Advancing Employee Ownership Through City Policy

i was able to click record so all right well hello everyone and welcome to advancing employership through city policy i'm thomas dudley from certified employee owned joined by anina stender also from certified eo hillary abell from project equity and kevin mcphillips from the pennsylvania center for employee ownership and today we're going to be talking about uh city policy i'm particularly excited about this topic because i think the cities and employership i think they fit very well together i mean we all know the good things that employment companies do for local economies the way that when you spend your money at an employment business you are putting money in the pockets of people who work in that community building wealth for for members of your community we all know the ties that employee owned businesses have to their local communities through that local ownership so much less likely to do things like move move down the road for tax incentives right so just all sorts of great things that employment companies do for for local economies and local communities i think that means that every city should know about employee ownership as an option for for local economic development and for us as a community it just seems like the city level there's so much potential for growth so nina and i started talking to each other about this earlier in the year because we were seeing you know we'd see we'd hear about from a friend uh something going on or see a new news article or hear about for example talking to project equity here about something they're doing and so it just felt like there's a lot going on here and we started thinking what is what's what's the landscape look like um and so looking around we couldn't really find kind of a good a good summary of all that and so we thought okay well why don't we just we'll start building that and start talking to people and one thing led to another and ultimately what we ended up doing is putting together a um trying to get a map of the landscape and really the whole point of doing that was to just try to understand what's going on and then feed that back to the people who are out there on the ground actually doing this work to hopefully start some conversations and just ideally make everyone kind of more successful by by helping everyone see what's going on out there so the goal today on this webinar is basically to to do that feedback to give you all a good look at what's happening we will as a follow-up share a link to that uh landscape that that map that we put together which is basically a spreadsheet a google sheet with uh all the cities that we saw and all the different things we saw going on there as well as who's who's involved uh where it's definitely a work in progress so if you see something on there that maybe we didn't get 100 right or if maybe that we're missing something definitely let us know and our goal is to basically keep that up to date and keep that going so that that is a a look at what is happening in in the city level or at the city level specifically today on on this webinar uh what we're going to do is first of all we would like to spend a second to acknowledge the all the organizations doing all this great work at the city level nina's going to walk us through that city policy landscape share the summary of what we found hillary is going to walk us through all the great things that project equity is doing across many different cities and kevin's going to walk us through one of the most in-depth initiatives that we found in in the city of pittsburgh harnina you want to you want to take it from here great um yes so we wanted to start off by highlighting some of the key organizations that were involved in the policy initiatives that we found project equity has a hand in a lot of these initiatives we'll be hearing from hillary about that later they were involved in 12 of the 32 initiatives that we found democracy at work institute was also involved in 11 of the 32 initiatives and 8 of these 11 were con are connected to their ongoing shared equity in economic development seed fellowship so we want to acknowledge in particular dawi as well as zen trenholm zen has been tracking local initiatives on the co-op side and made significant contributions to our findings and dawi has also been leading field efforts in equipping cities to develop and implement employee ownership initiatives so as you can see on the screen all sorts of organizations are doing great work and that's highlighted in our spreadsheet tracker which you all can take a look at later as well so we really appreciate everyone who took the time to speak with us as well as to review the data we found um and through everyone's contributions we were able to pull together a fairly comprehensive collection of information um so diving into the policy initiatives a little bit um so in terms of policy initiatives our approach to identifying these was to reach out to individuals and organizations in the field and ask them what they were involved in what other initiatives they knew of where they were happening and what we found was 32 policy initiatives at the local level um across 25 localities and including at least 20 active initiatives in our research we were looking at policies advancing all forms of employee ownership we found that 15 of these had a co-op specific focus whereas 17 of them supported multiple forms of employee ownership including co-ops esops and trusts in terms of the where here's the list of cities and sometimes counties where we found local policy initiatives as you can see there's a lot going on in california there were 11 policy initiatives based in california we found three in florida three in new york three in pennsylvania and then in terms of policies through our informational meetings with folks in the field while we were trying to understand what they were doing we identified five major categories of policy um so one was outreach to existing business owners as well as one helping business owners explore a transaction then helping them actually do the transaction focusing on helping people start new eo businesses and then policies that focus is focused on businesses that were already employee owned and underneath those broader categories you'll see some specific policies which i can go into in more detail later so here are our high level findings on policies advancing employee ownership at the local level so you'll see that business owners outreach 25 out of 32 involve some element of outreach to business owners in terms of exploring eo 25 out of 32 involved a focus on services for business owners who are exploring a conversion to employee ownership 10 out of 32 involves support for business owners going through a transaction 7 out of 32 involves support for startups of employee owned businesses and then 0 out of 32 involve policies focused on existing eo companies so this kind of shows that the majority of policies at the local level currently focus on outreach to business owners as well as helping them explore employee ownership so diving a little into each specific category of policy so under our outreach to business owners you'll see in this chart that the most common things we found were