Economic Democracy: A Conversation with Funders

Reposted from Philantopic

The Bronx Cooperative Development Initiative (BCDI), in partnership with the Kendeda Fund and the Open Society Foundations (OSF), recently hosted a funder briefing on economic democracy. In the lead-up to the briefing, Sandra Lobo, BCDI board vice president and executive director of the Northwest Bronx Community and Clergy Coalition — a founding member organization of the BCDI — sat down with Diane Ives from the Kendeda Fund and Scott Abrams from OSF to better understand how economic democracy became a priority for their foundations and the opportunities and challenges ahead. Ives has served since 2003 as fund advisor for the Kendeda Fund's People, Place, and Planet program, while Abrams is director of special initiatives for OSF's Economic Justice Program, where he focuses on early-stage high-risk bets aimed at advancing the concept of economic advancement globally. 

In a wide-ranging conversation, Lobo, Ives, and Abrams discussed their respective decisions to invest in BCDI, what funders need to do to support one another in this work, and why there is a need to create a collective consciousness around economic democracy. Economic democracy is a framework in which people share ownership over the assets and resources in their communities and govern and steward them democratically for a shared purpose. It's not just about more participation; it's about sharing power.

The transcript below, provided by BCDI, has been edited for clarity and brevity.

Sandra Lobo: You all have funded a number of different kinds of work in your tenure. How did economic democracy become a priority for you and your respective programs, and given what you've seen and learned, why do you think it's important?

Diane Ives: When I first started at Kendeda, we didn't even call it the People, Place, and Planet program. It was an environmental sustainability program. We were using the very familiar Venn diagram of sustainability, economics, and equity, and we realized that we were funding in all three of those areas but not where the overlap was, which is really what we were trying to get at. So we made a shift in 2012 toward a vision of "well-being for all within the means of the planet." Once we made that shift, it was easier for us to explore what we call "community wealth-building," which is this notion that communities should have agency around the decisions about their neighborhood and that they're able to retain and build the wealth they need to activate what they really want their neighborhoods and communities to be. So that was the shift we went through between 2012 and 2014.

Scott Abrams: A lot of what Diane just said in terms of community wealth-building resonates very strongly, but let me take a step back and explain how we came to this body of work. The first is widening inequality around the world — in terms of wealth and income — and a second is the way in which the structural deficiencies with the economy have been a driving force for populism and autocratic government we've seen all over the world. Part of our diagnosis is that so many people feel they've lost all control over the economy, and their role within it. This feeling of precariousness and vulnerability has fed a host of unsavory, radical, and regressive political outcomes.  

Questions of redistributive policy are difficult to grapple with in today's political climate. One of the ways in which we think about addressing these issues is to try to build models or spotlight examples of where democratic forms of economic activity are taking root. And a part of that for us is, of course, advancing shared ownership at the firm level and supporting ecosystems that enable more democratic forms of economic activity. Our larger, longer-term hypothesis is that some of those examples could help inspire replication, upscaling, et cetera, which would then impact the way people think about the economy more generally.

Sandra Lobo: Would you say those dynamics were always there, or have they shifted over time?

Scott Abrams: There's a great line from Hemingway's The Sun Also Rises where one of the characters is asked how he went bankrupt, and he answers: "Two ways. Gradually and then suddenly." What we see is a long steady march toward a worrisome dynamic epitomized by some of the political transformations we've seen with the election of Donald Trump, with Brexit, with the rise of Jair Bolsonaro [in Brazil], of Viktor Orbán [in Hungary], and the like. It has been a long time in the making — and partly the result of economic policy over the last forty or fifty years — but things have shifted very quickly recently.

Sandra Lobo: Tell us about the kind of investments you've made within Kendeda's economic democracy framework.

Diane Ives: In the United States, we have done a lot of really interesting work in different venues trying to understand what democracy means for government but have put very little effort into understanding what democracy means for the economy. It's almost as if the economy has been given a pass. We focus so much on policy, so much on elected officials, and so much on the rule of law. But the conversation is never about democratizing the economy and what that would mean and how that would benefit us overall. Instead, we've just accepted the neoliberal approach to the economy without asking, "Well, what does it mean for us in the United States as a democracy? How does this actually match up?"

With that in mind, I would say that some of the funding we do involves taking baby steps. Scott, you talked about this notion of shared ownership at the firm level. Is there a way we could get workers to ask every single day what it means to be part of an economic democracy in terms of decision making around where they work and all the different ways they engage in the economy on a day-to-day basis? It's that kind of truly tactile experience that needs to be scaled up, because it's not going to be a top-down, policy-driven directive. Whether the question is, "How do we convert a business to shared ownership?" or "How do we create a right-of-first-refusal for tenants to buy their buildings?", the minute you start thinking differently about how we, as economic actors, interact with the economy, an entirely different set of  options are on the table.

