PEOPLE MEETING COMMON ECONOMIC, SOCIAL AND CULTURAL NEEDS TOGETHER

Community-owned and community buyouts

What is a community-owned co-op?

Community co-operatives are businesses owned by people who live in a particular geographical area. Membership is open to the public. The co-operative can be for-profit, not-for-profit or charitable, but always exists to provide goods and services to its members on an equitable basis.

In order to maintain equity, community-owned co-ops operate on the basis of one member, one vote.

What are community buyouts?

A community buyout is when a group within the community works together to purchase and manage an existing business or service. This is in contrast to when a community establishes an enterprise to develop a new business or service.

The motivation for a community buyout may be the closure of an essential service: rural and regional communities, in particular, depend on small local businesses, such as the local shop, garage or post office. The closure of these businesses can threaten the viability of these communities, creating a catalyst for the community to come together to purchase and operate the service.

Otherwise, dissatisfaction with how an existing business or service is run may be the motivation for a community group to consider taking ownership.

Community buyouts require the same attention to business planning, community consultation and governance in their development as other business ventures.

What are the benefits of community ownership?

For local retail operation, co-op ownership by the local community means greater community influence over operations and greater incentive for community involvement as customers.

Community-owned co-operatives share any profits equitably with members (for example, dividends on shares, rebates on purchases) and community (for example, sponsorships).

Wealth is retained in the local area, rather than adding to the profits of national or internationally-owned corporates.

Community owned businesses tend to be more sustainable (less likely to fail than traditionally owned businesses) and are able to take a longer-term view as there are no external shareholders requiring short-term returns. Their driving purpose is to maintain the service for members and the community.

When are community-owned co-ops and community buyouts appropriate?

The development of a new community-owned co-op or the community buyout of an existing business both require sufficient community support and organisation. Community members may need to be persuaded that the plan has potential to succeed. Organising a community meeting to share information and explore different options is a good starting point to see whether there is support for the idea.

How to start a community-owned co-op

Once you have a group of interested people in the community, a good first step in starting a community-owned co-operative is establishing a steering group that can refine your business idea and investigate feasibility, and if there is a feasible option, undertake business planning.

This group can keep the wider community informed on progress and seek feedback from the community.

For the next stages on starting a co-operative, see Setting up a co-op. The BCCM supports new co-operatives, providing advice, education and referrals. We deliver workshops to help newly-forming co-operatives to understand the potential benefits and the legal requirements of the co-operative structure in more detail.

Resources/further reading

For further information or support in exploring a community co-op model, contact BCCM.

Examples

Hepburn Wind logo

Hepburn Wind

Hepburn Wind is the owner and operator of Australia’s first community-owned wind farm at Leonards Hill, Victoria. The  wind farm hosts two turbines that produce enough clean energy for over 2,000 homes. The co-op is owned by approximately 2,000 members, who raised $10 million to fund the construction and operation of the wind farm.

The co-operative also works to raise community awareness of the benefits of using renewable energy.

Since 2011, Hepburn Wind has given $250,000 to community organisations, has begun paying out dividends to members, and prevented 90,000 tonnes of carbon emissions.

Year established: 2007

Type: Community-Owned and Community Buyouts

Lyttleton Stores Co-operative

Lyttleton Stores Co-operative

Lyttleton Stores Co-operative is a not-for-profit community enterprise in Lawson in the Blue Mountains. Its mission is to connect customers, makers, and growers, encouraging conscious, ethical, local economies as well as transitioning to a no-waste, lower energy future.

The co-operative started out as a family partnership in 2015 with the intention to become a co-operative as its community grew. This goal was reached in 2018, with a crowdfunding campaign raising more than $50,000 to kickstart operations under the new co-op structure.

Lyttleton Stores Co-operative is a non-distributing consumer co-op, where profits are not distributed among members, but rather invested back into the co-op and wider community.

Year established: 2015

Type: Community-Owned and Community Buyouts

Sea Lake and District Co-op logo

Sea Lake and District Co-op

In October 2015, a co-operative was formed in Sea Lake, Victoria, to re-open the local hardware store.  A hundred people out of a population of 616 turned up at the initial public meeting to float the idea of a co-operative.

60 founding members of the co-operative raised $200,000 in shares. The same community bought out a local hotel in 2019: The Royal Hotel Co-operative.

Year established: 2015

Type: Community-Owned and Community Buyouts

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