Because there are so many essays, there is some repetition of facts and stories.  Some essays are very brief, some more extensive.  Though the quality of the essays is at a very high level throughout the book, if one only had time to read some of them, I would say that two essays by Kali Akuno, a long-standing comrade, supporter and activist who worked with Chokwe Lumumba for many years and was a key architect of the Jackson-Kush Plan, that kind of book-end the table of contents are must-reads.  These are: “Build and Fight: The Program and Strategy of Cooperation Jackson” and “Casting Shadows: Chokwe Lumumba and the Struggle for Racial Justice and Economic Democracy in Jackson, Mississippi.”

There are a number of key takeaways from these essays. First, and perhaps the most significant, is that Chokwe Lumumba’s election success was not based simply on a political campaign for office, but on literally decades of organizing in Jackson’s Black community and the counties that made up the Kush District.                                             

Chokwe Lumumba, born and raised in Detroit, MI, first moved to Mississippi in March of 1971, when he was 23 years old and taking a break from his second year at Wayne State Law School. He went to Mississippi to work with the Provisional Government of the Republic of New Africa (PGRNA) in its efforts to found the new community of El Hajj Malik (based on the name Malcom X had chosen for himself, El Hajj Malik El Shabazz).  The PGRNA was intending to acquire land by accessing funds authorized by Congress under the New Communities Act, and build a community that where no discrimination existed based on color, class, gender, or physical disability. 

The PGRNA purchased 20 acres from a Black farmer about 20 miles outside of Jackson and had contracted with a builder to build a school and dining hall on the property.  On the day the group and its supporters chose to inaugurate the site, which date they called “Land Celebration Day,” they were met by an armed phalanx of Klansmen, and state, local and federal police.  Despite this intimidating barricade, the group and its supporters managed to walk the last five miles to the site and inaugurate their project.  Their success, however, was ephemeral as the Black farmer was pressured to rescind the sale, and the local and state authorities were unrelenting in their efforts to undermine this work. The effort by the PGRNA to create this ideal community in Mississippi came to an end.

After this defeat, Lumumba returned to Detroit to finish his law degree and embark on a successful career as a lawyer. While in Detroit, he cofounded two organizations that intended to carry out the work of the PGRNA—the New Afrikan People’s Organization (NAPO) and the Malcom X Grassroots Movement (MXGM).  He moved back to Jackson, Mississippi with his family in 1988, where he worked as a civil rights lawyer and a political activist in these groups to develop a strategy for building black political and economic power in Jackson. 

Indeed, the Jackson-Kush Plan was developed by NAPO and MXGM between 2004 and 2010, well before any mayoral campaign was on the horizon.[2]  Kali Akuno explains that the purpose of the Plan was “to advance the New Afrikan Peoples Movement and hasten the socialist transformation of the territories currently claimed by the United States settler colonial state. . .Cooperation Jackson[3] is a vehicle specifically created  to advance a key component of the Jackson-Kush Plan, namely the development of a solidarity economy in Jackson, Mississippi to advance the struggle for economic democracy as a prelude towards the democratic transition to eco-socialism.”

As Akuno explains it, the Jackson-Kush Plan had three fundamental programmatic foci that had the aim of “build[ing] a mass base with political clarity, organizational capacity and material self-sufficiency.”  The three foci were:

  1. People’s Assemblies.  Building People’s Assemblies throughout the Kush District.  These assemblies were conceived of as (i) “mass” gatherings—mass meaning that the body engaged at least 1/5 of the population in a given geographic area, (ii) addressing meaningful social issues in a way that provided solutions, not just giving voice to those assembled, and (iii) operating n a “one person; one vote” principle.
  2. Independent Politics.  Building an independent political force throughout the state, but concentrated in the Kush District to challenge the two capitalist parties through a network of progressive candidates.  Key to this effort is grassroots organizing and alliance-building, both based on an extensive campaign of education around fundamental issues.
  3. Solidarity Economy.  Building a “solidarity economy” in Jackson and the Kush District anchored by a network of cooperatives and supporting institutions to strengthen worker power and economic democracy.  This network consists of (i) worker, consumer and housing cooperatives and credit unions, built up through a Take Back the Land initiative that sought to occupy abandoned lands and buildings and repurposing them towards socially productive uses, (ii) creating economically sustainable, i.e., green enterprises, (iii) developing community and conservation land trusts, and (iv) developing an adequate publicly financed infrastructure to support these development strategies. 

What Akuno means by “solidarity economy” is a concept that “describes a process of promoting cooperative economics that promote social solidarity, mutual aid, reciprocity and generosity.”  It is a concept he readily credits as being inspired by the cooperative networks in Mondragon, Spain that successfully combined cooperative economic development with a movement for self-determination and sovereignty.  

With the death of Chokwe Lumumba, and the defeat of Chokwe Antar’s initial mayoral run, the focus of the Jackson-Kush Plan was the development of private cooperative economic institutions under the Cooperation Jackson plank of the Plan, and the ongoing development of People’s Assemblies to both articulate the issues that mattered most to the citizens of Jackson and the Kush District and to continue their education and training in participatory democracy, political self-determination and grassroots self-organization.

