The Untold Story of the Evergreen Cooperatives

[Editor's note: this history of the Evergreen Cooperatives is the first of a two-part series written by Atlee McFellin, who was intimately involved in the Evergreen Cooperatives as a consultant and then an employee of the Democracy Collaborative from February, 2011 until November, 2012.  Part one focuses on some of the usually unmentioned contradictions inherent in the "anchor-institution model" of co-op development, and details how those contradictions played out in the particular case of Evergreen.  Part two will look more closely at the role of the Democracy Collaborative in events at Evergreen, and raises questions about what types of relationships between non-profit organizations and worker co-ops are appropriate, and what types of relationships might not be.  Part two will be published later this month. GEO also encourages responses from the Democracy Collaborative and Evergreen Cooperatives.  It is our sincere hope that GEO can serve as a platform for discussion of these and other difficult issues within our movement.]

Evergreen and the Struggle for Recognition

To really understand where the Evergreen Cooperatives stand today and how they got there, we have to first address the reality — then and now — surrounding the so-called “Cleveland Model.”

Back in late 2009, Evergreen launched its first two cooperatives. It was an exciting time for the Left, with Obama in the White House and Democrats controlling both chambers of Congress. It looked as though the depths of the economic crisis were beginning to catalyze a growing systemic alternative with “Yes We Can” hope in the political world and solutions all around us, roughly 13 months after Lehman Brothers declared bankruptcy.

Evergreen’s scale was intentional, in order to show what was possible. Originating in a Rust Belt city captivated attention because, as it went, "if it could happen in Cleveland, it could happen anywhere." Evergreen attempted to prove that anchor institutions (the “Eds and Meds,” and what have you) could act as catalysts for a kind of democratic economy or, at the very least, a degree of shared wealth that would put us on the path to more radical structural transformations in the future.

Liberal and conservative news organizations like The Economist, The New York Times, and others began to run stories about Evergreen as something to consider nationwide and even around the world. Countless people began to tout the co-ops as a crowning achievement of the coming new economy and a fundamentally new way of doing business. From various ends of the left-leaning political spectrum, people saw in Evergreen a way forward for a broad-based systemic transformation...of sorts.

One of the more vocal supporters of Evergreen was Jeffrey Hollender, founder and former CEO of Seventh Generation, maker of household cleaning products. After being let go from the company he founded, he went in search of his next challenge. After visiting Evergreen for an intensive three-day learning tour, he began writing about the project in publications like The Huffington Post, Fast Company, Co.Exist and others. He became a champion for Evergreen and had grand plans to build the development infrastructure, to grow it nationwide with the help of Mondragon, the Spanish cooperative corporation upon which Evergreen is (loosely) modelled.  The year prior — the same year Evergreen’s first two co-ops were founded — Hollender had launched an initiative with the United Steelworkers union to build worker co-ops in the U.S. Hollender called his new project CommonWise, and though it was definitely an idea whose time has come, Commonwise too contributed towards, and was an example of, Evergreen’s decline into commodification — i.e. into selling the idea of the model — even back then.

The desire for solutions in a world spiraling out of control led to a groundswell of interest in Evergreen and with it came people in droves. Hollender wasn’t the only person who visited Evergreen in hopes of discerning all the moving pieces that made it run. Easy visits like his were the ones where only 1-3 people wanted to tour the businesses, meet with worker-owners, interview the CEOs, Cleveland Foundation staff, anchor leaders, and others. More difficult were the groups of 30+ people from various communities for whom entire mini-conferences with these Evergreen stakeholders were organized, sometimes monthly. It’s very hard to do laundry in that environment. The endless tours and mini-conferences were all part of the spectacle and the commodity of the “Evergreen Experiment,” and it was the spectacle and the commodity that took precedence — not the worker-owners or the community.

Who were these groups? Why did they come and how much time and energy did those at Evergreen and their associated stakeholders dedicate to this circus? The answer to that last question is “quite a lot” – especially the workers. Margins in startups are slim and astoundingly expensive laundry equipment doesn’t generate profits when it isn’t being operated because those who should be operating it just spent hours dealing with the hoards. Representatives from large employers, government entities, and community and economic development organizations came by the bus-load to find out how they too could adapt the “Cleveland Model” in their communities.

This was the reality surrounding Evergreen: hope amidst crisis and a desire by many to spread something they believed could help build a better world. But that reality proved to be too much for this fledgling organization, its co-creators and partners. Most of the articles, visits, tours, and interest were (and are) not about Evergreen as it actually exists or the people who actually perform the labor upon which the cooperatives rest. The Evergreen all these visitors came to see was itself transformed — or rather, transformed by some of its leadership — into a spectacle, a marketable commodity.

