Are community co-operatives an untapped resource?

Head of Co-operative Development Scotland Clare Alexander explores further.

As the effects of Covid-19 take their toll and more and more businesses announce closures and redundancies, it’s clear that the pandemic has had a massive impact on our economy. But this adversity will create opportunity, rebuilding and rethinking the way we do business and how we support our communities.

While calls to focus on the social aspects of the economy have become more insistent in recent years, Covid-19 has undoubtedly fueled their urgency. Many of our norms have been questioned and there is a real desire for change. Business leaders have prioritised wellbeing, communities have responded by supporting each other through the crisis, and new and innovative ways of being economically viable have come to the fore.

New research released by Co-operatives UK said community ownership models are helping to create a new generation of UK businesses that are better equipped to withstand the Covid-19 crisis, or any economic crisis of this scale and nature. The organisation’s study focuses on community shares, a way of funding community co-operatives, and finds that of those businesses who have raised finance this way, a remarkable 92% are still trading.

Since 2012, £155 million has been raised by over 103,000 community share investors across the UK to save and create more than 440 vital community spaces and businesses.

Community co-operatives are run by and for their community, with profits generated invested back into those communities. They can have a significant positive impact whether they provide a service, deliver economic growth, or contribute towards the health and wellbeing of the local community – often all three.

The model is particularly suited to Scotland’s economy due to the prevalence of rural communities. Sectors including retail, hospitality and tourism can be the main employer in rural locations, particularly for young people, playing a key role in safeguarding jobs and retaining young residents. Businesses within these sectors can be run as community co-operatives allowing the communities, sometimes overlooked by traditional businesses, to create new jobs while protecting vital services (often for an isolated and aging population) or developing exciting new opportunities. Examples include saving a local food shop under threat of closure and the creation of an ambitious new distillery selling whisky and gin internationally.

The Community Carrot, a community-run shop in Dunbar, East Lothian, went from supplying 60 vegetable boxes per week before the pandemic to 350 during the early stages of lockdown, responding to the community in its time of need. Strong and well-established local supply chains with mills and farms, something local chain shops didn’t have, meant all orders were fulfilled and deliveries to vulnerable customers were guaranteed.  Whilst demand has eased as people return to normal shopping patterns, The Community Carrot has still significantly grown its customer base on the back of the reliable and reassuring service it was able to provide during difficult times.

Community businesses have undoubtedly experienced many of the same challenges around cash flow and uncertainty as others during this period but these impressive overall figures are a result of creating businesses that meet the needs of their community. During the initial response to the pandemic many of these businesses had a greater understanding of their communities’ needs, helping them to adapt and innovate during the crisis and putting them in a strong position to not only weather the economic storm but to thrive.

The economic and social potential of community co-operatives is significant and should be more widely adopted in Scotland.  Combined with the greater community spirit that has been cultivated during Covid-19, now is the right time to champion community co-operatives that can sustain jobs and communities and deliver wider economic, social and environmental benefits.

If you’re interested in more information on forming a community co-operative, please visit: https://www.scottish-enterprise.com/support-for-businesses/business-development-and-advice/community-co-operatives