The second key takeaway form the book, and one that is obvious from this brief summary, is that while the success of the movement’s goals cannot be achieved without a sustainable economic base, developing the solidarity economy envisioned by the Jackson-Kush Plan will not be enough.  Essential to success is developing both the ability of people to actively participate in the political direction of the city, state and country, but to do so on an informed, confident and self-directed basis.  In short, worker-ownership and the ability to participate in and direct the enterprises where folks are employed is a necessary, but not a sufficient condition, for achieving the kind of self-direction from below that will ensure political, as well as economic, democracy.  The strength of the Jackson-Kush Plan is that from the first it saw its economic platform based on a vision of the solidarity economy, and its political platform based on a specific conception of building people’s assemblies, as not just mutually supportive, but understanding that the success of each is absolutely integral to the success of both, and together provide the basis for meaningful success in the traditional electoral arena.

The third key take-away is that the story told in Jackson Rising reinforces in a dramatic way the old movement slogan that “freedom is a constant struggle.”  There is no resting on any achieved laurels.  Success only lays the groundwork for further advances; failure creates the opportunity to avoid making the same mistakes, thus clearing the ground for clearly envisioning and taking the next steps forward.  The ability of the Jackson-Kush movement to continue rising following the death of Chokwe Lumumba and the mayoral defeat of his son Antar is testimony to the strength of the values of this movement, its organizational integrity and the clarity of its analysis. 

It is too soon to adequately assess the progress that has been made and might come in the future from Chokwe Antar’s recent successful election as Jackson’s mayor.  What we do know is that the powers that oppose this movement have had time to respond, and with a better understanding of its goals and tactics, to build counter-measures designed to derail and destroy this movement.  In her forward to the book, Rukia Lumumba notes five specific initiatives by Mississippi’s legislature that have been introduced, and two executive actions by its governor that have been taken to combat the successes and momentum of the Jackson-Kush Plan.  Perhaps the most significant of the legislative actions is the effort to move control of Jackson’s airport, and the revenue derived from operating it, from the city to the county, thereby significantly reducing the revenues available to carry out the Jackson-Kush Plan.  Along the same lines is the bill introduced to redirect the 1% sales tax increase passed by Chokwe to fund the city’s compliance with an EPA-required water/sewage system improvement mandate[4] from the city to the state treasury.  There has also been introduced what we might think of as more traditional Mississippi legislation designed to: (i) give police broader powers to the police to stop and search people of color and (ii) openly permit discrimination against members of the LGBTI community for religious reasons.  And to add insult to injury, Rukia points out that the governor recently established April as Confederate Heritage month in Mississippi.

In bringing together these extensive essays, Jackson Rising provides a detailed discussion of this most important social achievement in the struggles for black liberation and economic democracy.  The extensive theoretical work that has gone into the Jackson-Kush Plan, and especially its implementation challenges and successes, are of extreme value to all who are involved in working towards economic democracy and political self-determination.  Indeed, for all of us who are in any way involved in such work, it is a must-read.


[1] The “Kush” in the Jackson-Kush Plan refers to the 18 contiguous counties in Mississippi that run along the Mississippi River on the state’s western border, 17 of which are majority Black and the 18th is nearly so.  The Malcolm X Grass Roots Movement (MXGM) called these counties the “Kush District,” after the generic name given to the collection of agricultural communities that bordered the Nile River in what is now Egypt and Sudan.

[2] For the full text of the Jackson-Kush Plan go to:

[3] “Cooperation Jackson” is the name used to describe the cooperative economic development programs of the Jackson-Kush Plan.

[4] The EPA action pre-dated Chokwe’s election, but nevertheless committed the city to a seventeen-year investment in water and sewage infrastructure that ran into many millions of dollars.  Chokwe’s ability to get passage of a 1% sales tax to fund this required expenditure was seen as reflecting the depth of his support in Jackson.  Depriving the city of these funds is clearly intended to undermine Chokwe Antar’s ability to meet this obligation and other initiatives proposed in the Jackson-Kush Plan, thereby laying the groundwork for a campaign to defeat his efforts to get re-elected.

Impending Silver Tsunami a Threat to Job Security

Deborah Groban Olson is executive director of the Center for Community-Based Enterprise in Detroit.

Deborah Groban Olson is executive director of the Center for Community-Based Enterprise in Detroit.

As highlighted by the excellent article "Robots" in the Aug. 28 issue of Crain's Detroit Business, automation is indeed ending whole categories of jobs at a much faster rate than ever. But there's an additional, largely ignored threat to job security nationwide: 2.34 million private businesses in the U.S. are owned by baby boomers, most of whom will retire in the next 10 to 20 years.

Together these baby-boomer-owned businesses employ 24.7 million workers, and 70 to 80 percent of these business owners have no succession plan.

Recent research by our organization quantifies for the first time the threat that this looming Silver Tsunami poses for the seven counties of Southeast Michigan: an astounding 400,000 jobs are at risk.

Many times, the children of retiring business owners aren't interested in taking over the family business, forcing the owner to choose between liquidating the business assets or selling it to a competitor — a competitor that may only be interested in obtaining the business' customer list or consolidating operations out of state. In both cases, local jobs are lost.

Across the U.S., cities and economic planners are taking renewed interest in a third way forward: employee ownership. New York, Cleveland, Minneapolis, Madison and Austin have each recently adopted policies supportive of employee-owned businesses, steps that can facilitate the sale of a business by its owner to its employees.

