The Rutgers NJ/NY Center for Employee Ownership, with support from the W.K. Kellogg Foundation, announced on Monday it has launched a new program centered around helping minority- and women-owned businesses that have been impacted by the COVID-19 pandemic.
“We are honored — and energized — to support this program at Rutgers,” Jeanne Wardford, program officer at the W.K. Kellogg Foundation, said. “As we weather this ongoing pandemic, it is crucial for us to create more active, effective partnerships with minority-owned and women-owned businesses.”
The program, which is nationwide, will focus on employee ownership strategies for business owners to sell their enterprise to their employees. In turn, this will save jobs, build employee wealth, and strengthen local economies.
Rutgers NJ/NYCEO said mid-size businesses can be candidates for an employee stock ownership plan, or ESOP, which borrows funds to buy a company on behalf of its workforce. Other businesses can explore what’s called a worker cooperative, a company entirely owned and governed by its workers. Federal loans may also be available to help with the transition into an ESOP or cooperative.
According to research by the Rutgers Institute for the Study of Employee Ownership and Profit Sharing, employee ownership enables low- and moderate-income workers to build significant wealth, and narrows the gender wage and racial wealth gaps. Earlier Rutgers research found that employee-owned firms are more productive, have lower turnover rates and are more stable in terms of employment.
“A large percentage of retiring business owners have no succession plan and no family members willing to take over,” Bill Castellano, executive director of Rutgers NJ/NYCEO, said. “The pandemic is pressuring them to make a quick decision under severe economic conditions. Our program highlights employee ownership strategies that can help their businesses, employees, and local economies succeed.”
The program will include:
- Conducting outreach to inform businesses about the succession strategies;
- Developing free, online program guides on how to become an ESOP or worker cooperative;
- Educating service providers about the succession strategies;
- Extending scholarships to professors from historically Black colleges and universities to attend the institute’s annual employee ownership conferences.
Rutgers NJ/NYCEO said it will be collaborating with the Democracy at Work Institute to develop the online resources.
“This is an ambitious plan and we’re going to form partnerships all over the country to make it successful,” Jim Terez, associate director of Rutgers NJ/NYCEO said. “We will be talking to federal, state, and local agencies, business groups, chambers of commerce, community organizations, and universities to build awareness of these job-saving strategies.”