Co-op Dayton

We are working to address the lack of good jobs and needed services in low-income and African American neighborhoods in Dayton, Ohio. An industrial city in America’s heartland, Dayton has experienced decades of disinvestment by employers and service providers that are fundamentally not accountable to their core stakeholders: employees and customers. Our solution is the multi-stakeholder cooperative business model, in which those that have the most at stake in a business also have an equity stake. Our most significant pilot of the model is the community- and worker-owned Gem City Market grocery cooperative. We have also developed a tool to support other cooperative and social enterprises in Dayton to design their multi-stakeholder structures. The model and tool are particularly relevant to American “legacy cities” that have experienced significant downturns and barriers to recovery, but it could be used by socially-minded entrepreneurs anywhere.

The problem that we work to solve is the lack of good jobs and needed services in low-income and African American neighborhoods in Dayton, Ohio, a formerly industrial city in America’s heartland. At the turn of the last century, Dayton was a center for industrial innovation with the Wright brothers, National Cash Register, Mead Paper, and other corporations. These businesses grew with our city, and yet, when they were incentivized to leave, they did just that, moving away from the people and community, the physical and civic infrastructure, that had contributed to their success. Like many legacy cities, the disparities and despair have only grown, with declining wages and increasing disease and death related to addiction and nutrition. After the major employers left, the service providers followed. Our urban neighborhoods now lack access to fresh food and healthcare services as corporate grocers and hospitals continue to relocate to wealthier suburbs. We feel deeply the lack of control over our local economy.

Our solution is the multi-stakeholder cooperative business model, in which those that have the most at stake in a business also have an equity stake. Our most significant pilot of the model is the Gem City Market grocery cooperative, which has two classes of members. The worker-owners have the most ownership, control, and share of profits at 65% because they contribute the most to the business’s success. Union neutrality and the Mondragon cooperative principles are also codified in the bylaws. The community member-owners claim 35% of the business. They can call a product referendum and veto relocation of the store.

We are developing a tool or technology to support other businesses to design their governance structure with all of their stakeholders in mind. The prototype is an Excel document that entrepreneurs can use to clarify their values; their stakeholders and what they have at stake; which business decisions are relevant to that stake; how the stakeholders participate in those decisions; and then how that translates to formal ownership and control. We recently piloted the tool with 10 teams of cooperative and social entrepreneurs as part of our enterprise design and planning program.

We work in the predominantly African American and historically redlined neighborhoods west of the river that divides Dayton. The Gem City Market cooperative is under construction on a commercial corridor that once thrived, but now the Market will share the block with multiple empty buildings, a fast food restaurant, and a dollar store. The focus on access to fresh food and the idea for a multi-stakeholder cooperative grocery came from a series of community meetings focused on disparities in opportunity across Dayton. Our organization was created to facilitate the development of the store and other cooperative businesses rooted in and accountable to our community. Our Engagement Director, Kenya Baker, hosts regular community meetings and events for the Market and other co-op projects, recruiting and developing members as leaders. The co-op structure also ensures engagement through an annual members’ meeting and elected representatives to the Board. This year we launched a formal program to develop more cooperative businesses with 12 enterprise teams and 50 team members, a majority of whom are low- to moderate-income, women, and African American. We piloted our governance design tool with the cohort to support their legal needs, and so far we have received positive feedback.

Our tool helps startup cooperatives and other social enterprises to design their multi-stakeholder governance structure. We plan to develop it so that it can automatically generate draft legal documents (corporate bylaws or operating agreements) and thereby significantly reduce the cost of legal counsel and incorporation for grassroots startups. The multi-stakeholder cooperative model also supports workers to gain an equity stake in the business so that they have more control over the conditions of their work and a greater share of the rewards.

There are several cooperative organizations in the United States that have developed or compiled important resources related to cooperative bylaws. The Sustainable Economies Law Center offers legal briefs and presentations on bylaws development; the ICA Group has two reports on organizational and governance development; and the U.S. Federation of Worker Cooperatives has compiled sample bylaws and operating agreements. We have created a first draft of an interactive tool to develop cooperative bylaws. Unlike the reports or sample legal documents, it allows the user to develop bylaws specific to their organization by responding to a series of prompts or questions. Each section of the matrix builds on the other until the entrepreneurs have a complete outline of their bylaws. We hope to develop a final section that plugs the outline into a legal document. 

Furthermore, in Dayton, we are using the multi-stakeholder cooperative model to bring together local residents and workers to identify gaps, activate community assets, and pool resources to build new businesses that help families meet their needs. We are inspired by cities like San Francisco and New York that have developed cooperative ecosystems. We are innovating by building a co-op model that thrives in working class cities like ours, smaller cities where ideas spread quickly and where we can iterate and experiment with the advantage of lower cost of living, of property, and a population frustrated with the old and open to something new.