educational sessions for owners as well as contacting outreach to business owners um and then you know in different cases uh some of these other policies as well data collection a website focusing on eo initiatives establishing an eo office media campaigns and and one example of business outreach to business owners was in the city of santa clara where they launched a worker co-op initiative in 2019 to assist locally owned businesses at risk of retention by partnering with project equity helping them learn about the option of eos succession as well as working with dawi with the sustainable economies law center and the u.s federation of worker co-ops to provide educational workshops for the community in terms of exploring eo most policies focused on partnering with ta providers and in most cases with funding provided as well so a recent example of this new york city launched its 2020 employee ownership new york city where they partnered with ta providers with dawi the working world ica group new york city local business outreach center network and they offered a whole range of consultation assessment succession planning training and education services for business owners considering and implementing the transition to employee ownership you'll see that less frequently cities policies focused on developing business owner toolkits and and sometimes in-house technical assistance as well in terms of supporting transactions as you can see especially relative to the previous two categories there are some examples of policies around financing partnerships subsidizing uh transaction costs loan guarantees but it's definitely a less common policy approach um and one example of where where we did see this was in berkeley where worker co-ops are included in the city small business revolving loan fund in terms of startups this category looked at any policies providing support to people looking to start an employee-owned business um so one example of educational sessions and training was in austin texas where the city council approved in 2020 a contract with a the university of texas rio grande valley to provide training coaching how-to information to anyone interested in starting a co-op business and in madison wisconsin the madison cooperative development coalition which is a city of madison funded initiative they provide 10 000 seed grants to co-op startups and then finally in terms of policy supporting existing eo companies uh we were surprised to find none no purchasing preferences no tax benefits no other subsidies or incentives for existing eo companies yeah and that particular was very interesting finding i mean when you think about uh policy and politics right it often comes down to constituencies and there's this big constituency of companies the employment companies themselves who likely have a lot to gain from city policies promoting or or favoring employment companies in some way and so just seems like a potential opportunity from at least from from our perspective but we obviously work with a lot of employment companies so that's where we spend a lot of our time thinking thinking about things and so you know kind of in just at a high level it seems like a lot of the work is focused on creating new employment companies which is also a great very important thing uh so it's just kind of an interesting summary finding another thing to to call out um so melissa hoover mentioned in the chat the owner to owners hotline project in in new york city as a as an interesting example of reaching out um to to some folks as well so dropping that link in the in the chat here and that i guess is uh i should also mention that if you have any questions please drop them in the chat or in the q a and we'll just take those as they as they come up um because it's great if you're thinking about something i'm sure someone else is thinking about it as well so definitely drop it in there all right well nina thank you so much for that summary uh next we'll hand it over to hillary who will walk us through the great work that project equity is doing so hillary you should be able to share your screen wonderful uh how how's the sound can you guys hear me all right okay good well good morning um it's great to have so many people on uh this call and i'm so grateful to nina and thomas at certified eo for for doing this research and pulling the information together because i think there's a lot of you know informal learning and conversation across folks doing this work but um the more we can generate cross-pollinate the learnings and the more we can build the field together the more powerful i think the work will become so so thank you so much thomas and nina and it's great to be here as well with with kevin mcphillips i'm looking forward to hearing about the work in pittsburgh um so as i pull up my screen for screen share um i'll just i do want to say that the work i'll be speaking about today is work that my wonderful colleagues at project equity do um primarily evan edwards and alice and lynn gaine and others on our team and i i've been involved in the santa clara initiative kirk bartan is here who got that whole thing going and brought the players together um but i'm speaking about uh the work of my colleagues so i just wanted to acknowledge their amazing work and and um appreciate that as i get started so what i'm hoping to do over the next about 15 minutes and i am going to uh set my timer here so that i don't lose track of time those of you who know me know that once i get started started talking about employee ownership i can go on and on um so what i'm hoping to do once i get the slides to advance there we go um is to talk briefly about our perspective at project equity on policy and government engagement just at a high level and the specific approach that we've been taking and now replicated and adapted in many local city governments and also with several counties across the country so i'll kind of walk you through our approach touch a little bit on a couple of examples berkeley was our first and is still our first sustained initiative with the city and miami-dade county is one of our our newer ones and then there's some insights and learnings that i hope to share as well so just a quick word on how we view policy and government engagement we do like to use the term government engagement because the vast majority of what we have been doing is actually not done through a policy process it's really working with um champions in in often elected officials in some cases we have you know a city council member or a county uh commissioner who's who's helped us maybe get some funding from the county um or in berkeley the mayor jesse arguing has been an incredible champion he started as a city council person sustainable economies law center got him excited about this work started driving the interest and then he became mayor which has been wonderful um so we we need champions um and then the work that we're doing primarily is really what i would call programming um is working with economic development staff or others in the city government to to do the type of outreach i'll be describing so so both are very important but we like to distinguish because there there is a lot of policy work that's needed at the local state and