The Colorado Health Foundation Champions Employee Ownership
Leaders from across the country gather to discuss employee ownership as a pathway to economic stability and opportunity
The Colorado Health Foundation has identified shared ownership as a tool to address economic and health inequalities. Last week, the foundation hosted over 60 people from around the United States to engage in a discussion about how to expand the employee ownership (EO) movement.
Kicking off the event, Jennifer Chheang, the Vice President of Community Investment Impact shared the foundation’s motivation to invest in EO saying, “The most important social determinant of health is access to economic stability and opportunity.” This is a new investment for the foundation, inspired by the 70% of small business owners in Colorado who plan to retire in the next decade—and the 400,000 jobs that will be at risk as a result.
This wave of retirements, known as the ‘Silver Tsunami,’ is a motivator for many in the EO ecosystem, and the gathering brought together people and organizations in the space to discuss how to strengthen the movement in Colorado and attract more support. Colorado is a known leader in the EO space. The state is one of only three states with an official Employee Ownership Office, and it recently established a new $1.5 million annual tax credit program to incentivize conversions to employee ownership. The gathering offered a chance for those outside of Colorado to learn more about its success and its challenges and for attendees to get a collective understanding of national innovations advancing EO.
Lessons from Colorado
The evening featured two panels. The first focused on key people and organizations driving the EO movement in Colorado. Moderated by Catherine Toner of Gary Community Ventures, the discussion brought together representatives from the Rocky Mountain Employee Ownership Center (RMEOC), the Center for Community Wealth Building (CCWB), SkyBlue Builders, a local ESOP, and Mujeres Emprendedoras, a Colorado-based worker cooperative.
Marion Champoux-Pelligrin of RMEOC offered stories of the positive response she’s received in her work promoting EO to rural business owners and emphasized the urgency of expanding the EO model to rural areas. According to Champoux-Pelligren, “when a business in these communities closes, it often doesn’t reopen.” The closures that are on the horizon, due to owners retiring, could result in the loss of essential services and community resources. This would have a huge impact on residents in already resource-strained areas.
“When a business in these communities closes, it often doesn’t reopen.”
Mowa Haile, CEO of SkyBlue Builders, shared the transformation that EO created for his company in its transition to employee ownership. With support from RMEOC, Colorado’s tax incentives, and the guidance of Apis & Heritage he was able to make his employees owners. Haile talked about the significance of SkyBlue’s conversion saying, “Employee ownership is truly a game changer in building wealth for our community.”
Even though Colorado is a leader in the EO movement, businesses in the state still struggle to operate as employee-owned entities. Irma Diaz, a co-owner at Mujeres Emprendedoras Cooperative openly discussed how the complexity of the coop form, service providers’ lack of understanding, and the tax burden make it difficult to operate her cooperative. The relative nascency of the movement is a barrier. Yessica Xytlalli Holguin from CCWB communicated her concern that Colorado is, “just getting started and we’re the model.” More awareness and funding are required to address the demand and make EO a viable solution for business owners.
National Solutions
With Alison Lingane of Ownership Capital Lab guiding the discussion, the second panel focused on programs and solutions that address some of the challenges the Colorado group raised. Zen Trenholm from DAWI talked about the Workers to Owners Collaborative initiative which engages in place-based work and coordinates with cities and community partners to shape solutions that address specific economic security issues in cities such as employment barriers or the preservation of businesses.
Responding to the ongoing challenges of funding and access to capital, Michael Brownrigg of Apis & Heritage Capital Partners shared the firm’s innovative approach to funding conversions that makes the process more accessible to owners. He reflected on the burden that owners are asked to carry—when what they seek is retirement, selling to employees can be an unsatisfying proposition, “We ask them to carry a seller's note for about ten years. That’s not retirement.” The Apis and Heritage approach is to buy the company so the owner doesn’t have to wait for their payout from the employees. Brownrigg made the case for more funding solutions like this to make EO conversion more realistic for retiring owners.
Normalizing Employee Ownership
A common thread throughout the evening was the need to normalize employee ownership. Trenholm highlighted the importance of socializing the concept of shared ownership through programs like DAWI’s Shared Equity and Economic Development Fellowship. The program addresses the friction between entrenched beliefs about ownership by elevating everyday examples of EO in practice. Champoux-Pelligrin of RMEOC echoed the sentiments of Trenholm saying, “The people that convert are the people who hear the stories.”
“The people that convert are the people who hear the stories.”
After the event, I asked a few attendees what they thought of the event. Julie Menter of Transform Finance said, “I witnessed real-time problem-solving between business owners, investors, and representatives of the Colorado EO Commission. You could see how well-connected, and collaborative, the funders, investors, technical assistance providers, and field builders are. It's great to see this is happening in Colorado.”
There was a buzz at the end of the program and the discussion clearly generated ideas for ways that Colorado’s work can be improved and also how it can be replicated across the country. Although the EO movement has been building for a long time, I left with the feeling that we’re just at the beginning. It’s promising to see organizations like the Colorado Health Foundation invest in the ecosystem and hopefully, they will inspire a larger cross-section of groups and policy-makers to see the value and possibility of employee ownership. With new connections made and solutions surfaced, more work can be done together to advance employee ownership.