Our technology is currently a matrix in Excel, but could easily be translated into a website or a phone app. The Excel document contains a series of sheets on business values, stakeholders and business impact, business decisions and stakeholder roles, ownership and control, and an outline of the bylaws. We also have a PowerPoint presentation and recording of our co-Executive Directors, Lela Klein and Amaha Sellassie, and other staff, providing background on Dayton’s economic history, the multi-stakeholder cooperative model, and instructions for the Excel matrix. As a website or app, we could include graphics and images, short videos, and instructions, and a friendlier interface than an Excel spreadsheet.

Both Microsoft Excel and websites are very widely used. The current Excel matrix is similar to a financial model (a familiar tool for entrepreneurs), in which each sheet incorporates data from the prior sheet. An example of a successful entrepreneurial website is Kauffman Fasttrac, which includes educational content, videos, instructions, and forms to respond to prompts. The website compiles the user’s responses in the webforms into a business plan. According to their website, Kauffman Fasttrac has been used by hundreds of thousands of people worldwide.

Our primary input is a tool that supports entrepreneurs to develop multi-stakeholder cooperative governance models. The immediate output of the tool is that more entrepreneurs will learn about the multi-stakeholder model and utilize it to structure their businesses. We can track our impact by the number of entrepreneurs that use the tool and incorporate with our bylaws or with other cooperative bylaws. By considering all of their stakeholders, more businesses will provide opportunities to build leadership and wealth through ownership or create other mechanisms for stakeholders to be involved in the decisions that impact them. The ultimate outcome that we seek are local economies that are designed for and led by residents, as workers, customers, and stakeholders in the success of local businesses.

To achieve the outcome of community-led economic development, cooperative organizations and entrepreneurs will need another input: community engagement or community-based marketing. In Dayton, we have created change through the combination of a multi-stakeholder cooperative model and a community organizing campaign. A business model that few people knew about five years ago now has 2,600 community member-owners that have invested in the Gem City Market cooperative, contributing more than $200,000 in capital for startup operations. Prior to the pandemic, our bi-monthly meetings for the Market attracted more than 100 people, who took ownership of the meetings just as they have the Market, by filling several tables with potluck dishes. Today, we have more than 15 startup cooperatives that we support in Dayton that use our tool to develop their structure and our just local economy.

The tool is currently in use by 50 entrepreneurs in our co-op development program as well as 15 other entrepreneurs that we are working with outside of the program. We expect to share it with at least 50 entrepreneurs each year in Dayton; and next year, we hope to share it with cooperative and business development organizations and their constituents across Ohio, including in Cincinnati, Columbus, and Cleveland, which we estimate could impact 300 entrepreneurs each year. Within five years, we would like to share the tool nationally and internationally with cooperative and social enterprise organizations, reaching several thousand entrepreneurs each year.

We also hope to specifically impact legacy cities in the United States (primarily in the Midwest and Northeast). The Brookings Institute estimates that there are 150 formerly industrial cities in the U.S. that have experienced severe economic decline. Like Dayton, many of these cities are working towards self-determination and building solutions from within. The Gem City Market cooperative has already engaged more than 2,600 people in Dayton, and once it opens next year, will serve 7,000 people in a section of the city that has lacked access to fresh food for more than a decade. Community leaders and activists from other legacy cities in Ohio, Michigan, Indiana, and Kentucky have contacted us to learn more about our model and some have engaged us as consultants to develop co-ops that could serve many tens of thousands more.

Our goal for the next year is to share the governance matrix in Dayton and with close partners in Ohio and refine it based on their feedback. We will also review cooperative legal documents from our partners and create model bylaws. If appropriate, we will find a way to connect the matrix and the bylaws document so that the bylaws automatically update as an entrepreneur completes the matrix, creating a complete draft for the entrepreneur to review with a lawyer. Once we finalize the tool, we will disseminate it in Ohio through a statewide network of cooperative and social enterprise development organizations and nationally through the U.S. Federation of Worker Cooperatives and other partners.

In subsequent years, we may develop the tool as a web application. This will require redeveloping our educational content (currently in our PowerPoint presentation), as well as contracting with a graphic designer and a web developer. With substantial startup costs and ongoing maintenance expenses, we would want to generate revenue from the web app, likely by marketing and licensing it to major business development organizations and networks that can then share it with their clients or members.

Our primary barrier is technical. Our team at Co-op Dayton is very talented, but lacks skills in web development. We also lack the startup capital that would be necessary to contract with a web developer and graphic designer or marketing agency. A key legal barrier to our vision is the difference in cooperative and corporate law between states and countries. We can create model bylaws for Ohio, but they will need to be reviewed by lawyers familiar with corporate law elsewhere.

On the technical barrier, we need to activate our network to find someone who is more familiar with web development and can help us to determine both our ideal outcomes and the steps to achieve them. We likely will not be able to access pro bono web development (or graphic design), so we will need to raise startup capital. Hopefully by demonstrating the impact of a prototype and completing market research on customers that would pay to use the tool, we can attract grant or equity investment. On the legal barrier, we will again need to activate our network (which includes an organization of solidarity economy lawyers) to develop a scope of work and seek funding or pro bono support to implement it.

