How US Social Cooperative Laws Could Accelerate Co-op Development

The US worker cooperative movement is surging. According to the 2021 Worker Cooperative State of the Sector report, there were 612 worker co-ops in the United States and hundreds more startups underway. Less noticed is that nonprofits have helped to make much of this rapid growth possible.

Following the Great Recession, innovative nonprofits have increasingly stepped up to incubate worker cooperatives in marginalized communities by providing organizing assistance, winning funding, and dedicating staff and resources to launching and sustaining worker cooperatives in their early stages.

In light of these developments, this article explores the role of US nonprofit incubators of worker cooperatives and argues that many of these co-op incubation projects resemble the global model of “social cooperatives”—cooperatives organized explicitly to provide services and economic opportunities to disadvantaged populations, and which often are allowed preferential tax rates.

Although the social cooperative model is not legally recognized in the United States, nonprofit co-op incubators have already laid the foundation for establishing such a model, which could be treated under tax law similarly to a tax-exempt 501c3 nonprofit.