Challenges

Scalability, Worker Issues

Location

Pennsylvania

Stakeholders

Businesses, Nonprofits

Beneficiaries

Job Seekers, Children, Parents

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Overview

Childspace, a Philadelphia nonprofit childcare chain, was converted into an employee-owned cooperative, securing care for 200+ families while cutting staff turnover in half.

Key Impact Metrics

  • 200+
    families served
  • 50%
    lower turnover than industry average
  • ~$545K
    total equity dividend since solution’s inception

Problem

Childcare business owners often lack succession plans, threatening their longevity. In this case, Childspace faced a potential closure due to this problem. Childspace, like many childcare centers, struggled to find buyers willing to maintain the quality, values, and community focus of their center. There was a risk that selling to external entities could lead to changes in staff, reduced care quality, or loss of the center’s unique identity.

Solution

With support from The ICA Group—a nonprofit that promotes cooperative business models—Childspace transitioned to employee ownership in 1988. It later restructured as an Employee Stock Ownership Plan (ESOP), a benefit program that grants workers ownership through allocated company shares. This model enables employees to build equity over time, often contributing to their retirement savings. Today, the center is collectively owned by its employees, preserving its legacy, values, and high standards of care. By giving workers a stake in the business, the model fosters empowerment, shared decision-making, and long-term wealth-building.

Results

  • Beneficiary Impact200 families served
  • Employee Impact$14 average wage per worker
  • Financial Results$10,900 in equity per employee-owner since program’s inception

Replication Tips

  • Seek buy-in from employees early, ensuring they see value in governance, voice, and long-term job security.
  • Structure the transition with shared equity or hybrid models (e.g., ESOP-to-co-op) to match workforce comfort levels.
  • Use technical assistance nonprofits (like ICA Group) to support worker buyouts, financing, and governance training.

Suggested Implementation Timeline

~12-18 months

Sources