What are Community Based Enterprises ? Enterprise Development and Community Economic Development Steps for Building a Community Enterprise

What are Community Based Enterprises?

Community based enterprises use business to improve the life of a community. They are different from private enterprise because their business activity is undertaken as a means of achieving community benefit, not private gain. 

Key characteristics of community enterprises are that they aim to be

  • community owned--assets belong to the community and cannot be sold off for private financial gain
  • community-led--people who are local stakeholders in the area of benefit play a leading role in the enterprise
  • community controlled--the local community is represented on the Board of Driectors and makes sure that the enterprise is accountable to the community
  • able to generate profits or a surplus that can be re-invested or distributed for community benefit
  • socially and environmentally responsible--the tackle social and environmental problems in their area
  • financially self-sustaining--or on the way to being so

Community based enterprises are also called  social enterprises.

The UK Department of Trade and Industry definition of social enterprise is: 

" businesses with primarily social objectives whose surpluses are principaly reinvested for that puspose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners" 

How are community based enterprises different from micro-enterprise?

Micro-enterprises are often small-scale, vulnerable to competition, under-capitalized and unable to generate many jobs. They are usually owned by one proprietor or a single family. If they do make more than a basic living for the owner, the profits are privately accumulated.

Community based enterprises have the potential to be larger scale, generate more jobs and return benefit to the community beyond those directly employed. They can be run as a worker-owned cooperative or as a member-based association.

In many parts of the majority world there is a role for community based social enterprises to help strengthen local economies.