WASHINGTON CENTER FOR EMPLOYEE OWNERSHIP
Taking Your Business to the Next Level
The Washington Center for Employee Ownership is committed to fostering a prosperous and growing employee-owned business sector across the State. We are a resource of information, education and connections for business owners, employees, and professional advisors.
What is Employee Ownership?
Employee ownership is a shared equity model where employees have an ownership stake in the businesses for which they work. It is a business succession plan that preserves jobs, local revenue and community impacts, and it provides the seller with a market rate value for their business.
While there are different employee ownership business structures, and not all have employees involved in leadership decision making, all employees do participate in the financial performance of the company.
Why Consider Employee Ownership?
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Preserve local jobs and local revenue.
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Improve company performance.
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Build resiliency.
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Increase wages and benefits for employees.
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Help to bridge the wealth and asset gap, including retirement.
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Strengthen the local economy.
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Sustain the legacy of the business.
Employee Ownership is a Solution
for the Small Business Crisis
How does Employee Ownership Change Washington's Economy?
Exiting or retiring business owners get market value for their business.
Businesses remain open and based in their local communities.
Businesses experience increased productivity, become more profitable and resilient.
Workers become more engaged, build wealth, and can have a voice in key decisions.
Communities are enhanced through increased local circulation of money and the retention of living wage jobs.
How is an Employee-Owned Business Structured?
The three most common types of employee ownership enterprises are
Employee Stock Ownership Plans (ESOPs), worker cooperatives,
and Employee Ownership Trusts (EOTs).
Employee Stock Ownership Plans (ESOPs)
ESOPs are the most common type of employee ownership. ESOPs, like 401(k) plans are qualified retirement plans and are used to transfer all or part of the company’s shares to a trust administered on behalf of employees. ESOPs are a tax-advantaged structure that makes them a fit for companies over a certain threshold size. ESOP ownership can be anywhere from a small percent of the company stock up to 100%.
Worker-Owned Cooperatives
Worker cooperatives function under a model of "one member, one vote" and distribute a share of profits to workers. A worker cooperative is a company owned and controlled by—and for the benefit of—the people who work there. The Board of Directors comprises a majority of employee-owners who are elected by the full membership on a one-person, one-vote basis, and net profits are shared, based on a formula designed to suit the company.
Employee Ownership Trusts (EOTs)
EOTs are trusts that hold shares of companies on behalf of the employees, who then participate in ongoing profit sharing. An EOT is a trust that holds some or all of the shares of a company on behalf of the employees. An EOT ensures employees have a share in profits, a voice in governance and that the mission of the business—and its jobs—can be preserved for generations to come.
EOTs have been the favored path to employee ownership in the United Kingdom for decades. The EOT structure in the United States uses a Perpetual Purpose Trust to establish an EOT, which is an innovation of trust law that is becoming more commonplace.
About WACEO
The Washington Center for Employee Ownership (WACEO) is joining a growing number of organizations across the country that serve as statewide hubs for employee ownership resources and support, helping small businesses take advantage of the power of employee ownership (EO).
This planned nonprofit organization is the outcome of an initiative catalyzed and facilitated by the Whatcom Community Foundation (WCF), and in progress for several years. An organizing group representing multiple economic and workforce organizations met regularly to consider and recommend the structure, goals and mission of an employee ownership center in Washington.
Currently the initiative is being guided and supported by a Steering Committee with statewide representation.
The WCF will serve as the incubator and legal home for the Center for an estimated three to five years, or until the Center is ready to transition to a standalone 501(c)3 or other structure. The Community Foundation will provide the administrative support and fiduciary oversight.
The WACEO envisions a prosperous, resilient, and growing employee-owned business sector fueling Washington State’s diverse communities and economies.
The Center’s guiding purpose is to:
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Increase awareness, build practitioner capacity, engage government, and expand access to capital for employee-owned enterprises.
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Be a resource to businesses looking to transition or form as employee-owned enterprises.
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Work to create more employee-owned enterprises.
In spring 2023 the Washington Legislature unanimously passed SB 5096 a bill focused on supporting and enabling employee ownership across the state through a new state office within the Department of Commerce and an appointed state commission.
The Center initiative is poised to partner with the State as the Commission and State Office come online. The Center will evolve its priorities and operational activities as needed to adapt and ensure close collaboration and clarity of roles between the State Office and the nonprofit Center.
This two-entity model (State Office and nonprofit Center) leverages the knowledge, expertise, and resources of an agile and entrepreneurial private sector along with the valuable public sector tools and resources of State government, creating synergy that will focus on the long-term stability and well-being of Washington businesses and communities. These efforts can work in tandem to leverage the potential of public private collaboration and foster a robust ecosystem for employee ownership across Washington.
Inclusive economies create opportunities for more people to benefit from the fruits of their labor.
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About WCF
The Whatcom Community Foundation works to create conditions for inclusive prosperity through research, advocacy, and adaptation. We invest in structures, systems, community learning and skill-building to increase resilience. We attract and deploy resources which allow us to launch impactful projects and programs, to make impact investments and grants, and give scholarships. The WACEO is an integral part of our inclusive prosperity work and our commitment to high impact projects that with local effort can have broader regional and statewide impact. Join us in our work to cultivate neighborliness, lift community voices, and invest in equity and hope.