Washington, D.C. - National Cooperative Business Association (NCBA) Director of Business Development Richard Dines told a House Subcommittee that any legislation to promote employee-ownership must include new sources of capital for worker co-ops and funding for technical assistance and education.
It is sound federal policy to encourage the development of more worker-owned cooperatives in both urban and rural areas, Dines told the House Subcommittee on Financial Institutions and Consumer Credit during its hearing today on financing for employee ownership programs. Providing new sources of capital and subordinated debt for worker co-ops will generate new wealth and ownership opportunities in some of our nations most economically distressed communities.
The subcommittee, chaired by Rep. Spencer Bachus (R-AL), evaluated the benefits of and barriers facing both worker cooperatives and businesses with employee stock ownership plans (ESOPs). The subcommittees ranking member, Rep. Bernie Sanders (I-VT), is drafting legislation that would create an employee ownership bank to provide loans and loan guarantees for employee-owned businesses.
Dines told the Subcommittee that unlike ESOPs, in which workers own the company through their retirement plans, worker-owners of co-ops not only control their businesses, they benefit from the profits of their business when they are earned, rather than at retirement. He urged the policy makers to explicitly include worker co-ops in any new financing and grant programs that might be authorized.
Dines recommended that new legislation should provide equity capital as well as subordinated debt to worker-owned co-ops; offer grants to allow non-profit developers of worker co-ops to furnish technical assistance; make changes to current Small Business Administration programs to include worker co-ops; and provide grants to educate the small business community about worker co-ops as viable business options. Dines cautioned the Committee to carefully define worker co-ops. If the workers dont own and control the business, holding a majority of seats on the board, its not a co-op.
Joining Dines on the witness panel were representatives of NCBA members, The ICA Group, Boston, Mass., and the Ohio Employee Ownership Center, Kent, Ohio.
The National Cooperative Business Association is the lead national membership association that represents cooperatives across all sectors of the economy, including agriculture, food retailing, childcare, credit unions, housing, healthcare, energy, telecommunications, and many others. There are 48,000 cooperatives in the U.S. and 120 million cooperative members.
*from a press release, written by Leta M. Mach, Director of Education, National Cooperative Business Association,1401 New York Avenue, NW, Suite 1100, Washington, DC 20005; USA. tel: 202-383-5450; fax: 202-638-1374; email@example.com; www.ncba.coop.Include the citation below and GEO Newsletter grants permission to copy, use, and distribute this article.