federal level to scale employee ownership for all of the reasons that thomas briefly alluded to in the beginning of this call and i think most people on the call know about i'm not going to walk through this grid but i i just wanted to share that from a policy perspective ways to to fund and operationalize awareness raising and education is a huge priority at every level um is usually the sort of number one number one thing that when we talk about barriers to more employee ownership is the lack of awareness um we have been using feasibility subsidies uh partial subsidies or discounts on on feasibility studies it's something that's been done in a couple of states something that has been part of not all of our local government engagements but many of them and we find that that does help business owners take that first step um part of the reason this work is so important is that business owners like most human beings don't plan enough for the future so they're behind on their succession planning and often having a deadline like you can apply for this subsidy or having that discount that coupon mentality can help get things going um but that is something that we would love to see happening um throughout the systems that are funded by federal dollars that are networked and and supported through the states and similar practices can be done at the local level and then of course the capital piece is really important and we see the the government role in that as being most powerful at the federal and state level and it is something that can be done at a local level but it's been a smaller part we haven't felt that that need was as as strong at the local level so we focused on awareness and education um but i do believe that policy usually follows practice so what we are trying to do is get local governments engaged programmatically encouraging and supporting employee ownership and um and we believe that that will link powerfully to work at the state level and that that will benefit from and feed into work at the federal level so we see all of these levels as paul of policy as being distinct but very much linked to each other and i hope that in the years ahead we as a movement if you will as an employee ownership field will be getting um policy wins at all of these levels i'll be talking a bit about our work in california i want to acknowledge that um we were one of many great organizations who co-founded the worker-owned recovery california coalition last year and so you know that coalition is working with actors in the state we don't have anything no major happening from the state yet but our hope of project equity is that the kind of work i'm describing on the ground helps to make the work real to folks at the state and that when the state kicks in it'll help to make the work on the ground even more powerful our goals with government engagement are are really threefold at a high level our approach is really to focus first and foremost on the near-term goal of driving transitions of new businesses to employee ownership and the reason for that is that having those live examples you know some communities already have them but many don't or at least they're not aware of them and having live examples not only that can showcase the benefits of employee ownership and be champions and elected officials can come and visit those companies nothing replaces that but also having examples of how the transition gets made how the city has supported a transition or multiple transitions we think that's what's going to get the city interested in doing the work in the long term is to really see results early on so that is our our primary focus um in the medium term we work with those city city players to as i know others others here do in their programming to embed employee ownership into the cities or the county's approach to economic development and i'll just say i'm going to use the word city to mean any any local government just for shorthand and finally we do believe that at every stage legitimizing and normalizing employee ownership is is the benefit here and that's what will help drive towards sustainability and scale of this work and we are engaging multiple stakeholders in the local ecosystem so sbdc's small business development centers are actually partnering in many of our city initiatives and also there's other you know many of the organizations represented on this call like democracy at work institute and sustainable economies law center and many others um you know are sometimes directly involved in the same initiatives we are or have been doing something before we came in and that's all very synergistic as well as engaging others who who are just you know rooted in those communities and can be part of this work um these are the local governments we're currently engaged with there are three in in the bay area those top three three in southern california we're also doing some early stage work in san diego but we're not working directly with the government so we're not including that here and one of our newer initiatives is in miami-dade county and in atlanta we have some some work that's been in planning stages for um you know more than a year and is is now getting going so that's um one that we're very excited about as well um and i'll say that both miami-dade county and atlanta are places where democracy at work institute has had its seed fellowship prior to the work that we were doing and that's certainly been you know very powerful in terms of generating local interest and employee ownership so our approach just to walk through it kind of step by step is that we start by framing or reframing the issue so essentially we're we're going to a city government uh to the economic development folks or the electeds who are interested and saying you know you need to think a little bit differently about economic development you need to be retaining the businesses that are here in your community because there is this thing called the silver tsunami i won't go into those details because i think everyone's generally familiar and the way that we do this work is we use we use data to drive that awareness and really ground it and have it sink in for people and that's an an in-depth landscape analysis of the local businesses and we're analyzing you know how many of them are 10 or more years old how many are 20 or more years old 30 or more years old what how big are those businesses what industries are they in and then the analysis that comes out i won't go to the punch line yet but really demonstrates the outsized impact of legacy businesses on jobs and revenue to the city so that's our first step is to say hey you've got a problem the silver tsunami and you've got an opportunity to um retain those businesses through through employee ownership transitions uh we often will use that data study to also kind of educate and do publicity sometimes we'll get media more and more we're starting to do direct outreach to businesses using um you know paid media using advertising and that's been exciting over the past year or so we've been experimenting with that and finding it to be very impactful and then we'll also do you know trainings and education and work hand in hand with the local leaders within the city staff who who you