By encouraging widespread involvement from their local community members, community co-ops play a really important role in helping to overcome issues like social isolation and loneliness, which can be prevalent, particularly in rural areas. Community co-operatives are set up on a one member, one vote basis, rather than one share, one vote. This is important because it means that all members have an equal say in how the co-operative is run, regardless of how many shares they’ve bought or how much money they’ve invested. In this way, they are truly democratic forms of business.
People choose to set up community co-ops for a variety of reasons, from safeguarding local services which may be under threat of closure, like the village shop or local pub, to wanting to establish a new service that meets the needs of local people. In all cases, the result is usually a thriving local hub of activity which meets a broad range of social needs.
Before joining the Institute for Solidarity Economics (now the Solidarity Economy Association), I spent the previous five years working for rural communities with the Plunkett Foundation. The Foundation supports the establishment of community co-operatives, businesses which trade primarily for the benefit of their community. Controlled by the community themselves, they have open and voluntary membership and, crucially, they encourage people to get involved – either by becoming a member, or by volunteering time or getting involved in another way.
Here are 14 steps you can use to set up a cooperative in your community. An infographic version of this guide is included at the end of this article.
Step 1: Contact a support organization
Setting up a community cooperative can be daunting but the great news is that there are experienced organizations out there ready to help. In the UK, Cooperatives UK and the aforementioned Plunkett Foundation are two examples, and many others have a range of support and advice to offer. Contact them first to find out what help is available.
Step 2: Form a working group
A committee is required to take on the responsibility of managing and leading your community group to set up your community co-op. It’s effectively the management group of an unincorporated organization.
Step 3: Consider your vision and how best to explain what you are trying to do
Your committee will need to have clear aims and objectives from the outset along with defined roles and responsibilities.
Step 4: Identify and consult with your community
By consulting with the immediate community and surrounding area you will be able to gauge the level of support there is for the project. This will also help you establish whether the community is willing to invest in the project and, if it is, how much.
By consulting with the wider community you are creating the opportunity to get feedback on your ideas and the inclusion of new ideas not yet considered. This will also give you the opportunity to identify people with relevant skills to get involved. Questionnaires and public meetings are good ways to consult with the community. Remember to share your results with everyone.
Step 5: Visit other enterprises to get inspiration
Talk to people who have already gone through the process and learn from them about what — and what not — to do.
Step 6: Review original plans and determine whether to proceed
Do any changes need to be made? Now that you have more information, think tactically about potential pitfalls and adjust as necessary.
Step 7: Formalize your working group
Committees should consist of a minimum of three people and a maximum of 12. At the very least, a committee should consist of a Chair, Secretary and Treasurer. It is also good practice to have four to six others with specific roles to lead sub-committees with experience such as marketing, fundraising and business planning.
Step 8: Research and decide on your legal structure
What kind of organization are you? Would incorporation be beneficial? If so, find the legal structure that works best for your community group.
Step 9: Determine start up costs and consider a business plan
A business plan is a valuable tool for setting out your aims and objectives for your community co-op. Your business plan will also include a financial forecast, including the initial setup and ongoing cost. From this you’ll be able to determine how much money the business needs to raise through initial fundraising and future sales in order to be a viable and sustainable business.
Step 10: Consider finance options and raise capital
Community fundraising events and requests for donations are an important way of engaging with the community and raising finance. You can also apply for grants and sell community shares.
Step 11: Consider your operating structure
Here a few examples to consider:
- Community-owned premises, enterprise managed by the community
- Community-owned premises, enterprise managed by commercial operator
- Privately owned premises, leased by the community cooperative, and managed by the community
- Other community premises (for example: a church or village hall), enterprise managed by the community
Step 12: Secure premises and plan for opening
Now that a location has been determined and finances have been secured, it’s time to prep for your co-op’s opening.
Step 13: Celebrate your success with an opening event
The official opening day is a celebratory event that all of the community should be invited to and encouraged to attend. This is your opportunity to show off all the hard work that has been going on, and the ideal opportunity to market the co-op to your local community, showcasing the wider services now on offer.
Step 14: Constantly review and engage with your members and customers
Listening (and actively responding) to stakeholder feedback will be essential. This helps to make sure that your co-op is addressing the needs of your community and acting as an engaged community resource.
For a shareable infographic version of this guide:
This guide was originally published in STIR to Action Magazine and was first adapted for Shareable in a 2017 article. It was updated in October 2022.