Where do co-ops fit within the FairShares model of enterprise?

Rory Ridley-Duff argued for a multi-stakeholder mindset at the UKSCS conference in Sheffield

A diverse co-op movement needs a variety of legal forms – and for multi-stakeholder co-ops, these include the FairShares model, says Prof Rory Ridley-Duff.

Prof Ridley-Duff, making a keynote presentation at the annual conference of the UK Society for Co-operative Studies in Sheffield, invited delegates to switch to a multi-stakeholder mindset and look at how co-ops can support the development of solidarity enterprises.

He explained how the FairShares model is based on the assumption that the exclusion of primary stakeholders from member-ownership is a cause of contemporary poverty.

Prof Ridley-Duff explaining the main characteristics of the FairShares multi-stakeholder model

The approach aims to bring together the people who established the organisation; the people who provide the labour; those who use the products and services; and the financial investors. All of them are investing different types of capital, be it financial, social or labour. A person could also invest different forms of capital into the business.

Governance and legal systems need to recognise these contributions and reward them accordingly, said Prof Ridley-Duff, adding: “If you are constituted appropriately, you can offer shares to raise financial capital from people inside and outside the organisation. You can to be a company or a co-operative to do that. And you can adopt this mindset across different legal traditions anything that supports mutuality.”

As a result, entrepreneurs get Founder Shares (or membership); workers get Labour Shares (or membership); trading commitments are rewarded with User Shares (or membership); and financial capital creation is rewarded with Investor Shares (or restricted funds to organise investments in the well-being of employees, user communities and/or public benefit).

Prof Ridley-Duff argued that the FairShares model promoted by the Fair Shares Association was rooted in the history of co-operatives. The three models of thinking around consumer co-operation, social entrepreneurship and worker co-operation are key concepts within the FairShares model, he said.

However, the FairShares model has its own values and principles. These are wealth and power sharing with primary stakeholders; specification of social purposes and auditing of social impacts; ethical review of the choices of goods and services offered, as well as the production and retailing processes; and social democratic models of ownership, governance and management.

Some groups are already using FairShares models while operating as co-operatives. One example is Anyshares, a United States company that includes all stakeholder groups in voting and dividend profit sharing. The business aims to position itself as an alternative platform bringing together users and service providers.

Similarly, Resonate, a co-op owned music streaming service, is jointly owned and managed by artists, listeners and record labels. Users pay to listen to a song and, after they pay listen to it nine times, they can download it. With other providers, listeners have to listen to a song over 100 times to own it. A platform co-op, Resonate also uses Blockchain technology to track and distribute payments.

According to Prof Ridley-Duff, co-operative social entrepreneurship is more rooted in mutuality than in philanthropy. It also tends to be explored more within multi-stakeholder co-ops than the rest of the movement.

“It is closely aligned with the development of a social and solidarity economy. Is supportive of member participation in ownership and it expands the notion of trading beyond commodities and market,” he said, adding that the UK had yet to fully grasp the concept of multi-stakeholder ownership.

He said that more studies and legislation were required to support the model, as well as having it included in education curricula.

In his view, the FairShares model a philosophy for creating and sustaining networks of solidarity enterprises that share power and wealth among their entrepreneurs, producers, consumers and investors.

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