Cooperative Futures Worker Ownership Transition Program

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Executive Summary

Cooperative Futures Worker Ownership Transition Program is a nonprofit in Ohio that helps retiring business owners sell their companies to their employees. We meet with owners and workers, teach cooperative ownership and finances, pay independent professionals directly for a valuation and legal and financial advice, help structure the sale and financing and support each new cooperative for three years.

Many small business owners are nearing retirement with no one to take over, and when they close or sell to outside buyers, good jobs can leave the community. A worker buyout keeps the business and gives employees a chance to build wealth.

With this grant we will help about 8 firms in Year 1 in 1 region. We are not a law firm, an accounting firm or a lender and we do not give legal, tax or lending advice. We do not guarantee a sale or a loan. We promise fair, independent advice and careful use of every dollar.

Our Year 1 budget is about $226,500, growing to about $300,500 by Year 5 as we add sites, coaches and participants. Each year's budget is planned to balance, with a small surplus each year. We have 3 staff in Year 1 (an Executive Director, a Program Director and a Cooperative Developer) and 6 by Year 5.

We are asking the Buckeye Employee Ownership Foundation for $70,000 for the Cooperative Developer and valuation and legal fee assistance. Our other income and startup support cover the rest. These numbers are estimates based on the assumptions listed at the end of this proposal, and we do not promise any result beyond what we describe.

Company Description

Cooperative Futures Worker Ownership Transition Program is a nonprofit organization in Ohio. We are a registered charity with a volunteer board of directors, a written conflict-of-interest policy and a yearly budget the board reviews.

Our mission. When a business owner retires, the people who built the business should have a chance to own it and keep good jobs in the community.

What we do.
- Meet with retiring business owners and their employees to explore selling the business to the workers.
- Pay for independent business valuations and legal and financial advice from qualified professionals.
- Train employees in cooperative ownership, governance and finances.
- Help structure the sale, financing and the new cooperative.
- Connect cooperatives with lenders, buyers and a network of other worker-owned firms.
- Follow each new cooperative for three years.

Our values. Respect for every participant, honesty with families and partners, safety first and a place for everyone who wants to belong.

What we do not do. We are not a law firm, accounting firm or lender and we do not give legal, tax or lending advice; qualified professionals do, and we pay them directly. We do not guarantee a sale, a loan or a successful transition. We do not take an ownership stake in any business. We follow the rules of our partner sites and our insurer.

How we got here. A group of cooperative developers, an attorney and a banker began helping a few retiring owners explore selling to their employees. Several succeeded, and others asked for help. We kept simple records of who we helped and what happened. This proposal asks for support to move from a few transitions to a steady program with paid, trained staff and the materials to match.

Problem & Opportunity

Many small business owners are nearing retirement with no one to take over, and when they close or sell to outside buyers, good jobs can disappear from the community.

Cost. Valuations, legal work and financing for an employee buyout can cost many thousands of dollars before any money changes hands.

Access. Few owners and employees know that a worker buyout is possible, and few professionals specialize in it.

Safety and trust. Owners and employees want fair, independent advice, and funders want to see that money is used carefully.

Missed benefits. Businesses that close lose jobs, and employees lose a chance to build wealth through ownership.

What we hear.
- An owner says his employees are his family and he has no one to hand the shop to.
- An employee says she would buy the business if she knew how.
- A banker says employee-owned firms repay at high rates.
- A developer says every transition teaches her something about trust.

We do not claim that a program can solve every challenge. We believe that an independent valuation, good advice and a strong plan can help workers become owners and keep businesses in the community.

Products & Services

Cooperative Futures Worker Ownership Transition Program gives retiring owners and their employees a safe, welcoming place to transition a business to worker ownership.

How the program works.
1. Outreach. We meet owners at business associations and retirement planning events.
2. Screening. We review the business's size, finances and readiness for a buyout.
3. Education. We teach employees about cooperative ownership, governance and finances.
4. Valuation and legal work. We pay independent professionals directly for a valuation and legal and financial advice.
5. Structure and financing. We help the owners and employees agree on terms and arrange loans.
6. Launch. We help the new cooperative adopt bylaws, elect a board and train members.
7. Follow-up. We support each cooperative for three years.

