Democracy Collaborative contributions highlighted
Posted by:
John Duda
In April of 2013, Democracy Collaborative Executive Director Ted Howard was invited by the Governor's Task Force on Social Innovation, Enterpreneurship, and Enterprise to present our recommendations for low-cost, high return policies that could build community wealth across the state of Illinois. (You can read this "Action Agenda" document here.) We're happy to report that a number of our suggestions have been incorporated into the Task Force's new report to the Governor and General Assembly.
First, the report agrees with our analysis around "the strength of employee ownership as a wealth building and job creation strategy":
ESOPs / CO-OPs: We recommend the creation of an Employee Ownership Center (EOC) for the state of Illinois. EOC’s mission will be to promote wealth creation and employment opportunities within urban and rural Illinois through promoting development of community-owned businesses. EOC will achieve its mission through providing knowledge and resource support, in the form of educational programs, training, and government and private funding opportunities to community businesses that are built on a cooperative model. In doing so, Illinois EOC will 1) increase individual/family/community wealth in Illinois; 2) generate, retain and grow employment in Illinois; and 3) increase awareness of community wealth co-creation strategies through employee ownership throughout Illinois.
As projects like the Ohio Employee Ownership Center have amply demonstrated, using state resources to retain and develop jobs through the promotion and facilitation of employee ownership is very often much more cost effective than traditional extravagant economic development subsidies that often do little more than pit communities against each other.
The Task Force also agreed with our assessment that the procurement needs of large non-profit organizations is a key untapped resource for community wealth building, and a unique opportunity that surround hospitals in particular exists as the definition of "community benefit" expands in the wake of the Affordable Care Act:
For hospitals, State requirements on Community Benefits currently do not include specific set-asides or carve-outs. Currently, unpaid/free medical care for the uninsured (and others) accounts for the majority of Community Benefits. For most hospitals, unpaid care is expected to decrease as the Affordable Care Act extends coverage to more Illinois residents. This creates an opportunity for the State to allow and encourage Hospitals to include SE [social enterprise] procurement and other support as Community Benefits.
Finally, we were exceptionally pleased to see the Task Force agree that worker cooperatives can be a key piece of an effective state-wide community wealth building strategy, and that revamping and clarifying the legal status of democratic workplaces is a key step the state can take to facilitate such developments:
Prompted by input the Task Force received from Ted Howard of the Democracy Collaborative at the University of Maryland, the Task Force recommends that the State support co-operative business development by revamping the state’s co-op law. With a hospitable legal framework, worker-owned co-ops, especially in economically disadvantaged areas of the State, might leverage relationships with place-based anchors institutions, including hospitals and universities, which would become customers of such co-ops.
The Illinois Cooperative Act (805 ILCS 310) is an antiquated co-operative law. It does not cover many concepts that are typically covered in a co-operative law (e.g., authorization or process to merge with another coop, details for member voting and member meetings, director indemnification, dissolution process). The Cooperative Act does authorize forming a co-operative made up of members desirous of uniting as laborers. But it also includes some provisions that could be restrictive and inconsistent with a worker-owned co-operative formed for economic development and wealth building as we have in mind.
You can read our recommendations to the Task Force here and the submitted report here.