At an early stage in its development Evergreen became, for some, a means to an end. That end was, in fact, marketing a narrative increasingly divorced from reality as a commodity to be bought and sold. Ultimately, Evergreen never achieved the version of itself that was paraded around conferences and sold to the press with a tokenized “worker-owner from the community.” Even the parading itself was an act by a conflicted heart who feared the wrath of his keepers were he to stop towing the party line.  But Medrick Addison, the second person hired on to the laundry, trudged along and said what he was supposed to say. This was, of course, until the point when the Democracy Collaborative stopped paying him for his time because they had no more use for him and he was let go from the laundry business despite the fact that he was on its board, the board itself didn’t vote to let him go, nor did the worker-owners vote for his termination.

This is not to say that the mission behind Evergreen wasn’t genuine.  It was...at first. Those whose efforts resulted in the original idea and its subsequent manifestation believed that it could be all that they claimed it could be, which is immensely commendable. But despite the best intentions of its founding leadership at the Cleveland Foundation, and the ongoing involvement of one its designers from the Democracy Collaborative, the idea of the “Evergreen model” quickly became commodified, much to the detriment of the actual businesses.

Coupled with some initial missteps that were rather major – although perhaps understandable to a degree — the project rapidly devolved into scrambling to get the initial businesses to a financial break-even point, while at the same time managing the considerable interest from other communities. But it wasn’t simply the occurrence of this scrambling that forced Evergreen down the path it’s been on ever since. Rather, it was the way in which this scrambling occurred and the way decisions were made because of the original design of the experiment.
 

Evergreen and the Fallacy of the Anchor Institution

During the initial planning stage of Evergreen, the Cleveland VA Medical Center proposed the creation of a laundry business and the Cleveland Foundation, with the Democracy Collaborative, enticed University Hospitals (UH), the Cleveland Clinic, and Case Western Reserve University to also agree to contract with said laundry business and to put up money for the Evergreen Cooperative Development Fund. This money was matched, to a degree, by the Cleveland Foundation, which went about capitalizing a laundry business and solar installation and weatherization business, in-line with what was then the relatively new American Recovery and Reinvestment Act. The second business came about because the Cleveland Clinic wanted to “go solar” but couldn’t take advantage of the associated ARRA tax credits – the solar co-op solved this problem. Thus work began on the first two Evergreen Cooperatives.

This was the first time the Democracy Collaborative had undertaken this type of project whereby anchor institutions would determine businesses that could be developed into supply chain cooperatives. Until that point or, more specifically, prior to when the Cleveland Foundation started paying them to help design Evergreen, the Democracy Collaborative was almost nonexistent – a holdover organization from the days when Gar Alperovitz and Benjamin Barber had maintained it as a network of academics.

It isn’t clear when the VA Hospital pulled out of the entire initiative, but it was likely once a considerable amount of work had gone into the process of creating what would become the Evergreen Cooperative Laundry, the first of what are now three Evergreen Cooperatives. The story went that after the VA pulled out it came to light that the Clinic, UH, and Case Western couldn’t actually contract with the laundry business for a variety of reasons that definitely should have been identified much earlier in what had been a rather long process. As one example, and perhaps the most striking, the Clinic couldn’t contract with Evergreen because it was locked into a multi-decade contract with Sodexo, for whom they’d actually paid-for and built a massive laundry facility.

What’s perhaps most interesting to note about this is not the fact that someone within that institution, or someone from the Cleveland Foundation or the Democracy Collaborative, could and should have identified barriers like this before committing millions of dollars of grant money. What’s most interesting is the fact that the Cleveland Clinic had just outsourced its laundry to Sodexo in 2004, which had gained a reputation for being a “modern-day sweatshop.” In 2010 — the year after the laundry and energy businesses launched — workers at the Sodexo facility were fighting for fair wages (their pay being a mere $8.34/hour) and to remedy abhorrent and subhuman working conditions, all while the Cleveland Clinic was taking credit for Evergreen.

But the Clinic hadn’t even contracted with the Evergreen laundry. The story goes that Clinic leadership and the Democracy Collaborative simply hadn’t bothered to investigate the extent to which they could switch over their laundry service contracts. However, there is little to no chance that Clinic executives were unfamiliar with the policies surrounding their laundry services contract, as they were in the midst of battling the workers and associated unions with regards to the Sodexo contract they’d entered into five years prior. It seems more reasonable to assume that they were using Evergreen to get some good PR because the laundry facility they were outsourcing to was being called a “sweatshop” (and all while getting solar tax credits to boot!).

