NCBA CLUSA member and nonprofit community development financial institution Capital Impact Partners last week announced the winners of its second annual Co-op Innovation Award. By delivering strategic financing, incubating new social programs and providing capacity-building to help ensure that low-to-moderate income individuals have access to quality healthcare and education, healthy foods, affordable housing and the ability to age with dignity, Capital Impact transforms underserved communities. Over the past 30 years, the organization has disbursed more than $2 billion to revitalize communities. Their press release follows:
Capital Impact Partners announced today that it has awarded grants totaling $45,000 to the Democracy at Work Institute and Project Equity, co-winners of its second annual Co-op Innovation Award. The award is given to recognize those organizations that demonstrate leadership in bringing the cooperative model to scale and in creating social impact for low-income communities.
“Democracy at Work and Project Equity truly embody the new energy we are seeing around the cooperative sector,” said Ellis Carr, president and CEO of Capital Impact Partners. “We are excited to foster these efforts through our Co-op Innovation Award, which continues our 30-year history of helping to grow the impact that cooperatives have on underserved communities.”
The Democracy at Work Institute (DAWI) received $25,000 to continue work that began as a result of their winning the 2015 Co-op Innovation Award, which was given in support of their effort to launch the Conversions Collaboration project to help small businesses convert to worker cooperatives. DAWI will use the 2016 award to undertake a pilot project assessing the viability of utilizing the worker cooperative model as a means to preserve minority-owned businesses where the current owners are reaching retirement age.
Many minority business owners who are facing retirement have less access to traditional capital sources and fewer assets on average than their counterparts at white-owned firms, and so find themselves under-resourced when they seek to keep their doors open after they leave. If even a fraction of these small businesses could be preserved by converting to cooperative ownership, owners could keep their assets within their communities and use the transition to support inclusive and equitable growth.
“With this funding from Capital Impact Partners, we will assess the viability of worker ownership in preserving minority-owned businesses and expand the national conversions collaborative to include new partners,” said Melissa Hoover, executive director of the Democracy at Work Institute. “This support will help build the bridge between ownership and racial equity, and between cooperatives and the communities left behind by traditional economic development.”
Project Equity was awarded $20,000 to help address an important gap in the worker cooperative development landscape—access to investment capital for cooperative conversions. Project Equity is developing a “Worker Co-op Investor Guide” to educate impact investors, fund managers and finance professionals about the process of investing in worker ownership and financing conversion buy-outs. Making this kind of investment more understandable and attractive to lenders and funders will help scale the growth of worker cooperatives nationally.
“We are excited to use this award to help us bridge gaps between the worker co-op conversions pipeline-building efforts and impact investors. As a field, we are laying the groundwork for what we forecast to be an explosion of worker co-op conversions, and are working to ensure that the core building blocks—including capital—don’t bottleneck this growth,” said Alison Lingane from Project Equity. “Capital Impact Partners recognizes the importance of not just addressing barriers to investors’ participation in co-op conversions, but the need for research that focuses on pipeline building in step with the needs of investors.”
The Co-op Innovation Award represents just one part of Capital Impact’s strategy to promote food, worker and housing co-ops that support underserved communities. The organization also provides direct capital to food co-ops looking to grow and expand through its National Co-op Grocers Development Cooperative Loan Fund. Over its 30-year history, Capital Impact has disbursed more than $283 million in financing to more than 200 cooperative businesses that serve more than 850,000 customers.
“The convergence of the growth of worker co-ops and a wave of retiring small-business owners offers a unique opportunity that is attracting the attention of foundations and investors previously unfamiliar with co-ops,” said Alison Powers, Co-op Program officer at Capital Impact Partners. “DAWI and Project Equity are leading the charge in building a nationwide ecosystem for worker co-op conversions with a focus on low-wage jobs. This aligns with our strategic focus on stabilizing low-income communities and increasing cooperative growth nationwide.”