A toolkit is only as good and useful as the institution that deploys it. The preceding chapters specified the instruments and the sources that fund them; this one turns to the state’s own institutional capacity: where the program lives, who runs it, and how the programs are implemented. Institutional capacity is itself a form of industrial policy, and the most carefully designed program will accomplish nothing if no one is charged with running it and set up for success.87 The authorized-but-never-capitalized funds that recur throughout this playbook are partly a capitalization failure, but they are also a state capacity failure: the statutes that authorized them named no owner, built no team, and assigned the work of implementation to no one.
Program placement and housing the toolkit
The employee ownership finance toolkit does not naturally live in a single place. Its instruments belong in different parts of state government because each instrument requires capacities that different agencies already hold. The transaction-level tools and credit enhancements are lending instruments, and their natural home is the state development finance agency, which already has a balance sheet, underwriting and servicing capacity, board governance, and standing relationships with lenders alongside which these programs will work. The fund-of-funds is an investment vehicle deployed from the state’s portfolio under fiduciary obligations, so its natural home is with the public investment officer (usually the treasurer) who controls that portfolio. Linked deposits usually belong with the treasurer for the same reason. And the tax incentives are enacted by the legislature and administered by a state’s revenue department. The feasibility study assistance, outreach, and education that surround the financing tools and build a pipeline for employee ownership belong with a state employee ownership center (in or out of government) and/or a dedicated state office.
Because no single agency alone owns and administers the toolkit laid out above, the tools risk being underutilized or unevenly deployed without a role or team responsible for making them function as a single program that a business or lender can navigate. This is the case for a coordinating role inside of state government to steward a statewide employee ownership strategy.
Table 10
The state development finance toolkit by agency
| Tool | Ideal placement | Rationale |
|---|---|---|
| Revolving loan fund; credit enhancement | Development finance agency | Balance sheet, underwriting, board governance, bank relationships |
| Fund-of-funds; linked deposits | State treasurer | Controls the investment portfolio and cash deposits; fiduciary mandate; private markets staff |
| Tax incentives | Legislature (enacts); revenue department (administers) | Taxing authority |
| Technical assistance, outreach, education | State employee ownership center or office | Field-facing technical assistance capacity |
Currently, states with established or growing employee ownership programs place the coordination, outreach, and tax functions in an economic development department or a dedicated office; the financing tools generally live with the state’s development finance agency. Consider the following examples:
- Colorado placed its Employee Ownership Office and advisory commission inside of the state’s Office of Economic Development and International Trade, which is functionally Colorado’s development finance agency.88
- Washington’s 2023 legislation established the Washington Employee Ownership Program (WA-EOP) at the state’s Department of Commerce, with a director, a bipartisan advisory commission, a feasibility assessment and implementation tax credit, and an authorized revolving loan fund contingent on federal capital. Funded by annual appropriation, the program lost its funding in the 2025 budget and ended on June 30, 2025; the statute remains, subject to appropriation.89
- Massachusetts split the functions, creating a legislatively authorized state center for employee ownership inside of its business development office, with the authorized revolving loan fund at MassDevelopment.90
- New Jersey’s employee ownership programs, including feasibility study reimbursements, an Advisory Committee on Employee Ownership, and the Employee Ownership Revolving Loan Fund, all enacted in 2026, are housed in the New Jersey Economic Development Authority (NJEDA).91
Governance and leadership
As the program placements above show, governance coheres the disparate pieces of the state development finance toolkit and holds them accountable. Two authorities in particular are best suited to do that work.
The first is a Director of Employee Ownership (or an office led by the director), which is a designated, accountable official within state government (ideally at the development finance agency) whose job is coordinating the toolkit and elevating the profile of employee ownership within the state. The Director serves as the state’s single point of contact for a business exploring employee ownership, administers the financing programs, coordinates across other state agencies that hold pieces of the toolkit, and ultimately drives the employee ownership pipeline the tools exist to grow. Because the success of the toolkit in large part rests on the Director’s remit, the role must have real authority to administer and coordinate programs, not just a mandate to promote employee ownership through outreach and education (and to the extent the latter is a function of the role, it ought to be in close coordination with the state’s center for employee ownership where one exists).
