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Grupo de Cooperativas de las Indias

What are “community companies” and how are they organized?

Family businesses, common structure companies, kibbutzes… community companies take almost as many forms as the communities that sustain them. However, the common elements are stronger than the differences.

inventingourlifeYesterday, after making an argument about why to create a community company, we were asked in the comments for the manuals for this operational model. Before that, we should define the concept a little more, and understand the main ways it can be organized.

What is a “community company?”

A “community company” is a market-oriented economic structure that gives a community a way to develop its autonomy. What distiguishes it from other kinds of businesses is that it’s not economic activity that drives the people who work together to develop fairly strong community relationships. Just the opposite, it’s about a community, a set of people that know each other and share a common understanding as peers, who form a business and direct it according to community interests.

Kinds of community companies

It can be a cooperative, a foundation-business (only in Switzerland), an LLC, or a corporation. Our experience tells us that corporations come with greater obstacles and insecurity for the development of a community business. In fact, our favorite form is the cooperative, both because it regulates the member entry and exit mechanisms in a much simpler way without adding incentives to potential conflicts, and because it allows up to 30% of “social expenses” to be tax-free as “funds for training and the promotion of cooperativism.” [only applies in Spain — translator] But, obviously, in each case, the choice will depend on the available legal structures,the organizational priorities, and above all, on the relationship with property each community wants to have.

The relationship between property and community

There are basically three kinds of community companies:

  1. Common structure company. This is the most lax model, and is normally restricted to liberal professions and merchants. The members share certain structures equally, as well as commercial agendas and information, and sometimes price policies; they develop a common image and strategy for external purposes, and mechanisms for financing and solidarity between them. Their billing is divided into two parts: individual, and what’s held in common in the form of payment for common services. The classic example would be a cooperative lawyers’ office, or a small clinic that belonged to the doctors that work there, but also a cooperative of software developers who share a house and/or offices. What’s different about these cases is that the amount of the collective appropriation dedicated to common structures and causes generally exceeds half of the earnings. The company is, in the end, a form of savings and collective investment. In fact, it’s relatively common to go from such a company to a kibbutz, as well as kibbutz members leaving to start a company like this.
  2. Community family business. Its demos — those who have decision-making power — is generally made up of the members of a generational cohort (a group of brothers/sisters, and, in many cases, their partners) which, over time, opens up to some of their children and perhaps some collaborator. Normally, there’s some confusion about assets: all properties belong to the family business, which holds the collective savings together.In these businesses, the partners, the more-or-less blood relatives, usually have a salaried relationship with their own business, all making about the same salary.
  3. Kibbutz. The word kibbutz means “community” in Hebrew. The ties between the original kibbutz movement (which was basically agrarian) and Israeli nationalism meant that, as of 1948, it enjoyed specific and highly favorable legislation. Kibbutzim were originally Israeli, agrarian, and rural, but in Israel itself, they evolved towards industry and services when the first “urban kibbutzim” emerged, and the most restrictive internal rules were reformed. Also, the model was extended beyond the ideological and geographical environment of the Zionism that gave birth to it. Today, the kibbutz form exists around the world, linked to all manner of movements: from Catholic and Protestant communities to German anarchist communities to English or US ecovillages. It’s calculated that more than two million people live in organizations of the kibbutz type.A kibbutz is a cooperative and a community of free association(which is to say, its members are not based on previous family relationships, but on prior processes of deliberation and trust) managed by assemblies in which shared savings are maximized as an asset of the cooperative. The members generally don’t have a salary, just a small advance on surpluses that has to let them cover their “personal expenses,” which are usually minimal, since in a kibbutz, housing, daily food, work tools, and transportation are shared.

    So, kibbutzim are quite resilient, and usually have hefty surplus accounts — since they don’t distribute more than a minimum among the members — of which a substantial part is dedicated to actions in their surroundings (training, promoting new cooperatives, social insurance, etc.)

The foundations of a community company

We could summarize the common elements of these three forms in three points:

  1. The origin is a conversation, a deliberation (and, as such, a certain kind of professional or ideological knowledge) within the community. The structure is formed as part of that process, with the idea of securing it and giving it autonomy.
  2. Economically, there exist different levels of confusion about assets, but, above all, a clear renunciation of the totally individual appropriation of the surplus characteristic of the classic capitalist business.
  3. Management is “flat,” with different kinds of assemblies that prize consensus over voting, even though there are normally elected figures who are in charge of representing the company to the outside world, and, at certain times, may have decision-making ability in the absence of consensus in an urgent situation.

But beyond this anatomy, surely what best explains the spirit and the daily life of community companies is the famous phrase from “Islands in the Net“:

We don’t have jobs. Just things to do and people who do them.

Translated by Steve Herrick from the original (in Spanish).

«What are “community companies” and how are they organized?» recibió 0 desde que se publicó el jueves 24 de enero de 2013 . Si te ha gustado este post quizá te gusten otros posts escritos por David de Ugarte.

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