know have responsibility for related programming and we need to be if not fully fluent of course we would love for them to be fully fluent and um employee ownership but the goal is really to get them you know at a basic level of literacy and able to kind of do do appropriate handoffs and referrals when businesses want to use learn more but to have that confidence to to put it on the table and to start to integrate into their programming stage three is that business outreach um and i'll give the example of what we did in berkeley and it's it's similar to what we do elsewhere but it looks a little different as you can imagine in each locality in berkeley we actually kind of wrote the letter and then you know with with the city's approval it went on city letterhead signed by um i think it was a leader of the economic development department and we put it in the mail so you know city governments are very are very strapped and some of them don't even have an economic development department so for example the the work we're doing in santa clara with other partners is the first small business programming that the city has ever had so it's just amazing that that's focusing on worker cooperatives it's very exciting um but that just gives you an idea of how how little some cities are our staff to do this work so we like to be a one-stop shop and say hey we'll make it easy on you um so so we we sent out a snail mail mailing we emailed follow up we actually did calls in the case of berkeley we don't do that as much and that was to a list of 200 priority businesses um that came out of a bigger list of 1200 um older businesses in berkeley um and then we do um because project equity is does a lot of awareness raising and business outreach as well as we have our client services team so we're able to kind of directly connect people into free consultations um feasibility studies and then transition and post-transition services so that's our five-step process um i'll give a couple of examples from berkeley and miami-dade county um sorry first i'm going to tell you a little bit more about the tools we use so so the data studies have become a very important part of our work and i told you i wasn't going to reveal the punch line well this is the punch line if you look across these very different localities long beach and you know port city in southern california berkeley bellingham washington a much smaller city up in washington state they all have about 20 percent of their businesses in the city are what we call legacy businesses 20 years old or more and about a third of the employees in the city work for those businesses and close to 60 of the business revenue in the city comes from those businesses so it's a little bit different in each place it's really important that we're working with real data from that place because that's what really drives the message home but essentially the story is the same which is you can't just focus on attracting corporations into your city uh for all kinds of reasons including that these businesses are already here they're strong businesses they've survived for decades and they deserve to stay and they can really um empower and build wealth for their employees when they're employee-owned these are just some examples of our advertising times going quickly so i won't linger here but we do both online ads and we've also done some print and some um you know publications in their online versions like berkeley side here um and i won't talk talk this through but this is the the services that we do have directly and kind of connect people into the technical assistance that goes from the exploration phase all the way through to the after the transition we have a two-year support program so as i mentioned in berkeley um this is a multi-year partnership now that involves a sustainable economies law center and us as well as the the city itself um this is a picture from with the mayor there in the middle from one of the gatherings i think this was after a city council meeting where the initial the initiative was um was discussed and this this initiative has had all of the components that that i described as well as some events um i'll touch on that in one second um this is the infographic that we used um as part of our business outreach and just for for general education and awareness raising and you can see this was one of our earlier presentations both of the um that outsized impact of those 1200 businesses in berkeley and then some of the benefits of employee ownership um this was a really fun event uh we it was hosted by sunlighten power which is a wonderful employee-owned company that is both an esop and a cooperative there was some really creative work by the ica group and the bister institute to create what they're calling an east operative and so they're in berkeley they hosted the event uh the person in the middle there with my colleague donna is jordan klein from the city of berkeley so he spoke as did the selling owners of adams and chittenden scientific class and some of the new worker owners in what is now a cooperative these are some of the folks from adams and chittenden the two white-haired men in the middle are the original owners and the the folks surrounding them there's a couple people from project equity and shared capital cooperative which provided the financing through our joint initiative um but the others are our worker owners so they spoke at that event and we invited local businesses and that was the old school way that we were bringing people together to learn from each other so some of the results of berkeley adams and chittenden scientific glass did convert and you know had had a small subsidy for some of their technical assistance costs from the city we have several new conversions in berkeley that are about to be announced so i'm excited to have that news come out in the next couple months about two new companies completing their transitions and their others in the pipeline um and also selk was able to drive some policy changes in this case which i think nina already spoke to both to how the loan fund gets around that barrier of personal guarantees and adding co-ops to the business license form so those are the types of kind of ongoing what i would call sort of policy or regulation changes that are are really helpful and help this this information or sorry this programming stick for the long run um it's that complement of city you know direct programming and outreach with with policy changes uh hillary there were a couple of good questions here that came up that i think might be might be good to address as well so one one question was from paul uh kind of regarding the data that you're getting to do the outreach where where's the data coming from yeah so so this is um this slide has has our data from miami-dade county um you know our primary data source is actually done in bradstreet so we you know got a got a paid subscription and we mine that data it's not always um 100 accurate or up-to-date but it it seems to be the most accurate source out there and that was a big learning because when we first did these data studies with cities we were you know getting business lists business registration records from the cities um and believe it or not their records