Ownership Structures

Throughout this course, one idea has kept returning: ownership decides where value goes. Two enterprises can do exactly the same work, and one can send its profits away while the other keeps them at home. The difference is who owns it.

This lesson introduces the main ownership structures community enterprises use, what each is good for, and how to choose. It is a starting point, not legal advice. The right structure depends on your situation, and you should get legal and tax advice before you set one up.

Why ownership matters

Ownership answers three questions: who decides, who earns and who carries the risk.

When an enterprise is owned outside the community, decisions about hiring, investment and closure are made elsewhere, and profits flow elsewhere. When it is owned by the community, or shared with it, those decisions are made with local interests in mind, and profits can be reinvested at home.

In a community forest, local ownership can allow timber revenue to fund projects chosen by the community. Same trees, different owner, different result.

Common ownership structures

Nation-owned enterprise. A Nation may own an enterprise through a structure chosen under its own governance and the applicable legal framework. Clarify how ownership decisions, operational management, accountability and benefit distribution will work.

Municipal or public enterprise. Local governments can own or operate services directly, or through a corporation or agency. The City of Surrey’s organics-to-energy system and Gibsons’ food waste program are public services run for residents.

Co-operative. A business owned and controlled by its members, who might be workers, customers, producers or community members. Each member usually has one vote. Co-operatives keep ownership broad and local. Vancity is a large example.

Non-profit or social enterprise. An organization that earns revenue but reinvests all of it in its mission rather than paying owners. Many reuse stores and training enterprises take this form.

Charity-owned enterprise. A charity owns a business and uses its profits for charitable purposes. On Fogo Island in Newfoundland, the charity Shorefast runs the Fogo Island Inn for the community, and its profits are reinvested in the island.

Partnership or joint venture. Two or more parties own an enterprise together, such as a Nation and a private operator, or a municipality and a company. Partnerships combine local ownership with outside expertise or capital. The key is a fair agreement about control, profits and what happens when things change.

Privately owned with community benefit. A private business can still serve community goals through local hiring, local purchasing, benefit agreements or a community share. This is weaker than community ownership, but it is common and can be a starting point.

Governance makes ownership work

Ownership on paper means little without good governance. Governance is how decisions are made: who sits on the board, what they decide, how they are accountable and how conflicts are handled.

Good governance for a community enterprise usually includes:

• a clear purpose written into its founding documents
• a board with the right mix of community voice and business skills
• separation between the enterprise and day-to-day politics
• regular, transparent reporting to the owners and the community
• clear rules for how profits are used and how decisions are made

Clear governance helps an enterprise maintain accountability as it grows. Define the decisions reserved for owners, the authority delegated to management and the information each group needs.

Choosing a structure

To choose, ask five questions.

• Who should control it? A Nation, a municipality, members, a charity or a partnership?
• Where should the profits go? To the owners, the community, a fund or the mission?
• How will it be financed? Some structures can take investment more easily than others.
• What expertise is needed? If you need an outside operator, a partnership may make sense.
• What will last? Choose a structure that will still make sense in ten or twenty years.

There is no perfect answer. Many communities start simple and change structure as the enterprise grows.

Honest limits

Ownership structures have legal, tax and liability consequences. A structure that suits one community may not suit another. Get professional advice before you set one up, especially where partners, investors or a Nation’s assets are involved. Community ownership also brings responsibility: owners carry the risk as well as the reward.