Worker co-op not a waste

Hub re­cy­cling co. suc­ceeds with funds raised from public

Boston Herald - - BIZSMART - By MARIE SZANISZLO — marie.szaniszlo@boston­her­ald.com

Years spent work­ing with Bos­ton’s im­mi­grants and home­less con­vinced Jose­fina Luna of one thing: If they were ever go­ing to find a way out of poverty, they would have to do it them­selves by work­ing to­gether.

In Novem­ber 2013, Luna and a hand­ful of en­trepreneurs from some of the city’s poor­est neigh­bor­hoods founded Co­op­er­a­tive Energy, Re­cy­cling and Or­gan­ics, a worker-owned co-op that aimed to cre­ate green jobs by help­ing busi­nesses com­post to com­ply with a state law re­quir­ing, as of last Oc­to­ber, gro­cery stores and restau­rants dis­pos­ing of one ton or more of food per week to di­vert it from land­fills.

There was one prob­lem: The coop had no money.

“Lenders said we were too big of a risk be­cause we hadn’t been in busi­ness three years and we didn’t have our own cap­i­tal,” said Lor Holmes, CERO’s busi­ness man­ager. “We tried to go to non­profit foun­da­tions, but they didn’t want to give us money ei­ther.”

So the co-op turned to a unique fi­nanc­ing strat­egy, selling shares of stock in their busi­ness through a di­rect public of­fer­ing, with a min­i­mum goal of $100,000.

By June 10, when the DPO ended, CERO had raised more than $30,000 in do­na­tions and another $340,000 from 83 in­vestors, whom the co-op hopes to award an an­nual 4 per­cent div­i­dend.

“So of­ten you hear of com­pa­nies that get tax breaks to lo­cate here, but that later leave,” said Aaron Tanaka, 32, of Roxbury, one of the in­vestors. “A di­rect public of­fer­ing is a way to help the com­mu­nity have shared own­er­ship in a busi­ness, and when it’s paired with a worker-owned model, it’s a way of en­sur­ing that the money stays in the com­mu­nity. It is a risk, but with a great so­cial mis­sion like com­post­ing, it’s a good in­vest­ment.”

Us­ing a 16-foot box truck, CERO picks up more than six tons of food waste per week from cus­tomers in­clud­ing Amer­ica’s Food Bas­ket, North­east­ern Univer­sity and The Daily Ta­ble, and brings it to a Mid­dle­boro com­post­ing fa­cil­ity.

The co-op plans to use the money raised in the DPO to buy a truck that will be able to col­lect more food from more cus­tomers more ef­fi­ciently.

Since Amer­ica’s Food Bas­ket be­gan turn­ing over all of its un­used food to CERO last Septem­ber, the gro­cery chain has re­duced its trash bill by about 12 per­cent, Gen­eral Man­ager Ed­win Polanco said.

“We used to put ev­ery­thing in the trash,” Polanco said. “Now, they pick it up on time, they’re a lo­cal com­pany, and we’re help­ing them grow.” David Ham­mer, ex­ec­u­tive di­rec­tor at co­op­er­a­tive-ad­viser ICA Group in Brook­line, said worker co-ops have been around for decades. Equal Ex­change, a Bay State co-op and fair-trade cof­fee im­porter, re­cently raised $4.1 mil­lion from 136 in­vestors.

“We see a huge need for more worker co-ops, both in Mas­sachusetts and across the coun­try,” Ham­mer said. “CERO has cap­tured a mar­ket that is poised for growth. And they’ve put a lot of time and energy — sweat eq­uity — into the busi­ness be­cause they own it.”

STAFF PHOTOS BY TED FITZGER­ALD

PICK­ING UP: Jose­fina Luna of CERO Co­op­er­a­tive seen at Amer­ica’s Food Bas­ket in Hyde Park where her food re­cy­cling com­pany col­lects food waste. The com­pany raised $340,000 from 83 in­vestors and $30,000 in do­na­tions from a di­rect public of­fer­ing.

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