Network
February 2nd 2012
A laboratory for a new economic development
The Evergreen Cooperatives initiative is harnessing the spending power of hospitals and universities to rebuild local economies in Cleveland, Ohio. Clare Goff reports
‘Economic development as it’s practised in this country is fundamentally broken. In one of the richest nations on Earth one third of the population live in dire circumstances. What we’ve been doing up until now has not been working.’
Ted Howard, executive director of think tank The Democracy Collective, is convinced of the problem and believes he has found a solution in Evergreen Co-operatives, a scheme he calls a ‘laboratory for a new economic development’.
Cleveland Ohio is one of the poorest places in the United States, a post-industrial city that has witnessed both population and capital flight in the last 30 years. Steel and manufacturing have moved on, leaving healthcare and universities as the biggest local employers. It is these anchor institutions – and their large procurement budgets – that are at the centre of the city’s drive to rebuild its local wealth.
The Cleveland Foundation approached Howard to help build economic inclusion in the city; he began by looking at the assets and spending power of Cleveland’s Greater University Circle area, home to some of the city’s most important anchor institutions and also its most disadvantaged neighbourhoods.
He found that just three institutions – the Cleveland Clinic, Case Western Reserve and University Hospitals – spent more than $3bn a year on goods and services, yet only a small proportion of this was spent locally. To Howard and his colleagues the opportunity to rebuild Cleveland’s local economy lay in circulating the wealth of these fixed institutions within their own neighbourhoods.
‘These are place-based institutions. Some of them even have “Cleveland” in their name,’ says Howard. ‘Unlike corporations, they’re not going to get up and leave.’
The aim was to capture some of their spend and localise it. But initial talks with the city’s hospitals, universities and cultural institutions about local procurement did not initially go well.
‘They just didn’t get it,’ says Howard. ‘I might as well have been asking “How much do you buy from Mars?”’
Thus began an educational process to bring local leaders on board and convince them of the value of local procurement and also of their responsibility towards the areas in which they were based.
‘The local residents and leaders of these institutions didn’t speak the same language. They had expanded and bought up land locally but had not had productive relationships with the neighbourhoods in which they resided.’
As their vision began to gain the support of local leaders, a framework for Evergreen Cooperatives – a group of local businesses involved in supplying goods and services to local institutions – began to take shape.
In 2007 the Greater University Circle Initiative, a partnership of Cleveland Foundation and the city’s large anchor institutions and community-based organisations launched the Evergreen Co-operatives Initiative.
Evergreen’s first group of worker-owners attending a ceremony where they were voted into the co-op.
In 2009 the first two businesses opened: Evergreen Co-operative Laundry, which provides environmentally friendly laundry services to local healthcare institutions and Ohio Cooperative Solar, which provides solar panels and generators to hospitals and universities. Green City Growers, a food growing business, and Neighbourhood Voice, a community-based magazine, are in the pipeline, with five or six more businesses in development.
For those anchor institutions, the benefits of spending locally are beginning to be felt. Localised procurement is bringing greater resilience to their systems and, in many cases, saving costs. The value and importance of good jobs and healthy communities on their doorstep is filtering through. One organisation has actually approached Evergreen itself to ask them to develop a local business to digitise its medical records, while another has committed to shifting all of its spend to local sources.
The challenge now is to build scale. A revolving loan fund has been set up with money coming from a range of sources including local philanthropy and state coffers. Companies set up under the Evergreen umbrella pay 10% of their profits to the fund, and the ambition is to create a network of cooperative businesses across the city.
As part of their educational process civic and institutional leaders from Cleveland were taken on a study trip to the Mondragon Corporation, the federation of workers’ cooperative based in the Basque region in Spain. While workers’ cooperatives are rare in the United States, seeing the impact of co-ops at scale enthused civic leaders to create a similar vision in their own localities.
Now the Evergreen scheme is spreading across the States, with other areas, including the conservative Texas, starting to look at how the local spend of key institutions can be used for the benefit of their communities.
Howard advises any cities thinking of embarking on the Evergreen route to plan for the ‘very long term’, to remember that co-operatives are businesses, and to take time to nurture the co-operative culture.
While local leaders are becoming convinced of the benefits of local procurement and the co-operative model, the biggest impact so far has been on the lives of those living in the local neighbourhoods and employed by Evergreen. New jobs are still in their tens rather than thousands, but the target is for 25 to 50 co-ops employing up to 5,000.
All workers in the Evergreen coop network have a stake in the business; they speak of having been empowered and renewed through becoming part of an organisation that is democratic, that pays them a living wage and that will be there for the long-term. Many of those now employed in the co-op were formerly long-term unemployed, have battled with addiction or spent time in prison; one described Evergreen as a ‘second chance to get back into society’.
A recent Evergreen job received 500 applications and the co-operative has provided a future for all those for whom the current economic system has failed. ‘It’s been a beacon of light and hope in the community,’ says Howard.