Some of the funding we've awarded has been to groups like the The Democracy Collaborative and the MIT Community Innovators Lab — groups that are thinking about ways to scale some of these examples on the ground. We've also supported groups like BCDI, PUSH Buffalo in western New York, the Thunder Valley Community Development Corporation, which works on the Pine Ridge reservation in South Dakota, and Nexus Community Partners in the Twin Cities. And we've been looking at shared ownership in the workplace, making a series of grants around cooperative development for workplaces and converting existing businesses into worker coops or ESOPs [employee stock ownership plans].

Scott Abrams: For us, it's quite similar, actually. We have some of the same partners, which is a good sign on the one hand, in that we both have a lot of trust in the same folks, and not such a good thing on the other, in that it could be a sign that the field is not as diverse as one would hope. So our theory of change effectively has been to build out ecosystems for shared ownership. We want to support a few experiments that are up and running in a place-based manner, BCDI in the Bronx being one of them. We have similar initiatives in the UK — you may have heard of Preston, for example — and we also fund learning networks like the ones Diane mentioned — for example, The Democracy Collaborative, et cetera — that help link learnings across different sites and develop insights and lessons around those real-world experiments.

The other thing we feel is really important is that this doesn't become a politicized body of work. It need not be. So we're trying to balance our approach to where we work — places that are urban and politically blue — the Bronx is a good example — and hoping, once it takes root, that it is seen as a viable model for places that are far less blue and far less urban, places like western North Carolina and Colorado. Ideally, we would like to have two governors from different parties bring the concept of economic democracy and shared ownership to the National Governors Association.

Sandra Lobo: What would you say are some of the challenges and opportunities — and I'm linking them because sometimes they're one and the same — within the work you both are doing?

Diane Ives: I'll Identify two things we've been thinking about in terms of challenges that are also opportunities. Scott, you hinted at it when you mentioned that we all seem to be funding the same groups. I do feel like there are a lot more places out there that we could support than we are supporting, and that makes me hopeful. I also feel like the interstitial community and the opportunity for shared learning is still at a very early stage of development. I think a lot of groups are toiling away on their own without having a whole lot of connectivity to other groups. So one of the challenges we have been looking at is around communications and messaging. Everyone uses different language, and maybe that's necessary, but at the same time maybe there are some common ways we can talk about this work.

We are just about to sign a contract with a firm that is going to help us with communications. This is a dream right now — we'll see where it ends up — but when you look at the gay rights movement, one day it was about protection and the next it was about love. What is the language we need to describe and explain the shared economy? Is it about "beloved" businesses that "nurture" us every day? Can we come up with a different way to talk about the work?

We also need shared metrics. There's a real need for understanding what investors want to see and also for pushing investors to think about their metrics differently. We're not just talking about profit; instead, we're asking, "What assets are staying in the community?" How do you measure that in a way that causes an investor to say, "This is worth investing in"? That's the piece we are eager to explore.

Scott Abrams: The thing is that right now the concept of shared ownership is not deeply rooted in the psyche of most people in the country. It just doesn't exist as a concept, and the result is that there are groups like The Working World that help with conversions, but a lot of the time and energy and cost goes into reaching out to people and getting them interested in the idea, and then, and only then, beginning the process of training them how to do it. However, there is a window of opportunity opening up with the baby boomer generation starting to retire in large numbers and business owners starting to look for people like us, in which case the costs may come down markedly and the speed at which conversions take place rises exponentially. The work that Diane just described around language and messaging is absolutely critical, and we have to find a way to get this idea out into mass culture. A colleague of mine had the somewhat-wild idea of creating a reality show, but instead of, you know, opening a locker or flipping a house, it would be about converting a business to worker ownership.

Sandra Lobo: I love that idea.

Scott Abrams: Right? That kind of thinking is a way to expose the concept to a much larger audience. It's a huge opportunity for so many people who are going to see their legacy evaporate because they have no one to leave their businesses to — except their employees, which is something that rarely occurred to them. And, of course, it also rarely occurs to employees to approach an owner with that option. 

Sandra Lobo: I want to talk a little about how unique you both were in terms of your support for BCDI. Diane, you were a very early investor — you gave us our first major grant in 2014 — and you structured it as general operating support over multiple years. Some people might say that's a super-risky move for an unproven organization with very little history. What made you confident enough to make such an investment so early on, and what kind of impact were you looking for at that stage?

Diane Ives: When we first got the proposal from BCDI, it was for one year. Our donor was excited about the concept, but asked, "What are they going to accomplish in one year?" and I replied, "Well, probably not much." I mean, the first year you over-promise and work really hard, but typically there are a lot of bumps in the road. Our donor  said, "I don't want to reevaluate them in a year. I want to see how far they can get, so let's extend the grant and give them a little more running room." It was her idea to make it a multiyear grant. And, of course, it was really smart that she insisted on it, because you tried some things that first year that didn't pan out, and if we had just looked at the grant at the end of the first year we would have thought we had made a bad decision. Instead, we were in it with you, we wanted to see what was next, and it was a really interesting opportunity for us to go on this journey with you all over a period of time. 

