Economic Democracy Gaining Momentum in Boston
The Bottom LineThe Bottom Line

Economic Democracy Gaining Momentum in Boston

Cero workers in front of one of their trucks

(Photo courtesy CERO)

Josefina Luna wakes up at 4 a.m. to get to work on time at the headquarters of CERO, a worker-owned organic waste composting cooperative she co-founded in 2014. As operations manager, every morning Luna assigns routes for CERO’s drivers, who pick up organic waste from more than 80 clients across the Boston metropolitan area.

Some of CERO’s clients have more than a dozen pickup locations, and some locations are scheduled for multiple pickups per week. Sometimes the pickup locations change overnight, sometimes a truck needs to go to the shop, and sometimes a driver calls out sick.

“It’s not easy when these guys see a smart woman telling them what they need to do, but I love it,” says Luna. “I work about 15 hours a day. But when you do something that you like it’s not a job. You get tired, but it’s not a job. I’m doing this because it’s my style to make a difference. It’s not enough to complain about a problem, you have to be part of the solution.”

Being a worker-owned cooperative means the workers at CERO (which stands for (Cooperative Energy, Recycling, and Organics) have a democratic vote in the management and leadership of the business, in addition to sharing in the profits when the business does well. But beyond that, like any other kind of business, CERO’s success depends largely on the quality of its service to its customers — restaurants, grocery stores, corporate offices, government offices, hospitals, universities, food processing companies and even food pantries.

Recently, Luna added 14 more stops to CERO’s routes, all of them from one of CERO’s newest big clients — Boston University, which recently awarded the co-op its campus-wide organic waste management contract. Some Boston University stops have just one 64-gallon collection bin, others have ten or more that might need daily pickups. And that was on the heels of adding new stops at Northeastern University, which expanded an earlier smaller contract with CERO to a campus-wide contract with 10 stops. These aren’t the only higher-ed clients CERO has, but they’re the most prominent, and the news is already generating more interest from other interested potential new clients than any other previous new contracts.

CERO’s growth hasn’t always been very smooth. It’s taken longer than expected to get to where it is today. And it’s still a small company, with just seven employees, but it’s growing and it’s gaining momentum. At one level, it’s validation for a vision of a new society that produces less organic waste.

But look deeper, and it’s also validation for a way of allocating labor and investment capital that is more democratic, and more rooted in disinvested communities and racial justice movements. CERO was the first business to receive an investment from the Boston Ujima Project, an effort by Boston’s working-class communities of color to direct investments into projects and businesses through an open, democratic process. That investment envisioned CERO could win contracts like these, which it is starting to do.

As Boston Ujima Project’s executive director Nia Evans puts it, “this moment underscores the ecosystem approach, being present from idea generation, remembering the moment when community members said to do this, a testament to their expertise saying ‘this is a business that we love, please invest in CERO.’”

If you grew up in a white middle-class or wealthier neighborhood, community control over capital has been quietly working behind the scenes in your favor for a long time. First there’s the federally supported mortgages that helped families buy homes they would not have otherwise been able to afford, located in segregated white communities. The lenders who made most of those loans were community banks, local credit unions or local savings and loan associations. Bank officers and executives often lived in those same neighborhoods and shopped at the white-owned businesses to whom they’d also made loans.

Some Black communities had their own banks, but they suffered because their customers faced racial discrimination in the job market or in competition for customers — not to mention, federal support was not initially extended to home mortgages for Black borrowers, even if their bank was Black-owned. Federal support for small business loans still reaches relatively few Black-owned businesses.

Then there’s the property taxes that officials, most of them white men, allocated to projects or programs that mostly propped up property values in the white communities where most of them lived. Some of those taxes went back out to white communities in the form of public procurement contracts for construction or other goods and services, which still flow mostly to white-owned businesses. Meanwhile Black communities, if they were subject to the same governments, were under-invested and over-policed.

With all of that as a backdrop, the Boston Ujima Project came to be in 2017. It hearkens back to even earlier periods. During slavery and in the decades after emancipation, communities of freed, escaped or formerly-enslaved people came together to form mutual aid societies to help cover for burial costs and take care of each other after the death of a family breadwinner. As detailed in Jessica Gordon Nembhard’s “Collective Courage: A History of African American Cooperative Economic Thought and Practice,” those groups evolved into the first Black life insurance companies and some of the first Black-owned banks, like Richmond’s Saint Luke Penny Savings Bank, established under the leadership of Maggie Lena Walker in 1902.

The Boston Ujima Project aims to build on the lessons of those earlier efforts in a few ways. First, rather than a conventional lending institution where borrowers make applications to professionalized loan officers, Ujima spent around three years hashing out its democratic process for lending decisions.

To be eligible for its loan from Ujima, CERO first needed to seek membership in the Ujima Good Business Alliance, which requires a vote of approval by the members of the Boston Ujima Project. Alliance members must go through a certification process that voting members have also approved. Ujima’s voting members must live in Boston and identify as working class and/or as a person of color, or must identify as a working class and/or person of color who has been displaced from Boston. Then, after submitting a business plan that gets evaluated by an investment committee that does include some volunteer professional investors, a majority of Ujima voting members must vote to approve the loan request.