Maybe it was simple ignorance that led the Democracy Collaborative to not investigate the situation with regards to local labor unions and affiliated organizations, or to learn the backstory of the anchor institutions to determine the extent to which they would actually make good partners. But whether through ignorance or something else, organized labor, associated larger progressive organizations, and smaller grassroots groups were all ignored. Perhaps though, the reason was not simply a lack of understanding but the fact that the Democracy Collaborative was getting paid to do a job – design what would become the Evergreen co-ops – and it is generally considered best to not bite the hand that feeds you.

In the case of the Cleveland Clinic, the initial errors with respect to the laundry business and the outsourcing of labor to Sodexo, with it's subhuman working conditions, are compounded by at least one troubling statistic. At the end of 2007, less than two years before Evergreen opened its first two co-ops, 1,773 Cleveland Clinic employees and their family members were on Medicaid or other types of public assistance — which means that they were paid so little for their time that they couldn’t even afford the basic necessities of life, like food, housing, or – surprisingly, given that they worked at a hospital — health insurance. Though very little data is available, by the end of 2010 some 1,634 employees of the Clinic and their family members were receiving food stamps, so the situation doesn’t appear to have improved at all in the interim. The numbers for University Hospitals aren’t significantly different, either [1]. While this sort of behavior is expected from capitalist employers, we shouldn't expect to find it in a non-profit organization whose purpose is supposed to be the health of the community. Indeed, this paints a rather dim picture of the power and possibilities supposedly inherent in working with these “Eds and Meds.”

So why didn’t all of this generate some degree of trepidation? Did Democracy Collaborative really believe these entities would get behind co-ops? If they did, shouldn’t they have thought to involve the broader progressive community so as to push them on the other issues simultaneously? Surely we can all look back on the past and say certain things should or should not have been done, hindsight being 20/20. But this situation is different because there were reasons behind a lack of this approach.

Evergreen was not created out of conditions giving rise to social movements – it was created out of a market relationship between the Cleveland Foundation and the Democracy Collaborative in “partnership” with the largest area employers. As a market relationship, any involvement with those criticizing the anchors, or even giving the appearance of possible criticism, was directly antithetical to the financial well-being of the Democracy Collaborative. Securing the finances of the non-profit got misconstrued as “movement building.” It should also be noted that the Cleveland anchors are not unique in their a track-record of worker exploitation [2].

It isn’t clear why or how the initial errors with Evergreen’s laundry occurred. By the time they were discovered, the rehab of the building that would later house the laundry was already well underway. In fact, initial “worker-owners” like Keith Parkham and Medrick Addison played a key role in the construction project. By the time they realized the anchors wouldn’t be contracting with Evergreen, leadership at the Cleveland Foundation and associated anchors felt they were too far down the path to stop...so Evergreen Cooperative Laundry was launched without much of a business plan at all. This troubling situation was worsened by what was a turbulent first year, with Evergreen transitioning through three CEOs.
 

Hitting the Ground Running with a Nation’s Problems on their Backs

This is where things get really tricky because everyone seems to think that the Evergreen Cooperatives only provided services related to laundry, energy, and food; but that is simply not the case. All those tours and calls and emails took considerable time from those responsible for actually building the businesses, especially the laundry, and that’s something that should have contributed to the financial sustainability of Evergreen. Evergreen's staff and worker-owners should have been paid for the time they spent supporting other communities. Be that as it may, everyone complied because they felt it was important to spread the model for what were noble reasons. However, the spectacle that Evergreen became – and the opportunities it afforded to some of those associated with it – included financial compensation to spread the Evergreen model. That compensation, however, was done outside of the co-ops.

Evergreen has proven itself capable of burning through outside CEOs since the beginning. The initial CEO of the laundry quit (or got fired...the facts of the case are still unclear) then the next one left not long after starting, only to return after the third CEO didn’t work out either.

Then, after the fourth CEO was hired, a staff member of the Ohio Employee Ownership Center went to work on a project in Pittsburgh with the Mapa Group (Mondragon’s “official North American representative”) to replicate the laundry co-op there. No, the laundry in Cleveland wasn’t making money by that point. In fact, it was losing money hand over fist. “Worker-owners” were even getting turned away from the check-cashing store down the street. The laundry just didn't have enough money. But that didn’t stop the CEO from spending a good amount of his time “spreading the model” while the only real-life example of that model was fundamentally breaking down.

While all this was happening, a big change was being made by the leadership at the Cleveland Foundation and Democracy Collaborative executive director Ted Howard — who was, at that time, also the Steven Mintner Fellow for Social Justice, tasked with overseeing and managing the Evergreen cooperatives. Howard and the Foundation started the process of building a holding company, the Evergreen Cooperative Corporation (ECC), by hiring its first CEO.