We have four full-time staff at Co-op Dayton, two part-time staff, and four contractors that specifically work on the Gem City Market construction and operations.

Our co-executive directors are Lela Klein and Amaha Sellassie. Lela is a graduate of Harvard Law School. She worked in labor unions for more than a decade before founding Co-op Dayton alongside other local activists. Her expertise on labor and cooperative law is essential for this project. Amaha Sellassie is a sociology professor at Sinclair Community College in Dayton and the president of the Gem City Market Board of Directors. His research on redlining and disinvestment in urban neighborhoods informs our multi-stakeholder model and is the basis for much of our educational material. He also has substantial experience in the practical aspects of multi-stakeholder cooperative governance from his service on the GCM Board. Our community engagement director Kenya Baker has a Master’s of Education from the University of Dayton and worked in Dayton public schools for fifteen years before joining Co-op Dayton. She is deeply embedded in our community. Rachel Meketon and Cherrelle Gardner provide technical assistance to cooperative startups and existing businesses in transition to the co-op model and are very familiar with the pains and gains that entrepreneurs experience related to incorporation and the co-op model. Rachel has a Master’s in City Planning from MIT and increasing skills in market research and financial modeling. Cherrelle is an entrepreneur, currently designing a multi-stakeholder makerspace cooperative for Black neighborhoods in Dayton alongside her co-founders.

We partner with all of the business development organizations in Dayton (including the Small Business Development Center and Minority Business Assistance Center) as well as many other organizations relevant to specific cooperative projects. We work very closely with a legal non-profit called Advocates for Basic Legal Equality (ABLE), which has already reviewed and supported our initial matrix and will continue to provide support on the development of legal tools. We also partner with the University of Dayton engineering, business, and other programs, which may be a source of volunteer support for this project. We are currently partnering with an organization called Co-op Cincy in Cincinnati, Ohio and the Ohio Employee Ownership Center at Kent State University in Akron, Ohio to develop a statewide network of cooperative development organizations that will also share tools and resources. Finally, we are part of multiple national cooperative organizations that will likely be interested in this tool.

We plan to provide co-op development organizations and socially-minded entrepreneurs with an easy-to-use tool to design their cooperative governance structure based on their values and stakeholders. Our tool will save them money and time. By completing the matrix and developing draft governance documents through the tool (rather than in conversation with legal counsel), entrepreneurs will save on legal fees. Because the matrix is simple and straightforward compared to other documents on co-op bylaws, entrepreneurs will save time. The tool helps socially-minded entrepreneurs to legally incorporate with clarity on their values and stakeholders. We expect most entrepreneurs to access the tool through a business development organization or business network, either as part of a set of online resources or as a recommendation from a business counselor or advisor.

If we develop the tool as a web application, we would only expect the revenue from selling or licensing the product to business development organizations to cover the cost for the initial development and maintenance. As a non-profit organization, we are working towards financial sustainability through a cooperative network model (in which Dayton region cooperatives and social enterprises pay an annual membership fee for access to our services), through consulting work in other cities in the Midwest and elsewhere in the United States, through individual donors in the Dayton region, and sustained philanthropic relationships.

We would be thrilled to expand our network to include the Solve staff and partners. We would utilize the network to overcome both the technical and legal barriers that we described above. We would also value insight on our business model and trajectory. We are also excited about the potential to share the multi-stakeholder cooperative model with a wider audience of social entrepreneurs and traditional businesses.

As mentioned above, the technology for the solution is a key question for us. The tool is currently a matrix in Excel, but could potentially be a web application. We are not familiar with the web development process or the associated costs and would appreciate advice. We also face legal barriers to expansion beyond Ohio and would welcome advice on how to approach that. For the business model, we need to decide whether to create a free and a paid version, and whether the payer model would be exclusively a license to organizations or also sold directly to individual entrepreneurs. Marketing and exposure would help us to fulfill our mission and vision to share the model and inspire more businesses to adopt governance structures that include their core stakeholders.

We are not familiar with all of the Solve partners, but imagine that Oliver Wyman could support business plan and potentially technology development; Northrop Grumman could support tech development; and APCO Worldwide could support marketing and exposure. We would be thrilled to partner with Eileen Fisher to highlight the practice of including employees as a stakeholder by giving them an equity stake in the company (in this case, through an ESOP). We would also be interested in partnering with MIT Sloan to share the multi-stakeholder cooperative model as a high road business practice.

Our solution creates more inclusive entrepreneurship opportunities by generating draft legal documents for cooperative businesses, which reduces the cost of legal counsel and speeds the process of incorporation so that entrepreneurship is more accessible to those with limited resources. We are currently piloting the tool with 65 entrepreneurs that represent 15 co-op and social enterprises here in Dayton, Ohio. All of the entrepreneurs are low- to moderate-income, women, African American, or Hispanic (and the majority are black women).

The solution also facilitates the creation of good jobs. The governance matrix includes employees as stakeholders that could (and should) have an equity stake in the business with more control over the conditions of their work through Board representation and a greater share of the rewards through equity or patronage dividends.