While an employee stock ownership plan (ESOP) is perhaps the best-known form of worker ownership, ESOPs can be complex to set up and expensive to manage — a fact that unfortunately dissuades many retiring business owners from pursuing worker ownership in any of its forms.

Here in Michigan, two companies have recently adopted simpler, innovative forms of worker ownership, providing models for other retiring business owners.

Dr. Russell Hart, founder and managing partner of Arbor Assays, an Ann Arbor based biotech firm with 12 employees, chose to sell the business to his workers using an innovative "perpetual trust" model. On succession planning, Hart said, "The normal process is for the business to be handed on to children or to be sold to somebody else. For me this wasn't attractive. We wanted Arbor Assays to remain an independent and successful business."

Similarly, the baby boomer founders of Zingerman's Community of Businesses in Ann Arbor, with $63 million in sales and 750 employees, recently implemented a program that allows every employee to own a share of the organization's intellectual property company. These shares provide employees a dividend based on the profits of the entire group of 10 businesses and representation on the governing Partners Group.

This action was based on the founders' and partners' desire to ensure the continuance of broad-based employee benefits that will survive any individual. "This is the first step in moving toward full employee participation and engagement in the organization," said co-founder Paul Saginaw.

Employee-owned companies face the same profit pressures as all businesses. But for employee-owned businesses, the quality and longevity of employment is also a primary objective. This highly personal impetus inspires workers and prompts innovation. For example, EBO Group, a 100 percent worker-owned company in Akron, Ohio, diversified, through participatory employee ownership, from mining equipment to recycling equipment and medical devices and tripled business in five years from 2003 to 2008, the end of which was the Great Recession.

Employee ownership is not the only solution to anchoring jobs locally. But, the fact that employee-owned companies are four times less likely to lay off employees during a recession, are 25 percent more likely to stay in business over a 10-year period, and have 25 percent higher job growth than comparable non-employee-owned companies should prompt all of us working in economic development to consider ways employee ownership can address both the threat of extreme automation and the coming Silver Tsunami.

This article was originally published in Crain's Detroit Business Other Voices Blog.

Upcoming Events: Maximizing the Value of Your Business and Cooperative Basics: How to Start a Cooperative

The Michigan State University Product Center is hosting three one-day, two-session events for businesses, entrepreneurs, and economic development lay people and experts. Members of C2BE will be leading sessions at all three events.

The Morning Session is “Maximizing the Value of Your Business.” The Afternoon Session is “Cooperative Basics: How to Start a Cooperative Business.” People interested in attending can register for either one or both sessions. There is no cost to attend, but registration is required.

The events will be held in Traverse City on Tuesday, September 19th, 2017 at the Hotel Indigo; in Grand Rapids on Wednesday, September 20th, 2017 at the Amway Grand; and in Ann Arbor on Thursday, September 21st, 2017 at the Sheraton Ann Arbor.

The Morning Session, “Maximizing the Value of your Business” will focus on determining what drives value in your company, methods of assessment, and strategies to enhance that value. Succession planning and legal issues involved with selling a business will also be covered, as well as employee ownership options.

During the Morning Sessions, C2BE will also introduce the concept of an Employee Ownership Trust, a relatively new model it used to establish employee ownership in a company in Ann Arbor.

The Afternoon Session, “Cooperative Basics: Starting a Cooperative Business”, will focus on providing basic information about cooperatives and their development, as well as resources and networking contacts. The session will begin with an introduction to cooperatives, covering their principles and what specifically makes them different from other businesses. A presentation outlining the steps and stages of developing a co-op will be given, followed by a presentation on legal considerations.

The event will conclude with a breakout session with attendees, where the presenters and service providers at the conference will be available to hear your specific situation and to provide some guidance on next steps.

Attorney Paul Chander and Todd Leverette from C2BE will be leading sessions at all three events. At the Ann Arbor event on September 21, C2BE Executive Director will present about Arbor Assays, the Ann Arbor company that C2BE partnered with to convert to an Employee Ownership Trust.

To register for the events, please visit


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New Policies for a New Economy

What are new policy ideas to support a more just and sustainable economy?

Over the last several years, jurisdictions across the country have enacted programs to support inclusive economic development through worker ownership.

C2BE has compiled these programs in a Memo that surveys all policies at City, State, and Federal level that support worker ownership. This blog post excerpts such policies at the City level. The full Policy Memo memo is available for download on our Resources Page.

C2BE hopes that our Policy Memo can
provide Detroit-based policymakers and supporters with helpful ideas for how we can decide how to use public policy to advance worker ownership and inclusive economic development locally.

  •   New York City, New York

1.     Mandatory Tracking of Worker Cooperatives Contracting with City Government

a)    In March 2015, the New York City Council passed a law requiring the city to report the number of contracts it awarded worker cooperatives and the number of worker cooperatives assisted by its Department of Small Business Services.[2]

2.     Public Funding of Cooperative Development Organizations.

a)    In 2015, the New York City Council passed the Worker Cooperative Business Development Initiative, which authorized the City Council to spend public funds on technical assistance organizations dedicated to worker cooperative development. The Worker Cooperative Business Development Initiative is administered by the New York City Department of Small Business Services.

