Shared Ownership 101
In preparation for next week’s Georgia Shared Ownership Convening, we put together a read-ahead for participants unfamiliar with shared ownership. Here’s a slightly edited version of our best shot at it—what’d we miss?
A Brief Introduction to Shared Ownership
Across the country business owners, investors, philanthropists, and policymakers are exploring how alternative forms of ownership might address some of the critical problems facing the US today, and in particular racialized wealth inequality and the coming wave of business closures as Baby Boomer small business owners retire, known as the silver tsunami.
Here is some of what shared ownership includes:
Employee stock ownership plans (ESOPs) are the most common form of employee ownership in the United States. Worker cooperatives come next, followed by a relatively new legal form called an employee ownership trust that has taken off in the United Kingdom. Even more recently, private equity firms have started deploying a form of employee ownership in their acquisitions.
Worker cooperatives are one type of cooperative. Producer cooperatives have a long history in the United States, especially in agriculture, and there are some companies structured as consumer cooperatives like REI.
Steward ownership refers to a handful of legal forms that center a company’s purpose or empower its stakeholders, in an even more legally binding way than benefit corporations (B Corps). Perpetual purpose trusts are one way that can happen in the United States.
Most of the models above are about ownership of companies. Neighborhood trusts are designed for the ownership of real estate, as is cooperative land ownership.
Each of these models alters some aspect of how companies or real estate are owned. Some of them, like worker cooperatives, also change how decisions are made, incorporating workplace democracy. In the US it usually describes the work of labor unions, but many organizations incorporate some form of democratic decision-making. The Great Game of Business network, for example, trains companies in open book management.
B Lab has long supported companies that want to commit themselves to purpose, and they are exploring what it means for their network of companies to lock their mission into their governance.
What all of these models have in common is that they are alternatives to the way that most firms are owned and managed. Umbrella groups that support this work variably use the phrases shared ownership; shared, inclusive, conscious, or stakeholder capitalism; alternative ownership enterprises; and the shared or ownership economy.
Shared Ownership for Business Owners of Color
The focus of the Georgia gathering was the potential for shared ownership in businesses led by people of color and, in particular, the potential of employee ownership to bridge the wealth gap by allowing marginalized employees to gain financial stakes and ownership in their companies, thus promoting economic equity.
The Kensington Corridor Trust (KCT) is a neighborhood redevelopment in Philadelphia, where the average household annual income is $20,505. With luxury development on the rise, KCT is dedicated to maintaining affordability, attracting businesses that meet local needs, and increasing job opportunities.
APIS & Heritage, is an investment fund that helps businesses of color convert to employee ownership.
The Rutgers Institute’s Employee Ownership Online Education Program was put in place to help business owners of color and learn about employee ownership strategies for business succession planning.
Last year's Congressional Black Caucus Foundation gathering focused on increasing black ownership, as well. The CBCF also partners with the Urban Institute and the Federal Home Loan Bank to tackle obstacles to Black homeownership.
Rutgers Institute Fellow Oyindmola Ijewere’s Building Black Wealth addresses the challenges and opportunities of black business owners, highlighting the need for succession planning to preserve Black wealth.
New Majority Capital’s supports entrepreneurs of color to engage in entrepreneurship-through-acquisition.
Supported by AWBI, Project Equity and Morehouse have produced two papers on employee ownership and the racial wealth gap: Strategies to Advance Black Employee Ownership and Employee Ownership for Black Workers: Closing the Racial Wealth Gap.
EO+WD, a research initiative, covered some of these topics recently in Building Black Wealth Through Employee Ownership
Going Deeper: What to Read and Who to Know
To get a sense of how many of these forms overlap and read some case studies, check out Transform Finance’s report on Alternative Ownership Enterprises. The Predistribution Initiative does similar work, focused on investors.
For an overview of employee ownership models, check out the website EO=, the Georgia Center for Employee Ownership’s Employee Ownership 101, and this Harvard Business review article making the case for employee ownership. Project Equity provides educational materials on different forms of employee ownership, and the Aspen Institute EOP provides a wide range of resources on employee ownership.
The National Center for Employee Ownership and the ESOP Association are two of the largest groups promoting ESOPs. The Rutgers Institute has for decades been the home of academic study of employee ownership, and ESOPs in particular. The National Center for Employee Ownership (NCEO) also provides comprehensive information and case studies on employee ownership, particularly on ESOPs.
To learn about employee ownership trusts and perpetual purpose trusts, check out our recent publication in Harvard SIR, this book by investment fund Common Trust, this book by the National Center for Employee Ownership, and this podcast with Mark Hand and Jenny Everett from EO+WD.
Two leading organizations on worker cooperatives are the US Federation of Worker Cooperatives and the Democracy at Work Institute. Newer voices include Zebras Unite and Start.coop.
Tandem promotes direct ownership, and Ownership Works promotes employee ownership in private equity transactions.
Trust Neighborhoods is the leading developer of neighborhood trusts, which they call Mixed-Income Neighborhood Trusts.
The NCEO maintains a database of state-level employee ownership policies. EO+WD and Common Trust recently published policy recommendations on purpose trusts. Colorado, California, and Washington have well-established employee ownership policy, and the federal government caught is somewhere between passage of and appropriations for a federal program that would fund state-level advocacy of employee ownership. For more on legal aspects of worker cooperatives and employee owned businesses, Co-op Law.org covers policy, nonprofit support, governance, taxation, and co-op basics.
What did we miss?
Let us know in the comments or by email!