The Government of Canada is investing $1.9 million over the next two years to enable the Canadian Worker Cooperative Federation (CWCF) to test a self-sustaining fund supporting establishment and maintenance of worker cooperatives across Canada.

After well over two years of research, drafting and lobbying by Human Resources Development Canada, CWCFs proposed Worker Co-op Fund will become a reality on a small scale, as a pilot project. Human Resources Development Canada (HRDC) is the federal department in Canada responsible for unemployment insurance and for a series of programs whose goal is job creation. After an initial disappointment that our original proposal for a $16.5 million fund was not part of the February, 1999 federal budget, the CWCF was pleased to learn that HRDC officials were interested in tentatively offering a $1.5 million grant for a CWCF pilot project.

CO-OPS SOLVING UNEMPLOYMENT

Funds would be used by CWCF to invest in worker co-ops across Canada with an important constraint; worker co-ops would have to meet one of the following two criteria:

1. job-threatening situations, e.g. a business in danger of being shut down for whatever reason, or
2. new worker co-ops where about half of the initial members are people currently receiving unemployment insurance or who have done so in the past three years.

On top of the basic $1.5 million to lend out, HRDC would provide an additional $400,000 grant to cover the cost of administering and promoting the program over two years, as well as the cost of an independent evaluator. The CWCF is currently exploring options for partnering with comparable investment funds to maximize efficiencies in the administration of the program.

NETWORK OF WORKER CO-OP DEVELOPERS

The Fund will work through the fledgling Network of Worker Co-op Developers which CWCF is launching. We expect to work in conjunction with existing co-op development agencies as part of the Network, including the Regional Development Co-operatives in Quebec, the provincial co-op councils involved in development. Developers certified to carry out CWCF projects may apply to the Fund for small grants for feasibility studies and larger grants for business plans, training and mentoring (all of which can be part of the capital package), and also of course for investments into the co-ops with whom they are working. The Fund will be very flexible in the types of investments it makes. However, it will be used primarily to leverage other capital and will normally invest no more than 30% of the total capital package. The mimumum of equity requiredÊto come from the worker-ownersÊis to be in aggregate 15% of all capital or $1,000 per member (whichever is less).

EXPANDING CANADAS CO-OP SECTOR

The Fund should be operational by December, 2000. This project supports the Government of Canadas Jobs Strategy in that it will only invest in co-operatives where jobs are threatened by shutdown, division closure or where jobs will be created in new or expanding co-ops. This strategy is based on strengthening economic fundamentals and establishing a favorable climate for job creation by making strategic investments in areas where the government can make a differenceÊyouth, trade, technology and infrastructure. By the end of the two-year pilot project, CWCF must have created or maintained 128 jobs. If this goes well, the CWCF will seek a larger Fund, as in our original proposal, for long-term growth of Canadas worker co-op sector.