we we found were not as robust as as what we could find on done in bradstreet and when we have both we'll we'll combine them and kind of triangulate the data interesting yeah that's that's that's definitely something that uh that's important to understand is where to actually find this list to do the outreach um another good question from tim so talking about the success metric so obviously conversions or transitions is is is the main metric here um but it takes a while to see that flow through the pipeline so i'm so what other sorts of fpc metrics have you used to to measure the success of your initiatives yeah that's such a great question um you know because we are our strategy is really so focused on getting those actual conversions we have you know what do you call them along the way metrics you know our pipeline funnel you know how many consultations are we doing with berkeley businesses how many people come to come to the events how what is our advertising what kind of um open rates and or click rates and all of that stuff we can track all of that stuff um those are kind of like activity metrics that we'll use um and but but for us in the long run the the real results are the converted companies and then the ways that the city is embedding the work in their own programming and to be honest one of the takeaways from all this that i want to share with you all is that it is it's multi-year work like we really don't see it as you know a six-month program or you know something that's going to create change that will continue underway um through a short-term initiative and it is because as tim said you know the pipeline process is so so long um so yeah but the ways that it gets embedded i think things like you know those examples from berkeley um and i think the the main thing i would think about is does does the local government are there people on that staff are there programs that have employee ownership just baked in as part of what that program is there to do and are there people who are fluent in it and can keep it can keep it going would be a metric i'd look for as well in addition relationships so kind of the lasting impact within the city and and building that sort of stakeholder network yeah that's that's great well i know you have a lot of great stuff why don't we do miami-dade uh data study and then we'll go we'll go to pittsburgh with kevin cool you know what i'll do is i'll just skip over this um because i'd actually love to just do the quick takeaways oh yeah perfect yeah let me do those and this is a um an event we did a couple years ago that we're hoping to do again getting government leaders from different localities together because we found that to be very very powerful um but the key insights just you know sort of two minutes to wrap up on these i already spoke to the first local leaders don't know it but those legacy businesses have a huge impact so they're so important to local communities um that message about the silver tsunami in business retention is really getting people's attention because business tax is such a primary revenue driver for them but there are other reasons to support this work and we're finding that during the pandemic you know retention recovery all of that as you might imagine and just business resiliency so the fact that employee ownership makes businesses stronger and then there's quality jobs and racial equity and all of those different angles um some of our work several of the localities we're working with have actually funded the work themselves out of their budgets and we're finding that that gives them a particular buy-in you know gives them skin in the game to use the cliche um and we've had some others that were funded by philanthropy and those have also you know moved forward and been valuable but there is something i think that can be game changing about getting that funding from from the government themselves i already spoke about the subsidies and again we we found that the full subsidy has more downsides than the partial subsidy and that the partial subsidy gets you the benefit of it and we're always working with companies that are solid uh businesses with profitability because those are the ones that it's worth it for the employees to own in terms of our mission so they have the ability to pay for technical assistance um so the the subsidy is really about um getting folks to take action um i spoke a bit to this is not one and done so i've already mentioned that but that's a key message we've something that we've learned um and as i said i think this is different at the state and federal level i think policy change very strictly defined as critical at the state and federal level but at the local level i think that policies and regulatory changes are important um but i think that it's the programmatic engagement of the city and reaching reaching businesses and getting employee ownership on the table um if you if you had to have one or the other i would go with with the programming and hopefully we get to have both in a lot of places so i'll leave it at that look forward to the discussion thank you that was great thank you so much hillary all right kevin i think you should be able to share your screen and we'll uh [Music] can you see that yeah i think i just think how's the volume can you hear me okay yep great good okay um first of all hillary thanks so much that was uh terrific uh really enjoyed learning a lot about that there's a there's a principle in anthropology called parallel evolution and i think a lot of the lessons that we've been learning you know i'm seeing in your research as well so um i know we're on the right track um so uh um i'm gonna talk for a few moments about a project that we're doing in in pittsburgh uh but first i want to sort of explain who we are we're we're uh we're the pennsylvania center for employee ownership and we are a a state center much like a number of other states have state centers and what's maybe a little bit unique about our organization is that we exist for one purpose and one purpose only which is to raise awareness um we don't uh sell anything we don't charge anything for our services we don't do technical assistance our sole purpose is to raise awareness um tim garbinski and company at the end ceo uh did a very fine piece of research back in 2015 that brought us all to the very obvious uh conclusion that the reason that there aren't more employee-owned businesses is that people simply don't know about it so the purpose for the pennsylvania center is simply to build a model that raises awareness as best we can you know to then bring people to uh to employ ownership so in the course of in the course of discussions at our organization um we we came up with the the idea of conducting an experiment and although there's lots of different kinds of employee ownership and we all know that we're focusing on two of them uh the esop the employee stock ownership plan as well as as worker cooperatives so the thing they have in similarity is is that in both of these everyone who works there is part of the ownership group and that was very important to us we're trying to we're trying to to to attack problems that are related to the working core and the wealth gap etc so so so we're going to focus