More Than A Utopian Vision: Cooperative Business Models That Work
This post is an adaptation of a project by UEP student Lylee Rauch-Kacenski for Professor Lorlene Hoyt’s course on Community Development, Planning and Politics.
You like shopping at food cooperatives and have heard of housing cooperatives, but how much of a difference can a single laundry facility, greenhouse or solar company really make? The reality is that a cooperative business is more than just revenue; it is a vote for what an alternative reality can look like; a living example of who benefits when we work together towards a common goal and vision. The problems we face as a society are daunting. Poverty, crime, unemployment and lack of safe affordable housing are all too common in many of our communities. Change can feel impossible when the problems are complicated and ingrained by years of policy, divestment in neighborhoods, and changes in economics. Through cooperatives, businesses that are owned and run by their workers, we can start to chip away at some of the problems affecting our neighborhoods and cities.
One particularly interesting case study of how key players in a community can come together to work on any issue from all sides is Greater University Circle in Cleveland, Ohio. Cleveland represents a typical post-industrial city. Once thriving with steel mills and the oil industry, it has been steadily declining since its peak in the1950’s and is searching for a new economic vision and place in the country. In this blog, we will dive in to the story of the Evergreen Cooperatives in Cleveland. Community developers and anchor institutions, nonprofits who are established in an area and likely will not leave such as hospitals and universities, came together to envision how they could help their city and residents thrive. One of the areas they focused on was developing high paying, quality jobs for the residents of the neighborhoods surrounding their institutions.
The area of Cleveland known as Greater University Circle is home to three anchor institutions: Case Western Reserve University, University hospitals and the Cleveland Clinic, 5 neighborhoods, and cultural institutions including the Cleveland Museum of Art and the Cleveland Orchestra. Despite these institutions and hub of culture, Greater University Circle (henceforth referred to as The Circle) remains an impoverished area with an average salary of $18,500 a year. In 2005 the anchor institutions of The Circle, the Cleveland Foundation and other key advocates for community development came together to strategize how they could use their influence to help transform the area.
The Greater University Circle Initiative (GUCI) was formed to address challenges in the area and determine steps to improve the greater community of the Circle. The two basic values of the initiative were that “by working together, anchor institutions can achieve more than any single institution working on its own” and “while physical development is important to revitalization, neighborhoods cannot succeed unless the people living there are valued and empowered.” The four strategy areas include institutional partnership, physical development, economic inclusion and community engagement. I will focus specifically on how GUIC addressed the issue of economic inclusion.
Together the three anchor institutions have a purchasing power of $3 billion a year, the majority of which is used to purchase goods produced outside the city. Together they devised a plan to create mutually beneficial industries in the neighborhood, creating jobs in the immediate area and keeping the money expended by the institutions within The Circle. An innovation that came from that plan is the Evergreen Cooperative Initiative. Created in 2008 as a way to build wealth as well as jobs in the community, the Cooperative network has three employee-owned, for-profit, green business in the area.
The Evergreen Cooperative Laundry was started to provide laundry services for the hospitals, nursing homes, hotels and restaurants in the area that had been sending their laundry to outside providers outside the area. The Cooperative is certified as highly sustainable by the Green building Council and implements an environmentally friendly approach and uses less heat and water than conventional laundry methods. Evergreen Energy Solutions is a solar company that designs, installs, and develops solar panel arrays in the Cleveland area. The newest Cooperative, Green City Growers is a 3.25-acre hydroponic greenhouse that will produce about three million heads of lettuce and three hundred thousand pounds of herbs a year. Hydroponic vegetables are grown without soil, using water and mineral nutrients. The method helps to eliminate soil erosion and runoff typical of industrial agriculture. Green City Growers focus is on growing lettuce and herbs primarily for the institutions in the Circle area.
As always, there are gaps between the ideals, values, and long-term vision of a business and the day to day realities. Many studies on Evergreen were completed after the first year and there have been some fundamental changes since then. The Evergreen Cooperative Corporation (ECC) governs the cooperatives and the Evergreen Business Services (EBS) maintains functionality through everyday support services. The cooperatives have made substantial management changes since they first started because of challenges balancing the businesses. There have been significant accomplishments credited to plans developed in 2013 when the ECC actively worked to identify gaps and weaknesses (Austrian, Ziona 14).
According to the 2014 Greater University Circle Initiative “Year 4 Report,” the cooperatives employ 84 people, 41 of which are employee owners. When the cooperatives started, each worker was hired for a six-month trial period, after which they could become a part owner of the business. Due to the request of employees there has been a shift from using the term “worker-owner” to “member” in order to better reflect the members’ rights and responsibilities in the organization. The trial period to become a member has shifted from six months to a year per request of the members. In 2014, two of the co-ops were able to distribute profits to their employees for the first time. By vote, the members decided “to distribute profits to all workers, not only those that are already owner-workers, which boosted employee morale significantly” (Austrian, Ziona 16). New support programs have also been initiated to help employees purchase automobiles and homes in the area.
The cooperatives have made vast strides in each of their businesses since their founding. I will briefly discuss some of the highlights in each company. The Evergreen Cooperative Laundry (ECL) has 39 employees and had its first profitable year in 2014. One highlight included the acquisition of University Hospitals as a new client, increasing the cooperative’s profitability. The Evergreen Energy Solutions had 8 employees in 2013 and is now up to 14. It expanded from installing solar panels to converting older lighting systems to LED lighting, doing general construction and housing rehabilitation. Green City Growers, the newest cooperative, has 31 employees. The Cooperative has started selling directly to grocery stores and restaurants in addition to its wholesale accounts, and has a booth at a local market. Green City Growers is not yet a profitable business, but is tweaking its model to achieve that goal. One shift includes using 60% of the space to grow basil, a more profitable crop than lettuce.
The current Minimum wage in Cleveland is $8.10. In 2013 the average hourly wage for the Growers was $10.64, Laundry was $11.34 and Energy Solutions was $15.65. According to the MIT Living Wage Calculator, the hourly living wage for one adult is $9.61 and for one adult and one child is $20.17. In 2014 statistics the wages had decreased slightly but are still higher than the living wage calculation. According to videos on Evergreen’s websites, employees generally seem positive about being a part of the cooperatives, grateful to have jobs in the area and be invested in the cooperative model.
Cooperatives are not utopia, a fantasy land where everything is perfect. They take a lot of hard work, but it’s that kind of investment in a model that supports people, and includes many voices and input from all owners, that moves forward the ideas of how a job can be more than just a paycheck, and a neighborhood can be more than just a collection of people. No business or approach to solving problems in our communities is 100% successful, but the Evergreen Cooperatives is an encouraging model of what the future of business could look like.
Austrian, Ziona; Hexter, Kathryn W.; Clouse, Candi; and Kalynchuk, Kenneth, “Greater University Circle Initiative: Year 4 Evaluation Report” (2015). Urban Publications. Paper 1288. http://engagedscholarship.csuohio.edu/urban_facpub/1288
Evergreen Cooperatives. Accessed October 1, 2015. Available from http://evergreencooperatives.com
Living Wage Calculator for Cuyahoga County, Ohio. Accessed October 1, 2015. Available from http://livingwage.mit.edu/counties/39035
The Cleveland Foundation. Accessed October 1, 2015. Available from http://www.clevelandfoundation.org
Wright, Walter; Hexter, Kathryn; and Clouse, Candi, “Lessons From the Cleveland Integration Initiative” (2014). Urban Publications. Paper 1242.