Community Supported Business (CSB)
You have heard of CSA (Community Supported
Agriculture). A CSA is a way for the food buying public
to create a relationship with a farm and to receive a
weekly basket of produce in season. By making a financial
commitment to a farm, people become “members” (or
“shareholders,” “investors” or “subscribers”) of the CSA.
The CSA movement has helped to make independent,
healthy farming sustainable.
The concept of Community Supported Business (CSB) is now becoming a much more widely applied way of getting smaller businesses off the ground, especially in rural areas and small towns. CSBs are based on a closer relationship with customers that the simple commercial transaction involved in the sales of products or services. As the word ‘supported’ implies, CSBs not only have a relational, but also a financial connection with their communities, either directly on a personal basis, through an intermediary, or sometimes involving a public agency.
The word ‘community’ usually implies people in a specific location, but it can equally apply to people who share similar interests. The Business Alliance for Local Living Economies (BALLE) refers to them not as Community Supported Businesses, but as Community Supported Enterprises.
Books: The system can work equally well with other local consumer markets. Examples include community supported publishing (e.g., South End Press) and bookselling. I ‘invested’ in a village bookstore, Putney Books in Vermont, where I paid $1,000 to get books to the value of $25 for 48 months and a ten percent discount in the store. This would have given me a 20% return over 4 years, as well as the discount and the reward of supporting a local enterprise, but unfortunately the store failed in its second year.
Dining: In Portland, Maine, there is a Community Supported Kitchen that provides local and organic prepared food year-round to members, on a basis similar to the CSA system. In Morrisville, Vermont (which has 55 CSA farms), there is a CSA-type Restaurant where, in exchange for a $1,000 loan, investors get coupons that they can redeem for meals at the rate of $90 a quarter, over three years. This is a petty meagre return on investment, but in the first six weeks of launch, the Bees Knees restaurant had raised $20,000. The venture was followed by Claire’s Restaurant, in Hardwick, Vermont. Launched by four partners in May 2008, it too, is based on a community centered investment and business model and raised more than $40,000 in community loans.
Food & Drink: House of Brews in Maddison, WI is a CS brewery and MobCraft Beer is launching a new business model for making beer that is based on crowdsourcing opinions of its online supporters to determine what gets brewed and when. Founder Giotto Troia of Madison is working with House of Brews to actually make the beer. He’s planning to release a new and different crowdsourced brew on a monthly basis based on social media feedback. Albany, NY has All Good Bakers, where shareholder receive freshly baked loaves and/or baked goods weekly made with North Country Farms Flours and other local, clean ingredients, all prepared by Owners Nick & Britin Foster. The Gleanery restaurant in Putney, Vermont is another example
Fishery : Port Clyde Fresh Catch is a community supported fishery in Maine, where investors can sign up for a weekly share of wild-caught shrimp. Fourteen week shares $210) offer 10lbs of shrimp a week or half shares ($105) that yield 5lbs. Another is Skipper Otto’s Community Supported Fishery. For $250/year members receive approximately 35lbs of whole, fresh and/or frozen salmon that is available direct from the fisherman, amounting to roughly 7 fish at around 5lbs each (about $7/lb).
Manufacturing : The concept of Community Supported Manufacturing, means taking back the means of production in a socially and environmentally responsible way. The concept here is to relocalize manufacturing. An example is Prumitei the fire arts center at Francardu in Corsica, where my friend Fanfan Griffi created the craft manufacturing center and restaurant with workshops all based on the use of fire: ceramics, glass, and bronze founding. He raised money from local governments, non-profits, large and small shareholders. Sadly, too this was a venture that founder and lost my small investment. The Post Carbon Institute has a briefing on CSM and a Power Point presentation you can download.
Energy : WindShare is pioneering Toronto-based ‘for-profit’ co-op with a mandate to provide renewable electricity to the people of Ontario through community ownership. The internal rate of return is projected at 7.23% per annum over a 20-year investment period, with no middle man, no fund management fees or other associated administrative costs. Sixty-six investors from Minnesota snapped up all the available shares in two wind generation companies (MinWind I & II) in 12 days. Eighty-five percent of the shares must be owned by farmers, with the rest available for local townspeople and non-farmers. Each share gives the owner one vote in the company and no single person can own more than 15 percent of the shares. Now there are MinWind III-IX, similar to the first two projects, which began producing power in 2002.
Chicago-based Indie Energy the geothermal-based clean energy building systems has a mission with a simple equation that became: Local Geo + Local People = Economic, Environmental, and Social Profit. “Organized labor, along with the private and public sectors, are the three pillars upon which the new renewable energy economy will be built,” said Daniel Cheifetz, Indie Energy CEO.
NRG Solar Solutions in Vermont worked with Green Mountain Power to enroll customers in a central solar lease program in the town of Rutland. This innovative pilot is believed to be a first of its kind in the United States. Customers can sign up without upfront cost and become part of a solar community that supports the development of specific solar projects. Costs are expected to be the same as or lower than their normal electric bills
The opportunities are near endless. The only considerations are that he product can be consumed within the community and that there is a way of mounting the venture on a for-profit, not-for-profit or a hybrid. With the standard business loan availability having dwindled to a trickle and the risk-capital tap having been turned off, here lies nothing but a wide-open blue ocean with few fish swimming in it.
In my local town of Brattleboro, Vermont in the US, there is an interesting hybrid called The Commons, run by Vermont Independent Media (a non-profit) that promotes local, independent journalism, providing a forum for community participation through publication of The Commons, a weekly free newspaper, run on commercial lines with paid advertising; and promotes civic engagement by building media skills among local residents through a media mentoring project.
There is now he CSngn™ that makes it possible to setup a Community Supported business, receive payments online, and easily manage members as a Community Supported Business. Anyone can be a CS, from individuals like a yoga teacher, to a full yoga studio. A small neighborhood farm, to a big community farm, or the kinds of business discussed above.
More widely in Vermont, as in a growing number of other States, there is a new corporate form called the beneficial corporation that is effective from July 2011. This is a growing form in other US States as well. The initiatives spring largely from the efforts of B Corporation. In Vermont, a benefit corporation means a corporation defined as
- providing low income or underserved individuals or communities with beneficial products or services;
- promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
- preserving or improving the environment;
- improving human health;
- promoting the arts or sciences or the advancement of knowledge;
- increasing the flow of capital to entities with a public benefit purpose;
- the accomplishment of any other identifiable benefit for society or the environment.
One BCorporation active in the field of alternative equity-raising is Cutting Edge Capital. They ask business founders the basic questions set out below:
If you want to read more about Community Supported Business, the take a look at Rural Research Report on Grassroots Entrepreneurship that I wrote for the Illinois Institute for Rural Affairs–a part of Western Illinois University.