Realising the potential for community business and anchor institutions

Community businesses are key drivers of the local economy and a growing aspect of Local Wealth Building. They are a key means of ensuring that wealth is more readily held, used and benefits local people and communities.

Vital to this is the extent to which community businesses are woven into the supply chains of anchor institutions. Work by CLES in three locations has found that community businesses are building local wealth and it is now time to celebrate, secure and amplify their full potential within the supply chain of anchor institutions.

Local Wealth Building has emerged as a powerful alternative to an economic model in which far too little consideration is given to wealth and who benefits from it. This work seeks to counteract a dominant extractive economic model of recent years, by making wealth more locally generative, socially purposeful and environmentally considerate. CLES have been at the forefront of this work for the last 15 years, harnessing the purchasing power, supply chains, and employment practices of anchor institutions to ensure that wealth is held more widely.

Anchor institutions are key, as they are sites of ‘sticky capital’ due to their size (they’re large employers with significant purchasing power) and immobility (they’re unlikely to leave a place once they have taken root, as they have strong ties through invested capital, mission and relationship to customers and employees). In the many places that CLES has and does work on Local Wealth Building, public sector anchors such as local authorities, universities, and NHS hospital trusts, have begun to shift their practices to build wealth more locally. However, there is scope for this to go even further through a recognition of the power of community businesses.

A key feature of the Local Wealth Building movement relates to supply and how local enterprises operate and are owned. It is in this area where community businesses have an important role to play. By being locally rooted; accountable to and trading for the benefit of the local community; and benefitting and impacting their local community as a whole, they can act as key drivers in the building local wealth. In an economic era defined by austerity and some lack of trust in large corporations, community businesses – from community pubs in the Lake District, to land trusts in Liverpool, and libraries and post offices up and down the country – have empowered local people to take back more control of their local economies and come up with their own solutions to local social and economic issues. They also counteract extraction by enabling the wealth generated in a community to stay in that locality.

Over the last year, CLES have been conducting research in three localities – Liverpool, Bristol and Ipswich – to see what key drivers and barriers exist, and what more needs to be done to enable more collaborative working for the benefit of local economies, places and people. We found that the appetite is there for collaborative between anchor institutions and community businesses. In Ipswich for example, a Community Benefit Society now runs Suffolk Libraries after Suffolk Council consulted staff about what services could be better run as community businesses.

With Power to Change estimating that there are almost 8,000 community businesses in England, there is a significant opportunity for the spend of anchor institutions to be truly generative. The report by CLES sets out a number of key recommendations for better collaboration between anchors and community businesses, to ensure that they can both evolve and realise their full potential.

For community businesses, these recommendations related to visibility and collaboration. Consortiums of community businesses can potentially work at scale, and investment in communications resources can publicise the activity of community business within the local market.

However, there is only so much that community businesses can do. The real power lies with anchors, and there must be a step shift in how they utilise their commissioning and procurement processes. There must be a deeper recognition of the benefits of embedding community businesses into supply chains. By breaking down procurement contracts and broadening strategies to consider more than compliance and cost, greater social value can be created, with greater benefit to local communities, people and places.

You can read the full report here.

This blog first appeared on the Power to Change Research Institute, which you can view here.