With a holding company of his own, the new ECC CEO began codifying various systems to bring Evergreen together. With the laundry seriously under-performing and requiring repeated infusions of working capital from the Cleveland Foundation and the occasional wealthy investor, the laundry CEO hired a manager to help get new clients. Though this new manager had no experience in the laundry business, and despite the worker-owners being ready for the challenge of finding new clients, the thought of actually empowering worker-owners to help grow the co-op seemingly never crossed anyone’s mind.

Shortly thereafter, the holding company CEO hired another person to assist him with managing Evergreen, an accountant with decades of experience bailing out troubled companies. It was at this point that whatever little mission Evergreen still had ceased to be. Given that there had literally been no time prior to this where the worker-owners actually had any degree of decision-making authority over anything of import, this trend towards bringing in outside management had a profound impact on the worker-owners because it was becoming clear to them that the mission itself was beginning to die. Indeed, a new era was ushered in: an era of lower-paid temp workers brought in to cut down on labor costs and a fanciful fictional narrative that persists to this day, one where it was Evergreen’s mission that caused each of the co-ops to under-perform.

Let’s make one thing clear: at no point in time did anyone actually consider empowering the worker-owners to help the laundry and the solar business become profitable. Despite the fact that it’s the case that countless worker-owners back then would have done nothing less than give a kidney to Evergreen, were Evergreen a person in need of one. None of the worker-owners failed to understand the opportunity they’d been presented with, so if asked, many of them would have done whatever they could to get new clients. Instead, at least for those at the laundry, they saw a CEO who wasn’t there enough to be effective hire a manager from outside of the company who didn’t know anything about laundry. They then had another CEO (of the holding company) come in and tell them he was cutting their hours and hiring temp workers.

Imagine trying to be a “worker-owner” at a laundry with a CEO who is often absent and splitting his time, a manager viewed as incompetent, the new CEO of some holding company moving the co-op in a different direction, and the laundry having so little money that they’re getting turned away from check cashers! And all this was happening while the people around them — the CEOs, managers, and leadership at the Cleveland Foundation — were increasingly absent and being paid much, much more than any worker-owner. It was clear that the leadership didn’t really believe in them to capably handle their own lives, much less to run the co-op; instead they turned it over to “professional” outside management.

All of this is not to say that somehow Evergreen started with grand aspirations and degenerated into something else as it ran into problems with profitability. The reason the businesses suffered is because the anchors couldn’t be trusted to hold up their end of the bargain and the “professional” leadership couldn’t be bothered to do the work that needed to get done. Since nobody ever bothered to get buy-in from the community (beyond the rich and powerful who had, by that time, already cooled on the idea of the co-op itself) and none of the so-called professionals were ever really willing to cede decision-making power to the worker-owners (i.e. those Evergreen was meant to benefit), the only path forward was the further cannibalization of the mission.

What led to the problems at Evergreen was not the cooperative business model, as the Evergreen leadership has repeatedly claimed, but the failure to actually apply it. The dismaying record of the Evergreen experiment should be a cautionary tale for those seeking to create a new economy based on equality, justice and democracy — not a example to be followed.

Notes

[1]  Piet Van Lier, “ Public Benefits Subsidize Major Ohio Employers: A 2008 Update,” A Report from Policy Matters Ohio, July 31st 2008. P. 10  http://www.policymattersohio.org/wp-content/uploads/2011/10/PublicBenefits2008_0731.pdf

Wendy Patton, “Public Assistance Initiatives in 2014 Ohio Budget Bill Will they help Ohio families?” A Report by Policy Matters Ohio, July 22nd 2014. P. 9. http://www.policymattersohio.org/wp-content/uploads/2014/07/public-assistance-July-22.pdf


[2]  More research still needs to be completed, however, it is important to note that the University of Pittsburgh Medical Center (UPMC) – another entity in a city that engaged in the entire first phase of work similar to that done in Cleveland to start Evergreen (a process in which the author was involved) – shows there’s good reason to doubt the anchors’ propensities towards any sort of real shift from neoliberal business-as-usual.
    
Similar to the Cleveland Clinic in size and scope, UPMC has faced constant opposition in recent years from organized low-wage workers, with support from local labor unions, against what they describe as “poverty wages” so low that workers fall into debt because of medical bills, often times going into collections. If one thinks this situation through to its “logical” conclusion, this means that UPMC workers are having their wages garnished by UPMC to pay debt on medical bills that workers owe to UPMC. What now to the who how?

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