b)    In 2015, New York City Council distributed $1.2 million to 10 technical assistance organizations that: created 21 new worker cooperatives, provided 84 services to 24 existing worker cooperatives, reached 938 entrepreneurs, and created 141 new worker owners.[3]

c)    In 2016, New York City Council distributed $2.4 million to 14 technical assistance organizations that: created 17 new worker-owned businesses, developed 182 technical assistance service relationships to 114 individual businesses, created 164 new sustainable jobs, and reached 2,164 entrepreneurs, business development professionals, and new partners.[4]

d)    In 2017, the Worker Cooperative Business Development Initiative will distribute $2.45 million towards worker cooperative development.[5]

  •   Madison, Wisconsin

1.     Public Funding of Cooperative Loan Fund and Development Organizations

a)    In November 2015, the Madison Common Council passed the Cooperative Enterprise Development Program, authorizing the city to spend $600,000 each year over the next five years to fund worker cooperative development for the purposes of job creation and economic development.[6]

b)    In July 2016, Madison Common Council distributed $300,000 to the Cooperative Network, a coalition of local cooperative development organizations, to provide technical assistance, outreach, public education and coalition building. [7]

c)    In addition, Madison Common Council distributed $300,000 to the Madison Development Corporation, an experienced community economic development organization, to administer a high-risk revolving loan fund for cooperatives.[8]

  •   Minneapolis, Minnesota

1.     Cooperative-Specific Training Integrated into City’s Business Development Programs

a)    In April 2016, the City of Minneapolis announced the expansion of its Business Technical Assistance Program (B-TAP) to include services aimed specifically at supporting the development of new Minneapolis co-operatives through the new Co-operative Technical Assistance Program (C-TAP).  C-TAP hosts a series of feasibility classes for people interested in forming a cooperative. Follow-up technical assistance includes: site selection assistance, business consultation, grants, financing programs, and more.[9]

  •   Oakland, California

1.     Public Resolution Recommending Policy Support for Cooperatives

a)    In September 2015, the Oakland City Council passed a resolution recognizing the benefits that worker cooperatives bring to local economies[10] and recommending the City support cooperative development through a broad range of options: preferential procurement, succession planning, tracking cooperative contracting, and monitoring technical assistance delivered by the city’s Business Assistance Center.[11]

  •   Berkeley, California

1.     Public Resolution Recommending Policy Support for Cooperatives

a) In February 2016, the Berkeley City Council passed a resolution calling for City Manager to develop a worker cooperative ordinance to support worker co-op development in distinct ways: preferential procurement, cooperative-specific education materials, business tax and land use incentives, and changing the business permit application to allow registration as a worker cooperative[12]

  •   Austin, Texas

1.     Public Resolution Recommending Policy Support for Cooperatives

a)    In March 2017, the Austin City Council passed a resolution directing the City Manager to develop policies to support worker cooperatives in Austin and recommending a broad range of options including: funding, education, succession planning, and city procurement.[13]


  •   Cleveland, Ohio

1.     City Participation in Anchor Institution Strategy

a)    Since 2005, the City of Cleveland has participated in a coalition using an “anchor institution” strategy of cooperative development, which uses the purchasing power of large, locally-rooted entities (mainly universities and hospitals) in order to incubate green, worker-owned businesses in low-income neighborhoods to build community wealth.[14]

NOTE: This blog post only includes policies at the City level. To see policies at the State and Federal level that support worker ownership, please download the full Policy Memo.

Now Available: Template Operating Agreement for a Michigan LLC operating as a worker cooperative

You asked for it; we answered. Now available on our Resources Page are:

  1. A Template Operating Agreement, written for a Michigan Limited Liability Company (LLC) operating as a worker cooperative; and

  2. A User's Guide to the Template Operating Agreement.

The Template is a sample operating agreement between Members of an LLC that is operating as a worker cooperative. It covers all the standard areas of cooperative governance, such as members, ownership, and distributions. It is meant to provide you with a basic foundation that you can then tailor to fit your own particular cooperative business. To that end, there are also explanatory notes in the text that help clarify its sections and provide other governance options for you to consider.

If you would like to use the template, we first recommend that you consult the User's Guide. It identifies, in a much more concise manner, the main questions about cooperative governance and encourages you to answer them in your own practical way. If you first fill out the User's Guide, it is then much easier for a legal professional to update the template to correspond to your particular preferences. We are of course available to help you do this as well.

We hope that these resources are useful, and that they help empower you to start or strengthen your cooperative business.

The Courage of Cooperation: A Review of Jessica Gordon Nembhard's Collective Courage

Collective Courage Image.jpg

Collective Courage:
A History of African American Cooperative Economic Thought and Practice
By Jessica Gordon Nembhard
Penn State University Press, 2014, 328 pages, $39.95 paperback.

DETROIT HAS BECOME something of a national symbol of the growing trends of economic inequality, and something of a laboratory challenge as to whether they can be reversed.[1] The impetus for economic development fostered by both governmental and private initiatives in Detroit has focused on the downtown and midtown areas, and the development of high-tech start-ups that depend significantly on younger, better educated, and primarily white entrepreneurs.

What’s been generally omitted in these planning efforts is how to bring economic development to Detroit’s predominantly Black and poor neighborhoods whose residents comprise a large majority of the city’s population, but who may have insufficient education, training or transportation to take advantage of whatever high-tech infrastructure is able to take root in the metropolitan area.

If “omitted” is an overstatement, it may just be fairer to say that with the globalization of manufacturing and the concomitant export of low-skilled and moderate-skilled jobs, few solutions have been proposed that begin to address the economic development of poor, oppressed communities.