What a typical session looks like. Participants arrive and check in with a staff member, settle in together, work on the day's activity in small groups and finish with a short talk about what went well. Staff praise effort, correct mistakes kindly and make sure no one is left out.

Staff. Our cooperative developers are trained in worker ownership, pass a background check, complete our training and are paid for their time. Independent professionals are paid directly by us.

Access and fairness. Programs are free. Services are free to owners and employees. We welcome every eligible business and treat owners and employees fairly.

Market Analysis

Who we serve. Owners of profitable small businesses nearing retirement and the employees who might become owners. Eligibility is a profitable business with at least five employees and an owner ready to sell, and no business is turned away for its industry.

How we estimate need. We cannot count every young person who could benefit, so we plan from what we can see. In our early transitions we helped several firms and kept a waiting list of owners. Business associations and lenders told us that many more retiring owners could benefit than we can serve. For Year 1 we plan to serve about 8 participants at 1 regions. By Year 5, with more staff and sites, we plan to serve about 24.

Where participants come from.
- Business associations and chambers.
- Accountants, attorneys and bankers.
- Retirement planning advisors.
- Owners and employees who tell others.

Who else benefits. Employees gain ownership and wealth. Owners gain a good buyer and a legacy. Communities keep jobs and businesses.

What the numbers mean. Every number here is an employee who became an owner. We keep our early counts modest and honest so we can do the work well.

Competitive Landscape

What young people can find today, and how we are different.

1. Selling to an outside buyer. Fast and often ends local jobs. We offer an alternative.

2. Closing the business. Simple and sad. We offer a path to continue.

3. Employee stock ownership plans. Strong for larger firms and costly for small ones. We serve smaller firms.

4. Business brokers. Help owners sell and focus on price. We focus on a local, worker-owned outcome.

5. Cooperative developers. Few exist. We add capacity.

What makes us different.
- Free development support.
- Independent professionals paid directly.
- Employee training in ownership.
- A three-year follow-up.
- A network of other worker-owned firms.

Why this gap matters. Existing programs do good work, and most serve people who can already pay or who live close to them. The people we serve are the ones left over: they live in the wrong neighborhood, have the wrong schedule or have no one to ask. We are built to reach them.

We have spoken with business associations, lenders and other cooperative developers to make sure we are filling a gap and not duplicating services. Their letters of support are in the attachments.

Marketing & Sales Strategy

How young people and partners will find us.

Reaching young people.
- Business associations and chambers. We will present at meetings and share a one-page overview.
- Accountants, attorneys and bankers. We will share information and a named contact.
- Retirement events. We will hold talks for owners.
- Local media. We will share success stories with permission.
- Word of mouth. Owners tell owners.
- A simple website and a phone line with a text option.

Reaching staff and sponsors.
- Recruit cooperative developers through cooperative associations, business schools and community development groups.
- Offer an orientation, a background check and training in safety, privacy and respectful practice.
- Give partners a short report each quarter with counts of participants and what they said.

How we decide who joins. We use a simple sign-up form and enroll participants in the order received, with priority for those with the greatest need and for people new to the program. We keep a waiting list when the program is full.

What we watch. Sign-ups, attendance, owners contacted, transitions completed and how many participants return for a second season.

Operations Plan

How the program will be carried out.

Timeline for Year 1:
- Months 1 and 2 (July and August): Hire the staff, buy equipment and materials, finalize the waiver, consent form and privacy policy with our attorney and sign site agreements.
- Month 3 (September): Open outreach to owners and select the first firms.
- Months 4 to 10: Educate employees, commission valuations, structure and finance buyouts and launch cooperatives.
- Months 11 and 12: Survey owners and employees, report to funders and plan Year 2.

Space. We work from a small office and meet owners and employees at their businesses.

Safety and privacy.
- Independent professionals are paid directly and a written policy keeps our role separate from theirs.
- We follow a written confidentiality policy for every owner and business.
- Every staff member and volunteer passes a background check and completes safety training.
- Staff work in pairs or in view of others whenever participants are minors or in a vulnerable situation.
- We keep an emergency plan at every site, and participants complete an emergency contact form.
- We keep records private, share them only with a participant's permission or as the law requires and follow a written policy.