on these and the concept was as follows you know we spent a lot of time uh working individually excuse me talking to prospects uh working with chambers of commerce and trade groups and uh members of government and and economic development folks but we said what what if we take a very broad-based approach and we try to do a marketing program that goes to a very large number of people not a couple at a time or a handful of time but a really large number and we also feel that although there's value at every level of government whether it is you know nationally whether it's at the state level with where we do some work we really feel like we want to get to the grassroots and we wanted to test the municipal level now there's a bunch of cities in pennsylvania the two largest being pittsburgh and philadelphia and we had city council hearings on employee ownership in both of those cities both were very engaged and interested and really terrific philadelphia's got about a million and a half people and pittsburgh has 300 000 so we decided we're going to focus on pittsburgh because it's a it's a more manageable chunk one of the things that was important to us was establishing significant partners in in an operational task force of decision makers who could move the dial from government banking business education media you know the important important areas that that could could move the dial for us one of the other concepts we thought about is although if if an organization is appropriate for an esop they generally don't have issues with funding but if if it's a co-op and we anticipated that most of the businesses we were going to be looking at were going to be smaller there are challenges there are economic challenges so we wanted to create a funding model and and hillary referenced this a little bit um you know that that didn't have personal guarantees okay it it's got you know it's it's in my mind um really problematic to convert a business to a group of people that who's whose financial means may not be great and and put a burden such as this on them so that was one of our goals and requirements as we we put this uh plan together and and lastly we wanted to uh establish professional relationships our partnerships with community groups because we didn't want to do this by ourselves we wanted to engage the the various communities within pittsburgh to uh to do this together so we had to approach the city and so here here's what we said to them we said one of the things that employee ownership can do it can keep the businesses in pittsburgh it can create and save jobs pittsburgh's population is decreasing from one census to the next and they're losing businesses and that's an important characteristic for their uh city council and for the the mayor's office so so that was that was important we know we can create value for for owners through through employee ownership very important we can add to the city city revenue base because if you keep people there if you create more jobs you're going to you know have um city wage taxes and you're going to increase the revenue base also the more people you keep there the more people buy homes and there's real estate tax etcetera so so that's a that's a real a real qualifier for them um obviously stem the loss of of business closures the loss of revenue due to business closures also importantly we we wanted to obviously create real futures for people and you know th this this is not a secondary issue for the city of pittsburgh they they really are focused on the people uh the value of their lifestyles and their ability to care for themselves and their families and and we also know that through some of the work at the nceo some terrific work that the effect of employee ownership on on minority uh business owners is dramatic and and that's very important um both of the local neighborhoods and we all know that employee owners have have have more retirement savings and surprise surprise um uh employee-owned companies you know are much more productive so so this is the argument with the city and they were very excited about about the prospect so in january of 2016 which is when our organization began uh actually um we had an outreach from from dr um david feingold who was the new president of chatham university in pittsburgh and if you don't know chatham i highly encourage you to check it out the extraordinary university they boast the nation's only fully sustainable campus and every one of their programs whether it's nursing or mathematics has some aspect of social justice in it and and i have great respect for them some of you may know dr david feingold who was joseph blasey's boss at rutgers um david was the second in command at rutgers and was instrumental in creating the program there in the graduate school around employee ownership so we called and he said how about if we partner and try to do something here in 2018 he introduced me to mayor bill peduto and um mayor peduto didn't know much about employee ownership but when he heard about it he became an evangelist and he said let's set up city council hearings and let's do something together so in january 2019 we held the hearings and um without going to great detail uh one of the members ended up crying at the end of the of the uh the session and she became my co-chair uh council member erica strasberger for the creation of the uh what we believe is the nation's first uh citywide task force on employee ownership in september of 2019 city council uh chatham university and our organization um banded together created the task force and we met three times between 2019 and 2020. our last meeting we had we had three meetings our last meeting was in uh march of 2020 and um something bad happened um so uh as a result of covid we made a decision that we've got to put this on hold so we made a lot of gains and i'll talk about this in a moment um but we said it it would be irresponsible to set up community meetings in neighborhood groups etc you know during the pandemic so we need to figure out when we can launch this thing we've done a lot of the groundwork uh we're ready to go but we need to need to be sort of clear of the of the pandemic we had another meeting um actually uh uh last month to reorganize and regroup with uh with them and uh we're all committed at continuing to moving this thing forward but uh we need to wait for it for for an opening just some things about about our organization and what's happening in pennsylvania in 2015 the year before we we we engaged um pennsylvania was in the lower half based on the 5500 data of of uh states in terms of new employee ownership in each of the last two data years from the u.s labor department we were very pleased to to rank as first in the nation in per capita uh employee ownership growth and second in the nation in pure numbers uh behind only california with with three times the population so we think we have a model that that can work we just need to find the moment to kind of launch a plan we took this on the road the the the concept and what we're doing and we met with uh philadelphia we met with york county which will include uh the sort of the center of the state uh harrisburg uh lancaster and york county and we met with the erie regional growth partnership