In this context, it was a pleasure to read Collective Courage: A History of African American Cooperative Economic Thought and Practice by Jessica Gordon Nembhard. The author is associate professor of Community Justice and Social Economic Development in the Department of Africana Studies at John Jay College, City University of New York.

Professor Gordon Nembhard seeks not only to explore in detail the theory and practice of Black engagement in cooperative economic enterprises throughout the 20th century — including collective benevolence organizations, grassroots economic organizing, cooperative agricultural initiatives, union cooperative ownership and deliberate efforts among African Americans to develop Rochdale cooperatives[2] — but also to highlight significant trends among African American thinkers fostering cooperative economic development as a means of overall economic and social advancement for the Black community.

Importantly, she sees such initiatives providing something of a template for moving forward, as she explains in the introduction:

I was interested in cooperative economic development as a community economic development strategy, and my focus was on how cooperatives help subaltern populations gain economic independence, especially in the face of racial segregation, racial discrimination, and market failure. . . .As a specialist in racial wealth inequality, I also began exploring ways in which cooperative ownership, particularly in worker cooperatives, is a strategy for community-based asset building, and I began to develop a concept of community wealth based on cooperative ownership and community assets.

In developing her history of Black cooperative initiatives as a guide to pursuing community wealth building through cooperative development, the author was very much influenced by the experience and example of the Mondragon Cooperative Corporation in northern Spain.[3]

Not surprisingly, the earliest cooperative efforts of African Americans were undertaken as simple collective actions and mutual self-help efforts in the face of racial violence and oppression — e.g. collectively tilling small garden plots, pooling savings to buy freedom or farm plots, forming mutual aid societies to cover burial expenses, taking care of widows and orphans or providing income when sick.

These arrangements took many forms,[4] and in two studies — Some Efforts of American Negroes for their own Social Betterment (1898) and Economic Cooperation Among Negro Americans (1907)[5] — W.E.B. DuBois documented many of them, intending as Gordon Nembhard explains, to illustrate “the myriad ways in which African Americans shared the costs, risks, and benefits of economic activity that helped Black families and communities, and to illustrate joint Black business and economic successes.”

Later in his career, DuBois proposed Rochdale cooperative organizations as a key economic strategy for African Americans, and in 1918 he organized the Negro Cooperative Guild to promote Black economic development.

Abolition, Labor and Cooperation

The abolitionist movement created a number of Black communities and communes in the early 1800s, among them the Northampton Association of Education and Industry in western Massachusetts. Though short-lived, over 200 people lived there,including Sojourner Truth and David Ruggles. Frederick Douglass was a frequent guest. Other such communities were the Nashoba Commune in Tennessee and the Combahee River Colony in South Carolina.

Professor Gordon Nembhard also notes that unions were instrumental in developing cooperatives among African Americans. Specifically, the Cooperative Workers of America (CWA) and the Knights of Labor (KOL), both integrated unions in the South, supported small farmers in grassroots efforts to develop agricultural cooperatives.

After the Civil War, Rochdale coops attracted support from labor unions, specifically, the Iron Molder’s Union, the National Labor Union, the Sovereigns of Labor and the KOL. About 10% of the KOL membership was Black, and many participated in these cooperatives.

By the 1880s, there were 334 worker coops in the United States, and 200 were part of a chain of industrial cooperatives organized by the KOL between 1886 and 1888.[6] The CWA built on this KOL cooperative tradition, but focused on cooperative stores and free cooperative school systems. The CWA also organized against poll taxes, unjust labor laws and for guaranteed wages.

It is not possible to review in detail the myriad of cooperative efforts documented by Gordon Nembhard, though a summary of the areas she explores gives a sense of the scope of her research. She surveys:

  • the agricultural cooperative system established by the late 19th century populist movement through the Southern Farmers Alliance and the Colored Farmers National Alliance;
  • the development of mutual insurance companies in Black communities (though she admits that these efforts were closer to Black capitalism than true cooperatives);
  • the development of Black joint stock businesses like the Chesapeake Marine Railway and Dry Dock Co. (1865-83), organized by Black dock workers in Baltimore in response to efforts by white workers to keep them off the docks, and the Coleman Mfg. Co., in Concord, North Carolina, a Black cooperatively-owned cotton mill;
  • Marcus Garvey’s Universal Negro Improvement Association;
  • the earliest Black-founded Rochdale cooperatives;
  • the development of cooperatives during the Great Depression by the Negro Business league, the Young Negroes Cooperative League and the International Ladies Auxiliary of the Brotherhood of Sleeping Car Porters, in both rural and urban areas, which focused on business organizations, housing cooperatives and cooperative education; and
  • 20th century Black rural cooperatives from the National Federation of Colored Farmers in 1922 to the Mississippi Freedom Democratic Party’s (MFDP) Freedom Farm in the 1970s, with emphasis on the history and experiences of the Federation of Southern Cooperatives.

Throughout these discussions, the author emphasizes the integral role Black women have played in the cooperative movement — from the earliest church-based mutual aid societies to the consumer cooperatives promoted by the International Ladies Auxiliary of the Brotherhood of Sleeping Car Porters; the quilting and sewing cooperatives founded by rural Black women in the South; the efforts of Ella Jo Baker in numerous cooperatives in Harlem; and the struggles of Fannie Lou Hamer in founding and managing the MFDP’s cooperative farm in Mississippi.