Equipment. We buy about $5,500 of equipment once at the start: laptops and a secure project system ($3,000), projector and training materials ($1,500), locking storage and printer ($1,000). Later years replace or add a few items.

Staffing. In Year 1 I serve as Executive Director. The Program Director, paid $50,000 a year, manages outreach and projects. The Cooperative Developer, paid $55,000, works with each firm. We add a developer in Year 3.

Management & Organization

Sarah Whitlock, Executive Director. I lead the organization, report to the board and am responsible for budgets, partnerships and reporting. I came to this work as a cooperative developer who watched good businesses close for lack of a buyer. I will complete the training we require of our developers so I understand the program from the inside. (Replace this paragraph with your own background.)

Staff. The Program Director manages outreach and projects, and the Cooperative Developer works with each firm. Each passes a background check. These positions are part of our grant request.

Board of directors. Our volunteer board includes a cooperative member, a retired business owner, a banker who serves as treasurer, an attorney, an accountant and a labor organizer. The board meets every other month, approves our budget and reviews our safety plan. No board member is paid, and members with a conflict of interest step out of related decisions.

Advisory partners. A cooperative lender, a business valuation expert and an employee-owner give guidance twice a year.

Staffing and pay in this plan: Executive Director, paid $54,000 a year; program Director, paid $50,000 a year; cooperative Developer, paid $55,000 a year.

Milestones Narrative

Our goals, how we will measure them and when we plan to reach them.

Year 1 outcomes (July 2027 through June 2028):
- Serve about 8 participants at 1 regions.
- Run at least two full seasons and a summer session.
- Have at least 85 percent of participants attend most sessions.
- Have at least 80 percent of participants return for a second season.
- Receive positive feedback from at least 90 percent of families who answer our short survey.

What we count and how.
- Participants enrolled, sessions and games attended, from our records.
- Skills learned and goals met, from the coach's checklist.
- Equipment issued and returned, from our log.
- Participant and family feedback, from a short, confidential form.
We report what we find, including what did not work, and use it to improve.

Growth over five years.
- Year 2: About 12 participants at 1 regions.
- Year 3: About 16 participants at 2 regions.
- Year 4: About 20 participants at 2 regions.
- Year 5: About 24 participants at 2 regions.

Learning along the way. At the end of each quarter, the director and the board review the numbers and decide whether we are on track. If we are behind, we will adjust our outreach, our sites or our schedule before asking for more money.

After the grant. By Year 5, grants make up about 53 percent of our budget, down from about 66 percent in Year 1, as partners and donors give more. We will keep building those relationships every year.

Funding Request

What we are asking for, and how the money will be used. Our request: $70,000 from the Buckeye Employee Ownership Foundation for the Cooperative Developer and valuation and legal fee assistance, for July 2027 through June 2028.

The request is spread across these budget lines:
- Personnel: Cooperative Developer salary, $55,000.
- Other: Valuation and legal fee assistance paid directly to professionals, $15,000.

Other money in the program. This request is about 47% of our Year 1 grant income. Other grants and the income lines below pay for everything it does not cover.

Year 1 budget: about $226,500, planned to balance with a small surplus (about $9,400 after the yearly wear on equipment). Year 1 money coming in: Grant Revenue $150,500; state Economic Development Funding $44,000; community Lender and Foundation Partners $24,000; individual Donors $8,000. Year 1 costs: executive Director $54,000; program Director $50,000; cooperative Developer $55,000; valuation and Legal Fee Assistance about $24,000; employee Training about $8,000; feasibility Studies about $8,000; outreach to Owners about $4,000; financing Navigation about $3,000; administration and Insurance about $10,000; about $2,700 a year for the wear on equipment.

One-time startup costs. Startup costs of $14,500 are paid once from startup money, not from the yearly budget: $3,000 for laptops and a secure project system; $1,500 for projector and training materials; $1,000 for locking storage and printer; $3,000 for attorney review of the engagement agreement, confidentiality policy and privacy policy; $1,500 for flyers, banners and a simple website; $1,500 for developer training and background checks; $3,000 for first insurance payment.

How we got our startup number. The Funding Need Calculator in this plan adds the startup costs ($14,500), the cash the program uses before it balances (about $0) and a cash cushion of about $54,000, which is about three months of Year 1 costs. In all, that comes to $68,500. We start with $6,000 from our founding board and $65,000 in startup support from a community foundation and a community lender, $71,000 in all, which covers that amount with room to spare.

