Proposal Summary
The Canadian Worker Co-operative Federation (CWCF or the Federation) aims to strengthen communities and economies by addressing the challenging issue of business succession and transfer as we face substantial economic uncertainty. The Federation recognizes that many retiring business owners struggle to find suitable buyers, leading to potential business closures. With the current economic headwinds, this issue is likely to be exacerbated. As a solution, the CWCF promotes worker co-ops as a sustainable model for ensuring the longevity of small and medium-sized enterprises (SMEs).
The Federation has the experience, skills, and networks to contribute at the scale required. This proposal can aid the Government of Canada in efficiently, effectively, and affordably delivering support to enterprises whose owners, investors, and workers are concerned about business survival and succession.
The Federation’s proposal includes four key elements to address the major disruptions in the Canadian economy:
1) Provide the same $10 million capital gains tax exemption on sales of businesses to worker co-ops as was enacted in 2024 for employee ownership trusts, to level the playing field between these different types of employee ownership.
2) Invest in a dedicated patient capital fund to develop worker co-operatives, building on the success of the Federation’s existing Tenacity Works Investment Fund. This Fund could support business succession conversions to co-operatives. ($70 million for patient capital.)
3) Support SMEs that wish to convert to worker co-operatives as an effective business succession strategy by facilitating the ability of employees and community members to participate in business ownership. ($19 million for technical assistance.)
4) Provide funds for the marketing and promotion of the program using popular culture and other creative means, particularly online. ($2 million to support the creation and dissemination of promotional strategies.)
The funding would be provided over a period of five years. The worker cooperative option will see an increase in demand in the coming years, both because of the “Silver Tsunami” of retiring entrepreneurs in need of an exit plan and with the instability introduced into the economy with the threat and the reality of tariffs. While the tax exemption is one vital step for effectively dealing with the “Silver Tsunami” of retiring entrepreneurs, the current infrastructure for meeting this demand is lacking, and existing social finance supports are not suited to supporting worker cooperatives. The CWCF proposal will allow us to meet this demand head-on, creating jobs, saving SMEs, and building inclusive wealth in communities across the country.