Continuing Struggle

This book’s wealth of information and detail about Black economic cooperative efforts in America is impossible to convey in a summary review, yet it does not present an overly rosy history, as many if not most of these Black cooperative initiatives were opposed, and undermined, by vehement white opposition. Nevertheless, Gordon Nembhard sees cooperative economic development as a key element in allowing oppressed communities to move beyond the limitations imposed by the greater society.

One development strategy for marginal, disadvantaged, underserved and oppressed groups is to use economic cooperation and group solidarity to create businesses that will provide meaningful work and income, greater control for workers and the possibility of wealth creation.

Most significantly, it is not just the building of single cooperative enterprises that can achieve this kind of independence, control and wealth creation. It also requires the development of networks of cooperatives that cooperate with each other.

Here the Mondragon model is so important, as Mondragon’s global success is built on a system of interlocking cooperatives that supply one another and help to keep money circulating among grass roots and local businesses. Such efforts are being looked at, copied, implemented and experimented with in marginal and oppressed communities across America. This book, hopefully, is spurring such efforts. It certainly is doing so here in Detroit.


  1.  This review will not be addressing Detroit’s bankruptcy filing, the reasons for it, or its outcome, though clearly the consequences of the bankruptcy proceeding will have a significant impact on the city’s ability to move forward, both economically and socially.
  2.  A Rochdale cooperative is a formal cooperative business that follows the Rochdale Principles of Cooperation established by the Rochdale Pioneers in England in 1844, and codified by the International Cooperative Alliance in 1895. These principles are: (1) voluntary open membership, (2) democratic member control, (3) member economic participation, (4) autonomy and independence, (5) education, training and information, (6) cooperation among cooperatives, and (7) concern for community.
  3.  The Mondragon Cooperative Corporation is a complex of about 258 industrial, financial, distributive, research and educational cooperatives and enterprises in the Basque region of northern Spain, with 93 production plans and nine corporate offices located outside of Spain. Though large, it has maintained fealty to the one-worker-one-vote governance model of working cooperatives. Growing out of the efforts of a Jesuit priest who was assigned to the Basque country during World War II, and who started a technical training school for unemployed Basque youth, the corporation began with a single worker cooperative formed in 1956 by graduates of that school. As explained by Gordon Nembhard, “Today, the Mondragon complex uses a system of interlocking cooperatives to handle evils of business development, including education and training, development, financial services, and social security. It has provided mechanism for some members of the Basque community to form and control their own businesses, schools and financial institutions, according to shared values and shared work.” To find out more about the Mondragon Cooperative Complex, you can go to their website at:
  4.  Indeed, Gordon Nembhard sees the underground railroad as an example of economic and social cooperation among African Americans, as well as the number of “outlaw communes” organized by fugitive slaves for both their own survival and as bases for guerrilla raids on slaveholders.
  5.  In this latter publication, DuBois documented 254 African-American cooperative businesses.
  6.  The economic system retaliated against these cooperative efforts — railroads refused to haul their goods, manufacturers refused to sell them machinery, and banks refused to extend credit — and this explains the short-lived existence of these KOL-sponsored cooperative enterprises.

[This article originally appeared in Against the Current Magazine]


    C2BE helps Arbor Assays become employee owned

    On January 1, 2017, Arbor Assays (A2) became an employee-owned company through the use of a “perpetual trust.”  The owners sold their interests to the employee trust and provided seller financing. Arbor Assays now has 11 employee owners.  While a relatively new technique in the United States – because the trust laws of many states limit the time period during which a non-charitable purpose trust can be established – this arrangement is more common in Great Britain where “perpetual trusts” are widely recognized.

    Founded in 2007 by Drs. Russell Hart, Nancy Schmidt and Barbara Scheuer, Arbor Assays, a small Ann Arbor company with a global reach, designs, develops, and manufactures detection and immunoassay products for important research biomolecules. Until the end of 2016 Russ Hart and Barb Scheuer each owned 45% of Arbor Assays while Nancy Schmidt owned the other 10%.  Bobbi O’Hara, R&D Project Manager at Arbor Assays, led the employee group through the transaction, having been elected as the Employee Representative.  Russ, Barb and Bobbi are Directors of the Perpetual Trust that now owns all the stock of Arbor Assays, Inc.

    A number of law firms were involved in the transaction.  Graeme Nuttall, at Fieldfisher in the UK, dealt with setting up the UK trust and its managing company.  Graeme has been intimately involved with drafting the UK government policy and laws governing Employee Ownership.  A2 used Bruce Elliott at Conlin, McKenney & Philbrick, and Christopher Moceri at Jaffe, Raitt, Heuer & Weiss to handle US legal work.  Ms Deborah Olson, the Executive Director of the Center for Community-Based Enterprise, was hired to represent the employees during this period and to work with Arbor Assays to ensure that the company is run for the benefit of the employees. This method of employee ownership maintains the company perpetually for the benefit of its employees, while eliminating the need for the company to repurchase shares from terminating employees.  Financially, the employees will benefit because, in addition to their basic compensation, the trust will annually allocate revenue not needed for company operations or future investment, to participating employees. 