I think part of what we realized early on was that if this were easy, it already would have been done, and at scale, so if it's not easy, then what kind of infrastructure is needed to allow for the complexity to be explored and better understood? Our metrics were more about: Can BCDI pull together the right players for its board? Can the board grapple with some of these tougher issues? Is there a way to focus the work but still embrace the complexity of the whole? Those were the kinds of things we were looking for. It took a while, but you got there.

Sandra Lobo: Scott, you came on board a bit later and awarded BCDI a substantial grant in 2019 that helped us transition from a late startup phase to our growth phase. What drew you to us initially, and what were you looking for at that stage of our evolution? How did we fit into the other investments you had made around shared ownership and economic democracy?

Scott Abrams: I’ve already mentioned our interest in supporting learning networks and a couple of concrete examples where we’ve seen early traction. And those investments helped lead us to BCDI. Some other considerations were that, since this was a new line of work for us and the Bronx is just five miles north of where we are sitting, it was a good opportunity to have a lot of interface with a team while we were learning ourselves.

Very pragmatically, in addition to the grantmaking work we do, we also run an impact investment fund. And there may one day be opportunities to deploy investment capital into some of the things BCDI helps foster — for example in some of the companies that are emerging from the Bronx Innovation Factory you run or the BronXchange. So it was a nice confluence of factors, and it turned into our first entry into place-based work within the economic democracy space nationally. The BCDI team is deeply passionate and deeply rooted in the Bronx. You already had experience with fighting back, and while that is incredibly useful, the fighting forward piece of the work is where we wanted to contribute. 

Sandra Lobo: What were the elements that allowed you to say, "Yes, this is what we want to be investing in"? 

Diane Ives: I guess there were a couple of things. One is that you demonstrated a willingness to tackle head-on the challenges you saw instead of sidelining them. Also, we were curious about how the work would evolve over time. How are your board members, who each represent an important community group in the Bronx, going to come together and prioritize the work of BCDI? How are they going to see this as a value-add to their own work and not a competition? That was something that made me say, "We need to go on this journey because this is something that we desperately need in other places and this is not something we've been able to figure out, for the most part." That was something we were super-excited about.

And I would also say that BCDI started with a very deep race and class analysis and a willingness to lead with race and class as an approach to the work, as opposed to trying to overlay it or rejigger it. It was, "No, we're starting there and that's how we’re moving forward!"

Scott Abrams: So three reasons for us: One, race and class. I won't repeat that. That was a huge part of our thinking. Two, the fact that it was very much connected to MIT CoLab [Community Innovators Lab] was appealing because we thought that so much of the learning could go back to a hub and be channeled out through that mechanism. That was really important to us. And three, a really important concept in our work in this space has been participation — and not for technocrats sitting somewhere and devising solutions for something, but rather the participation of many people mobilizing and thinking together. BCDI is an amalgamation of many other networks of community groups in the borough, and some of the participatory campaigns that took place prior, for example over the Kingsbridge Armory, spoke to the importance of participation for us.

Sandra Lobo: Last question. Focusing on philanthropy overall, what kind of space do you think we need to create for funders to learn about and support economic democracy? And what advice would you share with those who might want to shift their funding in this direction?

Diane Ives: One of my taglines is "Help people not be afraid of a changing economy." Part of what I see among funder colleagues in particular, as well as in some of the groups we work with, is this attitude that the economy is something that just happens and we just have to work around it because it's not something we can engage in or control. People get nervous about it.

I would say funders need more opportunities to experience the work. Seeing it firsthand is very powerful, whether it’s a trip to the Bronx or a trip to Mondragón in Spain or a trip to Emilia Romagna in Italy. I would also say we need more conversations among the different groups that are working in different places along with funders. We need to create spaces and opportunities where we’re all coming together more and talking about what we're learning.

Scott Abrams: ​One of the things we’re funding with The Democracy Collaborative is a working group on shared ownership that brings together people from five or six cities that are thinking about an ecosystem strategy much like BCDI's. We’re connecting that working group to a number of interesting examples across the country, from Cincinnati to the Industrial Commons [in North Carolina]. Amazingly, none of the members of The Democracy Collaborative working group had heard about the work in the Bronx or Industrial Commons. So we're looking now at how we can take advantage of existing convening spaces and tack on extra learning experiences for people to talk through and get inspired by these living examples.

Sandra Lobo: Well, this has been such a great opportunity to dig into your work with BCDI and economic democracy as a whole. Thank you both so much for your time.

Sandra Lobo is board vice president of the Bronx Cooperative Development Initiative and executive director of the Northwest Bronx Community and Clergy Coalition.