Fast Company commentary focuses on how government can support private investment
In a commentary at Fast Company, Marjorie Kelly and Jessica Rose, co-authors of Opportunity Knocking: Impact capital as the transformative agent to take employee ownership to scale argue that risk capital is the key to taking employee ownership to scale. Between the current pandemic-related recession and the aging of the baby boomer generation, we can expect hundreds of thousands of businesses to change hands over the next decade. If instead of selling those businesses to corporate acquirers or private equity, owners sold them to their employees, we could begin to transition to a far more equitable and just economy.
Action at this scale would be akin to the federal government’s decision after World War II to back mortgages to create widespread middle-class homeownership.
But what needs to happen to make that dream come true? To attract private capital to emerging investment funds focused on employee ownership transitions, the authors argue, government must use its lending and risk-reduction tools to build a robust investment ecosystem. This could involve creating a U.S. Employee Ownership Bank, as proposed by Bernie Sanders in 2019, or creating a $100 billion federal loan guarantee for employee ownership finance, an idea first proposed by Dick May, Robert Hockett and Chris Mackin.
The authors explain that action at this scale would be “akin to the federal government’s decision after World War II to back mortgages to create widespread middle-class homeownership.” Unfortunately, racist government policies left people of color out of those programs, so equity must be a central principle. Write the authors, “with appropriate guardrails to prevent overextraction of wealth, a new federal commitment to widespread enterprise ownership could bring economic security to millions historically left behind, particularly people of color.”
To read the full article, go to https://www.fastcompany.com/90610795/scaling-up-employee-ownership-is-key-to-an-equitable-economic-recovery.