The next five years. Our budget grows from about $226,500 in Year 1 to about $300,500 in Year 5. Grants are planned at $150,500, $138,000, $183,500, $172,000 and $160,500 in Years 1 to 5. Other income grows: state Economic Development Funding from $44,000 to $68,000; community Lender and Foundation Partners from $24,000 to $48,000; individual Donors from $8,000 to $24,000. Our surplus is planned at about $9,400 in Year 1, about $9,800 in Year 2, about $12,900 in Year 3, about $13,800 in Year 4 and about $14,500 in Year 5. We grow from 1 regions to 2 by Year 5, adding a part-time coach for each new site.

Savings. We plan to keep several months of costs in savings. The lowest year-end balance in the plan is about $66,900, at the end of Year 1. Some grant payments and partner payments arrive after we bill, so we plan for about $9,060 owed to us at the end of Year 1.

Cost per firm. In Year 1, our total costs are about $27,138 per firm served, which includes setting up the program. By Year 5, with more firm served and a trained team in place, that falls to about $11,915 per firm.

After the grant. State economic development funding, corporate sponsors and individual donors grow every year, so grants become a smaller share of our budget. Participants and families share their stories, and businesses can sponsor a team or a season by name. We will look for partnerships with schools and the city that want a safe, free worker ownership option for every child.

Risks and how we will handle them:
- An injury. Certified coaches, proper equipment, groups matched by age and skill, a written emergency plan and insurance.
- A site is no longer available. We keep agreements with more than one site and a plan for bad weather.
- A coach leaves. We keep a list of trained backup coaches and share lesson plans.
- Low attendance. We adjust sites, times and rides based on family feedback.
- A privacy problem. We follow a written policy, use secure systems and train every staff member and volunteer.
- A grant ends. We keep savings and grow partner and donor support each year.

If you are just starting. A new organization can begin before it has its own 501(c)(3) status through a fiscal sponsor: an established nonprofit that receives grants for you and passes them to your program, usually for a fee (commonly around 5% to 10% of the grant, sometimes more; ask before you agree). Another way is to start smaller: one neighborhood, a handful of firms and a small team, tracked carefully. Strong results from a small start make larger grants easier to win.

Appendix Notes

Documents to attach with this proposal:

- Your IRS 501(c)(3) determination letter, or your fiscal sponsor agreement.
- Your most recent financial statements and your current year budget.
- A list of your board members and what each one does.
- Signed letters of support from partner schools, agencies and sites.
- Your site agreements and your insurance certificate.
- Your consent, waiver and privacy policy.
- Your safety plan and background check policy.
- Your program outline and schedule.
- Quotes for equipment and materials.
- Resumes for your Executive Director and key staff.
If you don't have any of this yet, no worries - let's continue.

The assumptions behind our numbers (change them in the Financials section to match your own):
- Grant Revenue: $150,500 in Year 1, growing to $160,500 in Year 5.
- State Economic Development Funding: $44,000 in Year 1, growing to $68,000 in Year 5.
- Community Lender and Foundation Partners: $24,000 in Year 1, growing to $48,000 in Year 5.
- Individual Donors: $8,000 in Year 1, growing to $24,000 in Year 5.
- Pay (a full year, per person, including payroll taxes and workers' compensation): executive Director $54,000; program Director $50,000; cooperative Developer $55,000.
- Other yearly costs in Year 1: valuation and Legal Fee Assistance $24,000; employee Training $8,000; feasibility Studies $8,000; outreach to Owners $4,000; financing Navigation $3,000; administration and Insurance $10,000. These grow between 4% and 6% a year.
- Equipment: $5,500 at the start, then $1,500 to $2,500 a year.
- Startup costs: $14,500, paid once from $71,000 in startup money.
- Participants served: about 8 in Year 1, growing to about 24 in Year 5. Sites: 1 in Year 1, growing to 2 by Year 5. Each transition takes about nine to eighteen months, and new firms are started throughout the year.
- About 4% of each year's income is still owed to us at year end.
- Tax: none, as a nonprofit.
- Every dollar amount is an estimate. Replace them with your own quotes and real budget.

Startup Costs