Cooperatives have become a way to build community voice in shaping third places and public spaces, as well as keep housing costs down. Community ownership could be key to including historically marginalized communities in the marketplace, even in the face of increasingly unaffordable small-business startups and rising housing costs.

Courtney Berner, a researcher at the University of Wisconsin Center for Cooperatives, reports, “The ecosystem of support for worker cooperatives exploded in the last decade.” In her January 2022 piece for Nonprofit Quarterly, Berner added, “Increasingly, co-ops are being used by people in communities of color — especially Black, Indigenous and Latinx communities — as tools for community wealth building and economic development.”

Nexus Community Partners hosted an online event on June 7 entitled “Shared Ownership, Collective Leadership,” as part of their Community Learning Series, in which leaders of the organization’s Shared Ownership Center described the benefits of real estate investment cooperatives and worker-owned business cooperatives. The Shared Ownership Center staff assist cooperative startups and conversions with democratic strategies, formal structures and processes that enable the kinds of collective decision-making cooperatives require.

Two Featured Models: REICs and Worker-Owned

While member-owned cooperatives such as grocery stores have become familiar to many — and are especially prevalent in the Twin Cities — the Nexus event focused on Real Estate Investment Cooperatives (REICs) and worker-owned businesses.

In explaining the rise of REICs, Benjamin Tsai, Nexus’ director of community wealth building, set the tone: “People are tired of seeing real estate as a tool of wealth extraction.” Unlike absentee landlords, flippers and speculators, REICs “help communities realize the neighborhood they want to see.” Members share equity. By distributing ownership among a wider pool of people — both tenants and community members — REICs offer a longer-term, more stable wealth-building tool that works against displacement and offers potential to revitalize overlooked commercial corridors.

Local REICs include the NorthEast Investment Cooperative, started in 2011, and the newly formed Midway Investment Cooperative (MIC), which held its kickoff meeting June 10.

In worker-owned cooperatives, on the other hand, workers share profits. According to the presentation, worker cooperatives offer higher wages and flexibility, tend to outperform the competition and are more resilient during economic downturns like the COVID-19 pandemic, as well as social upheavals like those after George Floyd’s murder. Seward Café in Minneapolis was able to respond quickly to its neighborhood’s needs in the wake of racial uprisings. “As a collectively owned and operated restaurant, our response was to cook food and share the resources we had,” the Café reports on its website. “This initial reaction grew rapidly into a massive donation and distribution hub for prepared foods, groceries, PPE and hygiene items, household goods and basic necessities.”

Christina Nicholson, cooperative finance developer within Nexus’ Worker Owner Initiative, assists with modeling and financing. She helps startup groups and sole proprietors who are considering a transition to worker-owner models. But her job is more than financing. Just as often, Nicholson explained, it is to “help people see themselves as the leaders that they are,” whether it’s working with restaurants, retail shops or other small-business concepts.

A Shift in Mindset

Patty Viafara, director of Nexus’ Worker Ownership Initiative, guides clients through unlearning a culture of independence. “We are not taught to be collaborative. … There is a shift that needs to happen,” Viafara explained. All the speakers talked about what she calls “an efficiency bias” in white-dominant cultures that can devalue human needs and relationships — the lifeblood of what makes more collective organizations function best.

Those seeking to start a cooperative or convert an existing business face a great deal of front-end decision-making. It also can require a lot of unpaid volunteer work. Viafara is ready to meet these challenges with pre-launch support and governance models for potential worker cooperatives that “build consensus muscles” and help people learn to engage with conflict in healthy ways. She asserts the importance of a worker-owner “going through the tension and saying, ‘I don’t like this,’ in the presence of someone who used to be your boss.”

To handle the tension, Viafara described three types of governance structures for business cooperatives: representative, collective and a hybrid. These run from more hierarchical to flatter structures. Whatever the structure, Viafara advocates for effective distribution of decision-making. Tsai added, “Not everyone has to decide the paint color.”

Local REIC Examples

Nationwide, similar organizations include the Center for Shared Ownership in Chicago, supported by the Chicago Community Loan Fund. Started in 1991, it ensures “that Chicagoland community developers … would have a lender to turn to for harder-to-underwrite projects and enterprises,” according to its “About” page.

MIC board member Emma Chi Olson, who identifies as having Korean and Norwegian heritage, joined the MIC board in 2021, which emerged from the Hamline Midway Coalition’s MIC Implementation Committee. She got involved because of the potential for neighborhood gentrification with the addition of the Allianz Field soccer stadium on Snelling at University, with ticket prices (an average of $49 each) that tend to draw people from beyond the Midway’s more working class and immigrant roots.

“With all of what’s happening with Allianz Field and other market forces that are creating a huge amount of risk for my culture and for other businesses up and down University,” Olson said, “I needed to be a part of preserving and celebrating the rich cultural and community assets” of the Midway neighborhood by ensuring grassroots ownership.

When it comes to democratic governance, Olson insists that community collaboration is about “seeds being planted. … Taking the time to tend them as they’re growing is really important. There’s a lot of pressure to act, but that leaves people behind that will be greatly impacted.”

Local Worker Co-ops and Getting Involved

Local worker cooperatives also abound. The U.S. Federation of Worker Cooperatives lists nine in Minnesota, including Seward Café, Terra Firma Building and Remodeling and The Hub Bicycle Co-op, which Tsai helped start in 2002.

Anyone who wants to get involved or learn more about cooperatives has plenty of options. They can advocate for city resources and policies that better enable cooperatives to form. In some cases, they can donate money — though more philanthropic funding mechanisms are needed, according to Tsai.

Investing money is another option; 2022 Minnesota Statute 308B now allows private equity investments in cooperatives. Many co-ops need volunteers, as well; and many websites have forms to indicate interests and talents. Finally, the Nexus team can be reached at soc@nexuscp.org.

Top image: Seward Co-op Friendship Store in south Minneapolis. Credit: Fibonacci Blue / Wikimedia.