For Profit Organisations in the Commons Society
Organisations in the Commons Society are, in effect, co-worker owned and have the benefits of stability and high morale that go along with being co-worker owned. Famous examples of co-worker owned companies include the John Lewis Partnership and The Scott Commonwealth.
Organisations within the Commons Society cannot be bought or sold and so the only focus for the Directors is on running the organisation successfully.
Directors pay is agreed with the Commons Society and so cannot spiral upwards. The only way that Directors can receive a bonus is through issuing profit, of which they will receive their share. Moreover, when profit is issued then all the other co-workers receive their share too, and so too do the economic and cultural funds of the Commons Society.
The Commons Society makes training available to organisations to help Directors, and indeed all co-workers, understand the opportunities and restrictions that come along with being in the Commons Society.
The Capital Development Fund
Funded by a third share of all mature organisational issued profit and by grants and investments from ethical and social funders, the Economic Development Fund acts as the Commons Society investment bank.
The Economic Development Fund is a separate organisation but the Council of the Commons Society has a right to sit on the Board, to ensure full transparency, and to hold certain residual powers to protect the purpose and legacy of the Fund and Commons.
Directors within the Commons Society can approach the Fund for funds to develop their organisations. The Fund also pro-actively searches for organisation to bring into the Commons Society. This is achieved through a mixture of share purchase and organisational owner-buyout. Organisations that may be interested in joining the Commons Society include those whose owners are keen to exit their organisation but want it to continue as is, and organisations that need turning around through the input of new funds and expertise.
Why bring your organisation into the Commons Society?
- Legacy – co-worker owned companies are stable and sustainable in the long term so what you created and love still will go on as you intend it should
- Meaning – by linking into this collaborative network your work gains additional meaning
- Resources – co-worker training, thinking time with peers, and funds to support growth
- Motivation – founders and those bringing organisations into the Commons Society are paid out (rewarded), and from then on everyone shares in the profit
The Organisational Life Cycle
The Commons Society take note of the fact that organisations have two phases of being – entrepreneurial and corporate. Once an organisation is in the Commons Society it is effectively in for ever. The difference between the two phases is not whether the organisation is in or out, but what happens to the profit from the organisation.
In the entrepreneurial phase the entrepreneurs receive the profit. When they want to exit the organisation they have to be bought out by the organisation and / or the Commons Society. This is a commercial deal based on a conventional accountant’s valuation of the organisation. The means of paying for the buy-out is the responsibility of the entrepreneur and has to be agreed with the Commons Society. The entrepreneur might use the profit to develop a cash reserve, or could create preference shares that will pay off the buy-out over time. Perhaps the entrepreneur can persuade the Economic Development Fund to put some funds in too.
However, once the entrepreneur has been paid off then the company goes into the Corporate phase and from that point on the profit generated by the organisation will always be shared according to the three-fold profit cycle of the Commons Society.
Companies in the Commons Society can go bust and there is no automatic recourse to the Economic Development Fund (EDF). The EDF might agree to support the company but the conditions may be onerous, for example: a change of management or the appointment of a Turnaround Director.