The Future of Caregiving

The Fund for Jobs Worth Owning creates quality jobs in industries like home care and child care that employ significant numbers of minority and low-income workers. Worker ownership offers a path for economic advancement, respect and autonomy. Worker-owned businesses also keep vital jobs rooted in local communities and support crucial services. By making high quality and consistent elder and child care available, people can go to work with the confidence and knowledge that their loved ones are receiving quality care.

Learn how we invest in worker-owned caregiving cooperatives.

Financing for Home Care & Child Care Cooperatives

Cooperative Care

A primary example of the positive impact of our Fund is our first loan, made to Cooperative Care, a 35-member worker-owned home care cooperative in rural Wisconsin that has operated successfully for 20 years. Cooperative Care serves a sparsely populated market with a low-income client base (the majority receive Medicaid-sponsored care). In some counties they are the only provider of home-based care for seniors and the disabled on public pay programs.

The Fund for Jobs Worth Owning received an emergency call in 2019 to refinance a line of credit when a local bank under new management unexpectedly canceled the loan that had been in place for a decade. As a major provider of care services to low income seniors, Cooperative Care routinely uses a line of credit to bridge the often 60-90 day period between when they provide a service and when the state pays for the care. Without a line of credit, the co-op’s business was in jeopardy. A flexible term loan from FJWO covered the back balance due and other working capital needs. Technical assistance from the FJWO team helped co-op leaders with business planning to get them back to profitability. With their old loan paid off and a new business strategy in place, the co-op was able to renegotiate a new line of credit with the local bank and regain stable financial footing.

Heartsong Homecare Co-op

Evidence shows that worker ownership makes a difference in the home care sector. In an industry plagued with high turnover and low wages, worker-owned home care cooperatives have about half the turnover rate of other firms, and pay almost $2 an hour more than comparable firms that are not cooperatively owned. Lower turnover means better care for clients. Higher wages, plus the other benefits of a cooperative such as having a say in what goes on, mean higher quality jobs for caregivers.

Yet, as beneficial as employee-owned businesses are for their workers and communities, they remain difficult to finance. Low-wage workers do not typically have the wealth to purchase stock or offer collateral themselves, and service-sector industries have very little hard collateral to offer a traditional lender. Loans from the Fund for Jobs Worth Owning are flexible and tailored to fill this gap, providing a crucial part of the financing needed to stabilize and grow these valuable businesses.

A recent example is Heartsong Homecare Cooperative. Encouraged by the success of the four other home care cooperatives currently operating in Washington State, a committed group of caregivers in eastern Washington wanted to start their own home care cooperatives to serve rural Skagit and Island counties. Heartsong came to FJWO with a strong business plan and experienced management team as well as a core group of caregivers ready to serve the community. The workers only needed start-up capital to get off the ground, provide those early-stage funds to pay caregivers, staff the office, and invest in marketing to build the business.

FJWO partnered with two other community-based lenders to put together the deal. Since equity was limited, all of the lenders stepped up to offer payment flexibility, including 6-12 months of interest-only payments. FJWO did this as well, but also added an extra element of flexibility to the loan. Given the uncertain nature of a start-up business in a new market, the FJWO gave the borrower the option to defer all payments of principal and interest for up to two years. If their business is ready, the co-op has the option to lower their interest rate by beginning principal payments before the deferral period is over, but exercising that option is entirely up to them. This aspect of the loan gives Heartsong leaders breathing room to manage cash flow, make necessary adjustments to their business plan, and fund capital needs that might arise during those crucial early months.

Many lenders require personal guarantees for small business loans like this. But for a collaboratively-owned business like a cooperative—particularly one owned by low-wage workers—a personal guarantee is not the best way to make sure a loan is repaid. Instead, FJWO substitutes a disciplined system of ongoing reporting of key business metrics to signal when early intervention is needed, and help us work with borrowers to remain on track.

The Home Care Workers Purpose Trust

In Washington State, a private joint employer of 38,000+ Individual Provider home care workers serves more than 70% of the public home care market. Consumer Direct Care Washington (CDWA) promotes quality jobs and protects the rights of those home care workers. The Individual Provider program’s workforce—those who benefit from these high-road practices—is nearly 90% women and disproportionately people of color.

That didn’t just happen. The Fund for Jobs Worth Owning (FJWO) made a big bet in July 2020 to finance CDWA, an enterprise set to become the largest worker-centered business in the United States. CDWA is a game-changing new project of the Home Care Workers Purpose Trust, which was created to take ownership interests in companies that administer large-scale home care programs, with the goal of bringing the worker-centered home care model of Cooperative Home Care Associates to providers nationwide. The Trust is a collaboration between the ICA Group, the oldest national organization dedicated to the development of worker cooperatives, Cooperative Home Care Associates (CHCA), the largest worker cooperative in the country, and the Paraprofessional Healthcare Institute (PHI), a national nonprofit working to transform eldercare and disability services. Through its ownership stake and resulting governance role, the Trust ensures that CDWA will always adhere to its purpose of promoting quality jobs for and protecting the rights of home care workers.

Projects like the Trust are extremely difficult to finance, yet have the potential for systemic, lasting change. As the joint venture in Washington is the Trust’s first project, there were no assets to back or help capitalize the loan. The Trust required flexible, deferred financing options that would not be available through a traditional bank or even a friendly loan fund based on the risk level. Fortunately, the Fund for Jobs Worth Owning was there to help. The investment is an extension of FJWO and ICA’s strategy for building large worker-centered companies and infrastructure for scaling employee ownership in the home care industry.

The Fund for Jobs Worth Owning is the leading expert in providing financing strategies for worker-centered business.

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The Fund for Jobs Worth Owning | (617) 383-8192
136 West Street #1, Northampton, MA 01060
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