Enrique is a skilled carpenter.  For many years, he was a union member, worked hard, and made good money.  But the recession left him unemployed for more than a year and a half. That is a really long time to be without any steady income.  He’s picked up the occasional odd job but he is very grateful for the services like food and clothing that he has received from a longstanding community organization in San Jose, Sacred Heart Community Service.

For the last six months, Enrique has also invested over 150 hours of unpaid time in the process of starting a worker-owned cooperative business along with three other unemployed guys and me.  It’s a green business — TeamWorks Sustainable Landscape Maintenance — that does what you’d think of as standard yard maintenance but with a twist:  we use organic methods and electric equipment.  After many months of research and planning, the new cooperative has just opened!

Enrique (in red) and (continuing clockwise) Agustin, Daniel, and Juan celebrate the first payment received from a client!

Enrique learned about cooperative development from the same organization — Sacred Heart — where he has gone for food and other services.  The agency’s leadership is thinking seriously about what its long-term vision of “a community united to ensure that every child and adult is free from poverty” really requires. And that reflection has led to experimenting with a number of creative projects that seek to build healthier and more socially-just relationships in the community.

Why are cooperatives — which are businesses owned by their workers — one part of this exploration?  For me, it comes out of a growing recognition that creating jobs may not be enough.  In the traditional arrangement, a job means the renting of labor.  When it’s no longer needed, as in Enrique’s experience, the rental can suddenly end and the person is on their own. The underlying relationship is an economic transaction. It can be dehumanizing and, frankly, terrifying if you suspect that it isn’t stable.

In a cooperative, on the other hand, the fundamental relationship is a community of human beings who have come together for the common purpose advancing their individual and shared well being.  It is a genuine partnership. One of the many implications of this shift is that cooperatives tend to respond to recessions very differently than traditional companies.

To weather tough times, cooperatives often approve steps like across the board pay cuts to share the pain as they work on the top priority:  keeping all of their members engaged and connected to their cooperative community. Continuing health care benefits is often a high priority as well.  Other steps are usually taken as well, such as exploring ways the business can adapt to changing conditions, perhaps by researching new products or services and ways to harness new technologies.

When the recession really hit hard in the winter 2008-09, the TeamWorks cleaning cooperative saw its monthly revenues drop by more than 15%.  No one knew how far it would keep dropping.  But the cooperative never even consider laying off its members.  Everyone’s pay went down, but they kept the group together (and their health insurance). On a much bigger scale, the cooperatives in the Mondragon network in Spain (with 85,000 workers) and many other cooperatives around the world have taken similar steps in the face of downturns.

These qualities suggest that cooperatives offer a strategy not only for improving the lot of the working poor or unemployed, but also for all kinds of folks.  Many middle class people and professionals are now facing economic insecurity that they never expected to experience personally.  Community food pantries around the country have reported stories of once prosperous people coming for services and confiding quietly that they never in a million years thought they would be needing this kind of help. Many of these people worked as rented labor that could suddenly be let go just as Enrique was, sometimes despite decades of involvement with and commitment to a workplace.

I’m excited that cooperative development is increasingly being recognized as a compelling economic development strategy for addressing poverty and unemployment.  But this can become a narrow view that misses the larger promise of cooperatives: that they offer a meaningful path forward for all people who know that genuine security is rooted in committed human relationships and a community that can adapt, change, and grow together over time.

The Cleveland Foundation has done something extremely rare in philanthropy: it is transforming some of the private wealth it controls into a community asset that will be under the democratic stewardship of the Cleveland community for generations to come.

The project is called the Evergreen Cooperatives. It is not only creating good jobs with benefits in the heart of one of the city’s disinvested and disenfranchised African American communities.  It is also creating opportunity for serious ownership — an equity stake in a business that a dedicated worker could reasonably build to a value of more than $60,000 in eight years, and perhaps someday into six figure assets for workers who devote much of their careers to these cooperatives.  It just might finally be the “40 acres and mule” so long denied to so many.

Most foundations primarily do two things:

1. They make grants to nonprofits who spend it in ways that for the most part do not build assets in their communities.  Plenty of good work gets done, but the underlying financial mechanism is a little like paying someone’s rent rather than helping them to buy their own home.

2.  They conserve their own private wealth, mostly in traditional investments in the mainstream financial markets.

There is a third way.  Foundations can transform private wealth that they control into community assets.  These are assets that will continue, like an endowment does, to create wealth indefinitely.

But unlike traditional financial instruments, community assets are structured in ways that ensure democratic oversight.  The people in the communities where these assets are rooted will be the ones who make sure this wealth continues to be used in ways that make social, environmental, and economic sense over the generations.  And the structures also ensure that the new wealth that is created using these assets will be shared broadly rather than just enriching a few.

So hats off to the Cleveland Foundation.  It’s not easy to create paths to transform private wealth into community assets – there are no real maps for doing so.  But the Cleveland pioneers are walking such a path, and they have put millions of dollars and years of steady commitment into it. To those foundation leaders concerned about the lack of assets in poor communities, let this be an inspiration to think deeply about the wealth their institutions control and new ways it might be used.  Given the social dislocation created by the economic crisis, it’s time for deeply transformational strategies.