erie is a city in pennsylvania in the far northwest all three of those are interested in doing the same thing that we're doing in pittsburgh but obviously we need to show some successes first you know from the from the launch uh also we're working closely with members of the pennsylvania house and we've actually have a a draft bill for the creation of um a pennsylvania office of employee ownership in the uh economic development department um modeled similarly after colorado and what massachusetts are doing so we're we're optimistic about that as well i don't expect you to read this but this is a listing of the task force itself it includes pennsylvania's lieutenant governor john fetterman it includes three members of the house of representatives it includes three members of pittsburgh city council senior members of banking organizations such as pnc uh the ceos of the esop companies um the leaders of of um co-ops in pittsburgh and of course um employee owners which is very important so so so the concept or the or the plan is first collect data and hillary you talked a lot about data collection and you know a bit about that uh first collect some data get some good um secondly do outreach to community groups which we have done to get partners to to work with us uh meet with all of them send a a a blast communication both digitally and traditional mail from the city of pittsburgh and from from from the pennsylvania center um a communication goes out from each of those 30 partner groups as well to the to the more locally uh specified areas coordinate and schedule group meetings within those community groups to do educational sessions which we would host along with members of city council through all of this to a public relations program uh radio spots uh television uh digital social media um and print um and then of course catch you know follow up with anyone that is interested in in going further on this um again don't expect you to read this the first thing we had to do is we had to get the data so we work with city council and the carnegie library and we were able to get very specific data on 60 000 businesses in pittsburgh that included you know who the leaders were revenue number of employees age of the business etc and i'll i'll preempt the question that uh hillary was asked we also the the carnegie library data includes uh dun and bradstreet hoover's which is now one organization as well as the finance information from the city of pittsburgh so they banged that all together and gave us you know something that's let's call it a little better than the than the um hoover's and uh done d b uh data but we took the 60 000 companies and we vetted them down to 30 000 that we think are quote appropriate for the message of employee ownership and i'll tell you that the vast majority of them are small companies probably more appropriate for for cooperatives and about about four thousand of them are esop appropriate and the balance are really probably uh more more uh you know commercial uh corridor businesses main street businesses uh such such as that um the mayor's office and the mayor worked with us to create the the the community partners group 30 businesses excuse me 30 community groups you know we didn't go with you know the baseball groups or the you know sidewalk cleanup groups etc we wanted the ones that you know were business related and the mayor said here here are the ones that you want to work with so we got about 30 of those and during the pandemic we've been doing you know virtual presentations with each of them to get them on board and without exception so far every one of them said absolutely we'll host you at our monthly meeting or we'll set up a separate meeting uh you know for our group and we're happy to market to to everyone in whatever is our best way some people will send leaflets put leaflets under doors some people will do it digitally some people will send mailings out i mentioned the funding problem and one of the things that was important to us was trying to develop a template for funding so that every time we had a candidate for a co-op let's say we didn't go have to go back to the drawing board and say let's go you know go to this person let's go to that person let's see so so what we've developed is what we call four templates and all of them and let me be clear are based on you know a term sheet and a series of covenants you know so so these are you know economically viable alternatives okay first one is we call the capital stack which has a seller's note um which has a commitment from the ura which is the urban redevelopment authority in pittsburgh in fact the ura tom link who was terrific there said i'll fund the first two i'll just do it okay not the way he said that's what we're in business to do let me do it so great so we know we can get a couple of them off the ground um the economic development option okay uh seller note low interest loan from the ura and a small municipal grant from the city of pittsburgh um third one is cdfi uh so there's lots of cdfi's there's about four or five of them in pittsburgh their businesses to try to um help and funds start organizations that make sense for the city and they'll take a look at each one we're working with one group called bridgeway capital they'll they'll look at the particular circumstance of the business and if it makes sense they're in and then the last one is actually a crowdfunding option there's an organization called honeycomb credit which does crowdfunding and would be interested in working as well so depending on the organization depending on the the thresholds that they're at that the the um um you know that this the levels that they can meet they may be eligible for one of these these four hillary just like your ears you know we put some collateral together we're putting together what we call a toolkit as well which is sort of a single package for the people who express our real interest that gives them things that they need such as referral sources whether they're co-op or they're in esop and uh you know what what what to do next uh one for co-ops one for esops and of course throughout all of this we're we're driving people to the website okay and they can sort of click on esops they can click on co-ops they can find out what they need um we're going to take them to the place where they can learn information and then they can connect with us they can you know contact us and we'll work with them in any way we need to to get them to the point where they can work with um uh sources to assist them to to to go forward as i said we don't do technical assistance we just want to we we want to get the cart so far and then turn them over to the experts that's what we're doing and um as soon as we can get out of this uh this mess we're in um we're excited to launch and we're keeping our fingers crossed thank you so much for the opportunity to uh to share a little info thank you so much kevin that's fantastic to hear about everything that y'all are doing i'm very excited to see what comes of it once you can can really get rolling um all right well now we basically are set up for uh q a so i think we have a few questions on deck here and then if uh y'all have others please please put them in the chat or the q a um