    Russell Hart, founder and managing partner, said:  "We want Arbor Assays to remain an independent and successful business and were impressed by how the perpetual trust model can achieve this.  Shares are held in trust permanently for all employees, rather than allocated among staff as happens with ESOPs.  This means there are no repurchase obligations that can destabilize a company's ownership.  Profits that might otherwise be distributed to investors are available to pay out to staff as bonuses.  We hope our adoption of this business model will encourage others in the US to do likewise and for the US tax authorities to consider tax breaks to encourage its take-up, as has happened in the UK."

    Bobbi O’Hara said:  “Making the decision to transition from private ownership to perpetual trust speaks volumes about the faith in our collective competencies and the importance in taking care of each other, not just as coworkers, but as a community with a common goal.  As employees, we are excited to see how we'll shape our shared responsibility and direct this opportunity to have an impact for the benefit of us all."

    Resist, Advocate, Do For Ourselves

    By Paul Chander

    Ed Whitfield—an activist, writer, and artist based in North Carolina—has a saying. “Resist. Advocate. Do For Ourselves.” The phrase—RAD for short—is meant to describe the three approaches to social change. First, those who are oppressed must resist, or defend themselves from oppression. Second, the oppressed must advocate, or organize to reform existing systems of oppression so that they are less oppressive. And third, the oppressed must do for themselves, or create their own means to serve their needs and values that are better than the existing system, and can hopefully transform it altogether.

    Ed explains the relationship between the three approaches as follows:

    "As long as oppressive systems and concentrated power exist, we will always have to do some resistance and advocacy work, but we need to remember that the goal is for us to organize ourselves to be the power within our own lives and communities. We must create the world we want to live in by doing for ourselves."

    In the wake of the presidential election, I’ve been thinking a lot about RAD. Donald Trump’s victory means that, for the oppressed and those who fight alongside them, our energies will be drawn towards resistance and advocacy more than ever. This is all but ensured given Trump’s rhetoric to increase deportations of undocumented immigrants, ban Muslims, repeal the Affordable Care Act, slash welfare spending, roll back reproductive rights, squash popular protests, undo environmental regulations, increase military spending, and expand mass surveillance.

    But in the face of increased repression, what happens to that last phase—doing for ourselves? Given the increased need to play defense, it may now seem like a luxury to imagine better alternatives, let alone start building them. But I argue that doing so is now more important than ever. This is because building a better alternative to the current system is the only way we can lastingly overcome our regression towards what Trump represents.

    For the last four decades, the bipartisan political establishment has supported one system—global capitalism and the domination of our politics by the corporate elite. The result, for the vast majority of people, has been massive economic deprivation, environmental crises, endless militarism, and the inability of the political process to respond in any meaningful way.

    Amidst the failures of global corporate capitalism, Trump represents one response we can pursue—authoritarianism and divisiveness. By giving voice to the mass anger directed at the establishment, scapegoating racial minorities, and making bold (yet unfounded) claims to fix the system, Trump was able to make this approach seem acceptable. And, in the absence of a strong progressive alternative, enough people—especially those devastated by establishment approaches—were sadly but understandably drawn to it.

    But there is a better way. One rooted in more humane values of community and cooperation. One that addresses immediate needs of economic security and environmental sustainability, but also lays the groundwork for transforming the current system into a better one altogether.

    Historically marginalized communities, abandoned by the system long before Trump’s election, have already been creating such initiatives from the ground-up, all in ways that are hyperlocal, participatory, pluralistic, and decentralized. Some examples of these efforts include: 

    • Worker Cooperatives: businesses that are democratically owned and controlled by their workers and operated for their benefit. Worker co-ops create self-employment, serve community needs, and keep dollars local.
    • Consumer Cooperatives: a service or good that is democratically self-organized by those who use it to in order to meet a need in a way that is unaddressed by the marketplace (for example: housing co-ops, cooperative loan funds, and co-op grocery stores).
    • Community Land Trusts: property that is owned by a non-profit and democratically governed by community members to ensure affordable, stable housing or other community needs
    • Participatory Budgeting: democratic deliberation and voting by citizens on how public tax dollars will be spent to benefit the community

    These initiatives may seem disparate, but common to all of them are two underlying concepts: (1) economic democracy, or when community members collectively own productive assets and democratically operate them to serve human needs and values, and (2) social solidarity, or collaborative action between people with different oppressions to achieve mutual self-determination and liberation.

    If community members keep building these values-driven projects, guided by these two concepts, they can not only meet their needs and values better than the current system can, but also lay the foundation to transform global corporate capitalism into a better alternative altogether—the solidarity economy.

    In the Trump era, communities will be resisting and advocating more than ever. But the systemic problems that enabled Trump to succeed have not changed—global capitalism and the domination of our politics by the corporate elite. Despite his promises, Trump will not change this system either. As such, community members (of all kinds) will eventually seek to do for themselves to serve their needs and values better than the current system can. And when they do, their efforts must also prefigure a transformative alternative. This is the only lasting way out of the failure of global corporate capitalism that is just and liberatory.    

    The solidarity economy framework is one such alternative, as expressed through initiatives like cooperatives, community land trusts, and participatory budgeting. If we spend the next four years building these solidarity economic projects (in addition to playing defense), then by the next election cycle, we can not only stop our inhumane decline based on a failed system, but begin to embody and envision the world we actually want.

    The election of Trump will increasingly force us to resist and advocate, but we cannot become trapped on the defensive. Now, more than ever, the future is up to us, and how we decide to do for ourselves.

