Anchor institutions could help to further co-operative development

A recent report by The Democracy Collaborative shows how anchor institutions can make a difference by helping to develop local enterprises such as co-ops.

Anchor institutions are non-profit institutions such as universities or hospitals, that once established tend not to move location.

The report, written by Farzana Serang, Phillip Thompson and Ted Howard, explains how Vision 2010, a five-year strategic growth plan, produced lasting change in Northeast Ohio.

Cleveland, Ohio was severely affected by the economic crisis with rising poverty among the unemployed, loss of jobs and stagnant wages for the middle classes, being just some of the major problems facing the local community.

With the main anchor institutions in Cleveland purchasing $3 billion every year and a lot of vacant property in Cleveland, University Hospitals saw an opportunity to build on their need for goods and services and get money flowing locally. In partnership with Office of the Mayor and local business trade unions, University Hospitals developed the strategy Vision 2010.

In line with this strategy, University Hospitals altered its traditional business practices in order to deploy its economic power for community benefit. This included local purchasing, building local capacity, involvement of trade unions and minority contracting.

The report reads: “Vision 2010 has set a new standard in the City of Cleveland for what is expected in terms of diversity, inclusion, and local spending on large construction projects.”

Speaking of the strategy, University Hospitals Chief Executive Officer, Tom Zenty, said: “Cleveland’s civic capital depended on the ability of these anchor institutions to stabilise the region”.

As a result, about 110 small businesses received contracts through Vision 2010.

University Hospitals also promoted joint ventures so that small firms with little bonding capacity, those with less experience with hospital construction, and non-union firms could partner with a union firm and be covered by the larger firm’s financing, bonding, and certification.

In 2012, University Hospitals committed $1 million in funding for Evergreen Cooperatives over four years. Steve Standley, Chairman of the Board of Evergreen Cooperatives, said: “Without Vision2010 we wouldn’t have even been involved in Evergreen. Vision 2010 really started it all.”

The Democracy Collaborative played a key role in the implementation of Vision 2010 by helping to create three co-operative enterprises: The Evergreen Co-op Laundry, Energy Solutions and Green City Growers.

Ted Howard, Executive Director of The Democracy Collaborative, said that the project was based upon a political strategy, emphasising that it is not enough to simply build individual co-op businesses.

Speaking of Evergreen Co-operatives, he said: “Co-ops are successful all over the world, what is different in Cleveland is the involvement of anchor institutions”.

Mr Howard referred to Mondragon Corporation as “the gold standard” in terms of co-operative development, but emphasised that the Cleveland model is different because it seeks to link businesses to the infrastructure.

Through strategic planning and co-operation with anchor institutions, Evergreen Cooperatives offer an innovative approach to business.

The Obama Administration has expressed interest in The Cleveland Model, granting long-term loans to Evergreen Cooperatives. Local authorities in the UK have also expressed interest in the Cleveland Model, particularly in Preston and across Wales.

The Evergreen Cooperative Initiative aims to build community wealth by creating a network of worker-owned cooperatives linked to the supply chain of University Hospitals and other anchors. The co-ops seek to hire employees who live in the neighbourhoods adjacent to University Hospitals and other anchors such as the Cleveland Clinic and Case Western Reserve University.

By 2015, Evergreen Co-operatives could include 10 co-operatives, owned and managed by about 500 area residents.