Community Enterprises
Community enterprises are businesses that put social objectives at the center of their operation. They operate with more than one 'bottom line'. As a business they aim to:
- make and sell products in markets
- cover costs including wages for participating members
- generate profits that can be used to provide social or environmental benefit
Community enterprises involve a number of people and are usually larger than micro-enterprise or self-employment. They have the capacity to make returns to the community as well as to the individuals directly employed.
In many parts of the world community based enterprises are making a major input into local economic development that produces well-being directly.
What are Community Based Enterprises?
Community based enterprises use business to improve the life of a community. They are different from private enterprise because their business activity is undertaken as a means of achieving community benefit, not private gain.
Key characteristics of community enterprises are that they aim to be
- community owned—assets belong to the community and cannot be sold off for private financial gain
- community-led—people who are local stakeholders in the area of benefit play a leading role in the enterprise
- community controlled—the local community is represented on the Board of Directors and makes sure that the enterprise is accountable to the community
- able to generate profits or a surplus that can be re-invested or distributed for community benefit
- socially and environmentally responsible—they tackle social and environmental problems in their area
- financially self-sustaining—or on the way to being so
Community based enterprises are also called social enterprises.
The UK Department of Trade and Industry definition of social enterprise is:
"businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners"
How are community based enterprises different from micro-enterprise?
Micro-enterprises are often small-scale, vulnerable to competition, under-capitalized and unable to generate many jobs. They are usually owned by one proprietor or a single family. If they do make more than a basic living for the owner, the profits are privately accumulated.
Community based enterprises have the potential to be larger scale, generate more jobs and return benefit to the community beyond those directly employed. They can be run as a worker-owned cooperative or as a member-based association.
In many parts of the majority world there is a role for community based social enterprises to help strengthen local economies.