NEW APPROACHES DEMAND NEW VEHICLES
As a result of the research we have conducted since 2008, we realized that existing corporate structures lacked the features that were needed to implement a new paradigm. We therefore developed three primary corporate vehicles that can be used with our projects to carry out our overall objectives of community economic development.
Commonwealth Development Organizations (CDOs)
Commonwealth Development Organizations A CDOs is the primary entity that coordinates an entire project, including the establishment and running of one or both of the other two vehicles. See a detailed and downloadable write-up of CDOs here.
Public Benefit Financial Institutions PBFIs are the principal vehicle that manage the issuance of a complementary currency under a CDO project. See the section titled Money for a more in-depth explanation of the four ways in which a PBFI issues that currency. They are: a) sell it (for another currency), b) lend it, c) invest it and d) spend it. This means that a PBFI is functionally the equivalent of a sales organization, a bank, a venture capital firm and a public foundation all rolled into one entity, that exists for the purpose of enhancing the economic vitality of communities. A downloadable document on PBFIs is available here. You can also see a detailed and downloadable write-up of Money here.
Public Benefit Financial Institutions (PBFIs)
Small Business Holding Companies (SBHCs)
Small Business Holding Companies (SBHCs).
A significant portion of the Sustainable Communities Framework (SCF) is non-profit in nature. However, no economic development plan is complete unless it makes provision to support the for-profit community, in particular the small and medium sized enterprises (SMEs) that make up the economic backbone of communities everywhere. The ideal program provides comprehensive solutions for both sectors. NCG’s SCF program does just that.
To provide a means to support for-profit activities related to SMEs, NCG worked with senior management at the SEC to create a concept we call Small Business Holding Companies (SBHCs). An SBHC is a generic public holding company that concentrates its investments in SMEs.
Think of SBHCs as miniature versions of Berkshire Hathaway, both in terms of the overall size of the SBHC and the size of the companies it invests in or acquires. Active oversight of those subsidiaries is what avoids investment company status.
An SBHC is intended to be a public holding company that provides a means by which anybody in a community can invest in local small businesses without having to be wealthy. SBHCs are a special type of for-profit company, formed as a benefit corporation, that exist for the purpose of investing in, purchasing and supporting local small businesses, for the benefit of the community and all the other stakeholders. See this article for an in-depth explanation of what they are and how they work: How to Increase the Flow of Capital to Small Businesses While Enhancing Liquidity for Investors.
National Commonwealth Group will form an SBHC in each region where it establishes the SCF program to support local SMEs. See this page for more information about SHBCs, and this video originally created in 2008 by Michael Sauvante, chief architect of the Small Business Holding Company (SBHC) concept. It was updated in 2016 to reflect the adaptation to SBHCs.