Traditionally, there have been very few avenues for cooperatives to access financing. The Detroit Community Wealth Fund (DCWF) wants to change that.
DCWF offers loans to cooperative businesses in Detroit, while providing technical support along the way. Its loans are non-extractive, meaning it doesn’t ask for personal assets, only a portion of monthly profits until the loan is repaid. It also doesn’t look at members’ credit scores prior to approval, but instead works with them to develop a sound business plan.
Once repaid, the cooperative is then able to participate in DCWF’s process, helping to choose which other cooperatives get loans.
“We really believe in democratic financing,” says Margo Dalal, executive director of DCWF. “That’s because we believe in community control.”
DCWF will also prioritize businesses from marginalized communities — cooperatives comprised of low-income people of color. “We believe in needs-based community development,” Dalal says. “What does the community want to see in its neighborhood? What do they need? And how can we help develop a business that meets that need?”
So far, the fund has given a loan to Cleaning in Action, an all-woman, all-minority cleaning cooperative in southwest Detroit. The $25,000 loan went towards hiring a marketing specialist as well as startup capital to cover fixed costs for a year. Cleaning in Action has already repaid the loan.
DCWF is funded through foundation support and The Peer Network, a national coalition of local, co-op financiers. Funds from the network’s Financial Cooperative are also distributed democratically.
Beyond financing projects, the DCWF will also look to build partnerships in the co-op economy and educate the city about the benefits of the democratic business model.
“We really believe that everyone has the ability to be an entrepreneur,” Dalal says. “But wealth and the ability to be financed haven’t been offered to most Detroiters.”
Cooperatives might be a way to change that.