Business Ownership for The 99%: How to Finance It

One prominent goal for many social entrepreneurs is to make business ownership to be held by as many people as possible; so that social giving-back can be attended and monitored better from more people involved as funders rather than just focus on financial returns. However, how to well operate and manage the so-called inclusive models still remain questions for funders. In other words, funders need a greater comfort level with these models before they dole out the money. To solve these questions, a variety of ownership models and respective innovative financing approaches has been examined and reported by Democracy Collaborative:

  • Employee stock ownership plans (ESOPs): Through this model, entrepreneurs sell ownership in their company to their employees. ESOP shares are held in trust, and the number of shares can vary among employees. It basically serves as a retirement plan: Employees cash out either when they retire or when they leave the company. Also companies can be partially or completely employee owned.

  • Worker cooperatives. With this model, ownership is in employees’ hands, with a one member, one share, and one vote system. One innovative financing approach is to raise donations for new members who can’t afford the fee. Others include devoting a portion of profits to funds for growth, selling shares with limited voting rights and doing a direct public offering (DPO).

Hybrid and social enterprises. Basically, these two categories include double bottom line companies, benefit corporations (corporations with a legal structure protecting a financial and non-financial mission), and companies with a social mission. One novel financing approach: A small number of municipalities are working on ways to help fund companies registered as benefit corporations. For example, Philadelphia, Pa., introduced a sustainable business tax credit for such enterprises in 2009.


Business Ownership for The 99%: How to Finance It