the first one here is um really about the the guarantees so i know that uh kind of a theme here i mean across this is that every um every initiative we saw had some call either was focused or included all types of ownership including co-ops i mean i know a thing that's mentioned often with costs the challenge a challenge to making these work is the personal guarantee hillary could you tell us a little bit about what what specifically that is and why it's a barrier and how you all are looking to get past that sure i'll be quick and um kevin can add if if he wants um yeah just you know personal guarantees are the most common way that business loans small business loans get get guaranteed um because there's often not collateral so that personal guarantee is the the throat to choke as bankers sometimes call it or the house you're gonna repossess if the loan goes south and um they tend to want to have every owner um provide a guarantee and that's just not not viable in when you have 10 20 you know 100 owners in a co-op um so the there are other ways to underwrite the loans in fact there was a house committee a small business committee hearing on um on capitol hill this morning about esops and cooperatives and it spoke to ways that the usda has guaranteed loans um and i know locally a lot of cdfis will fund nonprofit organizations or or housing development or that kind of thing and you don't have individual throats to choke and those types of loans either um so so our favorite we do cash flow um cash flow-based lending basically you know you do you do projections if you think they're viable then you invest because you believe the business is sound based on historical and you know really understanding the nature of the business um the the thing that selk came up with in berkeley was very unique and i don't know the details of it um i think they were not able to get rid of the personal guarantees altogether which which really is the preferred route um for co-ops not not for necessarily for any other businesses that's a different question but for for co-op lending um so they just had an alternative where certain individuals would be part of jointly guaranteeing the loan and people could rotate on and off of that panel among the worker owners so no one had to kind of take that responsibility for the long term and not everybody had to take that responsibility so it was a creative workaround and i'm still hoping that we'll be able to just say there's other ways to underwrite loans there's lots of you know personal guarantees aren't used most of the time anyway so that that's my take on it makes a lot of sense uh kevin got one for you for you from uh from zen here um so thinking about the city's role in supporting the capital gap for co-ops um and you mentioned considering a backstop uh could you could you share a little bit more information about that yeah well i think uh zen thanks for the question um i i think you read something in there that wasn't but you're clairvoyant i'll explain in a second um what the city has agreed to um is providing um is providing a grant a small grant 10 percent of the um of the required funds by the way the funds are for you know the sale price and technical assistance right so um uh they've agreed in in in one condition to to provide a ten percent what we are talking about is a backstop and you know a a guarantee you know in in certain circumstances or conditions um that that would go a long way we've also made an approach actually to um uh sectors of the sba uh we we feel that that would fit neatly into what their mission and goals are um you know they do it all the time for private businesses in my my former business we had a uh we had an sba backstop on a uh a significant loan that we had so so uh you know i think that could be a wonderful place for the sba to play um you know then you're dealing with the national bureaucracy which is is not always easy but um yeah we're asking as and we're asking the the the city to consider that um and uh no answer yet uh they they by the way they um they um city of pittsburgh uh will will be having a new mayor um uh uh bill peduto did not uh win the democratic primary um uh representative ed gainey did and i just share this quickly we we uh we met with ed gainey never heard of an esop never heard or knew vaguely what a co-op was as in a east end co-op food co-op in pittsburgh when we explained everything he became an absolute evangelist and he said something interesting that i've been sharing with people he said kevin this is a public health issue and i never really thought of it in that context but he said look people that don't have wherewithal people that are working poor people that are impoverished people that don't have a few you know a future they suffer in ways that the rest of us don't so this is a public health issue powerful uh okay great well unfortunately we're probably not going to get to all the questions so one thing i'm going to do is send a follow-up email to all the participants um kevin hillary start with you i'll share everyone's contact info in there so people can follow up directly but basically just want to end on kind of one question so the hope here is that a lot of folks will you know we want more city policy initiatives as well right so hillary kevin uh for each of you just kind of based on your experience if you were for someone who's we're starting in a city where there's nothing really going on and you're trying to get something going what would be the one thing to focus on first to get something like this rolling [Music] it's a great question um i guess i'll say that i think helping the city understand the value of employee ownership and the importance of business retention so making the case of why it's important and then finding a good partner who can do some or you know in our case it would be like a we can do all those pieces i described kevin's strategy is another great one that's really bringing together all the pieces and you don't have to have sort of a soup to nuts approach but finding the right partner who's a who can do some pieces of the work with together with the city is where i would start yeah i would say i would say a similar thing i would say i always i'd say partners and um um support from the top you know if you're in a city uh you know my mind is first your leadership starts from the top get the support of whoever the you know the city administrator is whoever the uh the mayor is or get their support and and then connect with the community groups that um for whom this is would be viable valuable and important fantastic okay well thank you all so much for attending for for joining as i mentioned i'll send a follow-up email later today uh with some with the materials that that we certified put together as well as contact information so if your question we didn't have time to get to just you know feel free to ask it directly and as i mentioned we are trying to keep this this landscape up to date as well so if you hear about things or there are new things or things we're missing definitely let us know um and i'm looking forward to seeing everything that comes out of all these great uh exciting initiatives at the city level all right thank you all so much take care thank you bye