The second authority is a standing advisory commission, whose purpose is to advise the Director/office, elevate the voices of key employee ownership stakeholders (including employee owners themselves) in decision-making and design, and keep the program durable across administrations. A commission of practitioners, lenders, employee owners, advisors, researchers, and other relevant stakeholders equips the program with expertise it would otherwise lack and a constituency that outlasts any single Director or administration’s enthusiasm. The exact composition of a commission will vary from state to state, but Massachusetts and Washington are instructive in how they constituted theirs: a mix of representatives from state government, business associations, labor unions, worker cooperatives, ESOPs, academia, and economic development.92 Such a roster balances a range of constituencies, including the government officials whose agencies hold pieces of the toolkit and the employee ownership field that grounds the program in the realities of employee ownership. The commission’s value is strategic and should focus on advising on state strategy and the objectives of the program, as opposed to being responsible for approving elements of the program.
Operating model
Once a state settles on its program placement and approach to governance, it must make a series of decisions as to its operating model and how much to keep in-house or contract out to vendors: who leads the program, who underwrites, who services loans, who manages a fund-of-funds, and who administers technical assistance, outreach, and education. Table 11 considers the conditions under which a state should lean one way or another.
Table 11
Operating model considerations
| Function | Lean in-house when | Contract or partner when |
|---|---|---|
| Program leadership (the Director) | Always: this is a necessary state role | |
| Underwriting | The agency already lends, has expertise, and deal volume justifies a team | New to the asset class or low volume (bring on an external fund manager) |
| Servicing | Volume justifies dedicated staff | Small fund and/or new to the asset class |
| Fund management (fund-of-funds) | Always external (state as the allocator, not manager) | |
| Feasibility, outreach, education | The office has capacity and lacks a state center for employee ownership | A capable nonprofit or university center already exists |
As the table shows, the operational model should roughly track the scale and experience of a given program. A small program may find itself contracting out much of the functions of underwriting and servicing and staff only a Director, while a growing one may build more functions in-house as volume justifies more resources. Staff capacity must be funded and housed in state government. The lesson of the authorized-but-not-capitalized RLF is germane here: a program that finally capitalizes its lending but fails to hire and pay necessary talent will lend either poorly or not at all.
Sources
Source numbering follows the full playbook.
- Julien Rosenbloom, Personnel Is (Industrial) Policy (Washington, DC: Lafayette Square Institute, February 2026).
- Merrit Stüven and Matt Helmer, How the Centennial State Is Leading on Employee Ownership: A Profile of Colorado’s Employee Ownership Office, Aspen Institute Economic Opportunities Program (May 2023).
- Ch. 392, Laws of 2023 (Washington), codified at Revised Code of Washington §§ 43.330.590–.595 (the Washington Employee Ownership Program, its director and commission, and the revolving loan program conditioned on federal funding); Revised Code of Washington § 82.04.4488 (the conversion tax credit); ch. 366, Laws of 2025 (SHB 2047) (eliminating program funding, conditioning the program on appropriation, and sunsetting the credit).
- Massachusetts General Laws ch. 23D, § 16 (the employee ownership revolving loan fund, administered by MassDevelopment); Massachusetts Center for Employee Ownership, operating within the Massachusetts Office of Business Development.
- New Jersey Economic Development Authority employee ownership technical assistance programming; N.J. P.L.2026, c.83 (S4218/A5016) (the Employee Ownership Transition Program, Advisory Committee on Employee Ownership, and Employee Ownership Revolving Loan Fund, each housed at NJEDA).
- Massachusetts General Laws ch. 23D, § 16; ch. 392, Laws of 2023 (Washington), codified at Revised Code of Washington § 43.330.595 (commission membership).