    Detroit Co-op Tour

    On November 11, we coordinated a Detroit Co-op Tour for participants of the 2016 NASCO Institute.

    We were met with a diverse group of students and cooperative members from all over the US (mainly UCLA, Boston, and Florida) with a few friends from Toronto as well. The tour was sold out with 33 people attending. 

    We met at Avalon Village in Highland Park first and listened to founder Shu Harris speak on her vision as it becomes realized with the renovations on the homework house, solar roofing, cobb constructed outdoor classroom, basketball courts, and shipping container co-op market place build-out. She shared her plans with the group, graciously took questions. and we shared lunch from the FoodLab-incubated catering co-op Fresh Corner Cafe in Jakobi Ra Park.

    Next we visited the newest Soulardarity street light install near Nandi’s Knowledge Cafe. We talked about community power and energy advocacy as well as the Highland Park initiative. Then we met with Jerry Hebron at Oakland Ave. Urban Farm. She gave the history of the farm, as well as the new initiatives happening including seed saving, tea-making, and we witnessed the holiday flavor of Afrojam being created in the kitchen. We went over to Detroit Poetry Society work house next, saw their renovation process, spoke with Gabby Knox on the vision and their process of cultural preservation and maintaining space to stabilize their block. 

    We then traveled to Talking Dolls, saw the print shop in action, and spoke with Rob and Pharoah about the space, their transition into cooperative ownership, and their newest service of shipping fulfillment for clients. Lastly we arrived at Data Driven Detroit and talked with Erica Raleigh about data for community empowerment and their transition to worker ownership.

    One woman visiting from Dudley Street Initiative commented that she was so happy to know of all of the hyperlocal, positive movement by people of color in Detroit, and that she has never gotten this narrative before. Let us continue to build and support one another so that the cooperative ecosystem in Detroit is the dominant narrative. Appreciation to us all.



    If Detroit’s economic recovery is to be inclusive, large-scale development projects must benefit local communities. On Election Day, voters get to have a say on how that can happen.

    Proposal A requires that large-scale developers negotiate directly with local residents to reach an agreement about how the community will benefit, whether through local hiring requirements or projects that serve community needs. Prop A was placed on the ballot by a grassroots coalition of community-based organizations. Most importantly, the resulting community benefits agreement is legally enforceable.   

    In contrast, Proposal B requires that large-scale developers negotiate with city-appointed representatives, with no legally enforceable agreement as the outcome. As a result, Prop B would continue to allow large-scale development projects to proceed without any real guarantee that local communities will benefit.

    On Election Day, voters have a chance to ensure that Detroit’s recovery is actually inclusive. For a real community benefits agreement, Vote YES on Prop A and NO on Prop B. 

    Welcome to Detroit: Birthplace of the New Economy

    From ONE Mile Magazine Vol. 2, Paul Chander pens an article about Detroit and the New Economy

    Welcome to Detroit, Birthplace of the New Economy

    Paul Chander, the Center for Community Based Enterprise

    Capitalism is failing people and the planet. However, its failures are not yet pervasive enough to force humanity to develop a better alternative. Not yet.

    Detroit, on the other hand, does not have the luxury of time. Here, the old economy has failed so badly and the need for survival is so great that Detroiters must do for themselves and must do so differently. At the same time, should their transformative efforts succeed, they could serve as a model for the world’s next system.

    Therefore, Detroit is not only the canary in the coalmine. Detroit is the great hope of humanity.

    The number and variety of Detroiters’ visionary initiatives are vast. They include: community gardens, urban farms, sovereign food systems, member-owned cooperatives, buying clubs, social enterprises, community production facilities, new work enterprises, community land trusts, community supported agriculture, renewable energy solutions, community-owned power, fabrication labs, off-the-grid homes, gift swaps, timeshares, freedom schools, co-working spaces, independent media, artist collectives, cooperative entertainment infrastructures, experimental music venues, new genre explorations, and intentional cultural programming that uplifts positive and indigenous identities.

    Despite their breadth, all of these efforts share a common goal: collective economic determination and social liberation through a genuine culture of cooperation, community, democracy, and solidarity. Scaled up, these core elements could form the basis of a new cultural and economic system—the solidarity economy.

    Yet if the solidarity economy is a better alternative than traditional capitalism, how can it actually replace it?

    The first step must be to ensure the success of each initiative. Detroiters are getting there with unparalleled resourcefulness, but additional resources and training must be provided to bridge the gap.

    The second step must be to scale, and to scale in a way that is strategic; to coordinate these projects in a way that prefigures the next system and converts the old one; to transform a city that symbolizes the impending failures of the old system into an inspirational harbinger of the new. In short, to build Detroit’s solidarity economy.

    Detroit need not only be ground zero of the failing old economy. Detroit can be the birthplace of the new economy. In fact, it must be. For if it can be done in Detroit, it can be done anywhere. And that is the ultimate goal. To envision a better world and build it out of the ruins of the old. Speramus Meliora; Resurget Cineribus. What’s more Detroit than that?

    Interested in the new economy? Attend the Detroit Cooperative Community, a monthly co-learning potluck meant to nurture the cooperative consciousness and commitments needed for a solidarity economy. It takes place the last Wednesday of each month at the D. Blair Theater of the Cass Corridor Commons, 4605 Cass Ave. Visit to learn more.