How Community Ownership is Shaping Businesses

Whether we’re talking about giving local communities access to good food at affordable prices while protecting the environment or looking for ways to provide much-needed local services, community ownership and other cooperative projects may offer a solution.

What is community ownership?

Community ownership – sometimes referred to as “democratic economy” – is when a business, asset or organisation is owned and controlled in a way that allows a community to influence its operation or use and enjoy the benefits arising from that entity.

This could include – but isn’t limited to – food sharing schemes, renewable energy schemes, housing projects, community hubs, workspaces, shops, markets, entertainment venues (e.g. theatres, skate parks, pubs) and more.

According to Co-operatives UK, there are currently around three million cooperatives around the world with 1.2 billion members.

Replacing current, unsustainable models

If we use the UK as an example, many people are now living in towns and cities where the high streets are more like ghost towns than thriving centres that serve the local community.

The COVID-19 pandemic has accelerated this decline.

It’s clear that the old model of the high street no longer works.

Online shopping, concerns about travelling, absentee landlords with no local connections who are happy to cut their losses and walk away, and lack of transparency about who owns what are just a few of the reasons behind this.

If there is to be any hope for reviving or reinventing the high street, then we will need to adopt a different model – one that puts people before profits.

The benefits of community ownership

This is where community ownership comes into its own.

Generally speaking, most people care passionately about where they live and they want to see their local area bustling with promise and opportunity.

Community ownership taps into this passion.

People come together to create a service or facility that is completely tailored to their needs as members of the local community.

Any income that is generated from the project is then reinvested locally, providing more jobs, training and opportunities. In this way, community ownership can reverse economic decline and attract investment.

Another benefit is that people tend to be much more committed to making community ownership projects work because they personally stand to benefit from success or lose a valuable resource if the project fails.

Community ownership projects are often stable, sustainable and well-maintained due to a shared sense of community pride, confidence and stewardship.

When people feel they have a meaningful stake in how a business or asset is developed, they’re more likely to volunteer, attend meetings, campaign for or buy from that entity.

They’re also more likely to look for ways to reduce running costs, such as investing in greater energy efficiency.

How community ownership schemes work

Community ownership schemes can work in a number of different ways.

For example, people can raise the finance to invest through a combination of grants and loans and then run an organisation directly as a community enterprise. This is known as direct ownership without shares.

Alternatively, a community enterprise might be funded by inviting members of the local community to purchase shares. Again, the community enterprise would directly run the organisation (direct ownership via community shares).

In other cases, a community takes over an asset, funding it via shares, loans or other financial means, but licenses out the running of the business to someone else (indirect ownership).

Challenges facing community ownership schemes

Of course, each of these schemes has its pros and cons.

One major challenge community ownership schemes can face is raising finance quickly. Identifying and applying for suitable grants, in particular, can be a long process, impacting how quickly community enterprises can react to new opportunities in comparison to private investors with ready capital.

Once finance has been raised, there’s the challenge of keeping a large number of investors happy and ensuring that the diversity and interests of the investors accurately reflect the local community itself.

Community enterprises also need to consider whether they have active members with the operational and/or admin skills to successfully run a business or liaise with local authorities, for example.

If they bring experts in to support them, it’s crucial that the experts act as mentors rather than overriding the less experienced voices within the cooperative.

A powerful tool to empower local people

Even with the challenges mentioned above, community ownership is increasingly being recognised as a powerful tool that can empower local people and contribute to inclusive, sustainable economic development.

It gives people a direct say – and stake – in their communities and ensures that any new businesses or services reflect a need that local people want to see fulfilled.

We can see a growing number of community ownership schemes and projects throughout the world.

More and more people recognise that community ownership of land rights, for example, lowers rates of deforestation, holds more biodiversity and benefits a greater number of people than land managed by private or public entities.

Want to find out more about community/democratic ownership?

Community ownership schemes and opportunities vary throughout the world but we’ve put together a few initial resources and examples of schemes as a starting point if you’d like to know more:

• Stir to Action
• Co-operatives UK
• Co-op News
• La Via Campesina
• Pachamama Coffee
• Self-Employed Women’s Association

Are you involved with a community ownership project? We’d love to hear from you about what it is and how it’s helped your local community.