Secondly, in contrast with typical earlier efforts by disinvested or disenfranchised communities to exercise power over capital, the Boston Ujima Project isn’t limiting itself to investing only the capital that exists within its communities. It operates under the assumption that the economy extracts capital from Boston’s working class and communities of color, and therefore it has to provide a mechanism to bring that capital back into those communities, on their terms. That’s why most of the investor dollars that Ujima has in its pooled investment fund come from outside its voting members’ communities, although voting members are also allowed to invest in the fund and earn interest.

It might seem crazy to think that outside investors would be willing to take on the risk of investing in a fund like Boston Ujima Project, which runs itself so differently than most investment funds. But CERO itself actually helped break open that possibility.

CERO emerged out of a collaboration between the Massachusetts Coalition for Occupational Safety and Health and the Boston Workers Alliance, which represent or serve undocumented immigrants, youth, low-wage workers, and formerly incarcerated workers. Also mostly Black and Latino, these are not the kinds of people with much money lying around. According to a study commissioned by the Federal Reserve Bank of Boston, white households in Boston have a median net worth of $247,500, while Black households in Boston have a median net worth of just $8. These two groups formed CERO in response to reports that members were facing discrimination in the job market due to race, language barriers, or criminal records.

The banks CERO approached weren’t interested in lending to a startup, especially one founded by people of color, some of whom were formerly incarcerated. So after launching in 2014, CERO became one of the early examples of investment crowdfunding led by a historically marginalized group of people. Also known as “Reg D” offerings, the same legal and regulatory mechanisms are commonly used by tech startups funded by Silicon Valley venture capital firms or angel investors. Working with advisory firm Cutting Edge Capital, CERO sold non-voting ownership shares to 83 investors, raising a total of $340,000. Others like the East Bay Permanent Real Estate Cooperative and The Drivers Cooperative are now conducting similar offerings to raise investor capital.

“It was amazing,” Luna says. “I’m so grateful for [our investors]. Only one person so far requested [to cash out their investment], to help with an emergency situation. These people put their money here because they wanted to see progress and to see what their money can do in the community.”

It helped expand imaginations in Boston. Ujima took it a step further. Instead of asking investors to invest in one business at a time, it asked investors to put their money into a portfolio of businesses and projects selected by the community. “CERO is a part of Ujima’s origin story,” says Evans. “I really can’t underscore enough this notion of what happens when you have a group of people who decide to think larger than convention and to see possibility outside of convention and tradition.”

As part of its pitch to investors, one of the points Boston Ujima Project makes is the possibility of pairing investments with businesses that reflect larger community organizing priorities and goals of its members.

CERO claims as its birthday October 1 — the same date in 2014 that the Massachusetts state ban on commercial organic waste went into effect. The ban required Massachusetts businesses and institutions that dispose of one ton or more in organic material per week to find a non-landfill solution for disposing of material, which created a market opportunity for CERO. Reducing material going to landfills has long been a priority for environmental justice organizers in Boston and elsewhere.

Procurement contracts from public and large private institutions like hospitals and universities is another major goal for community organizers in Boston and elsewhere. Earlier this year, the Black Economic Council of Massachusetts filed a civil rights complaint against the city of Boston, accusing the city of racial discrimination in its awarding of contracts. Meanwhile, members of the Boston Ujima Project have chipped in as alumni or friends and family of alumni of local universities, pushing for conditions that offer businesses like CERO a more level playing field in competing for contracts.

As CERO business manager Lor Holmes explains, those conditions include breaking out organic waste management into its own contract instead of lumping it in with one overall waste management contract (“If you wanna do food waste recycling right, you have to consider it as a whole different industry,” says Holmes). It also helps to have more representative staff at universities themselves, and applying public pressure from trustees or alumni to support more local and diverse businesses with procurement spending.

“I assumed in 2015 that the little contract was going to be our foot in the door and soon we would be serving all of Northeastern University,” says Holmes. “It took until this year to get the three-year campus wide composting contract and we’re having a fabulous experience that is so much more respectful. Also so much of the management in procurement and facilities is women now. Still very few people of color in leadership but they’re talking the talk, part of what they love about us is we’re a women- and minority-owned business, and that we’re a local business. We’ve been that all along. I think it has more to do with them [changing] than with us.”

CERO may be the first moment of validation for the Boston Ujima Project, but there’s still a chance that it may be the last, too. The people and communities it is trying to serve face racial and other barriers that it isn’t designed to overcome. But even if it fails, there’s the chance that in a generation or sooner, someone else can build on it just as it has built on previous generations. For now, it’s a moment to celebrate.

As Ujima’s Johnny Charles puts it, “there’s an explicit celebration of CERO’s growth and success, but there’s also this quiet celebration like, we knew it would work, to a certain extent.”

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi.

Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.

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Tags: bostonworker cooperativessustainabilitycomposting

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