Building Wealth Together - Place-Based Approach to Capital Investment
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Article Summary
- Place-Based Capital (PBC) empowers communities to address local challenges by leveraging their own assets, reducing financial dependency, and promoting sustainable solutions like affordable housing and renewable energy.
- Community Wealth Building (CWB) offers a practical framework with pillars such as fair work and locally rooted finance, focusing on inclusive ownership, local investment, and participatory decision-making to foster economic resilience.
- Real-world examples like Hepburn Energy in Australia and the Preston Model in the UK show how CWB principles can generate jobs, democratize enterprise, and retain wealth locally, transforming economic outcomes from the ground up.
By Daniel Vlahek
Historically, philanthropy has been a powerful force in addressing key issues from inequality to environmental sustainability, and it has been a conduit in mobilising capital and directing it to those in need. Yet, challenges persist.
As community needs increase, they have now become financially dependent on this model of distribution. Contexts have also become more complex in recent years, leading to sustained local crises and embedded issues.
How do we break this to inspire a more connected, economically robust community?
Shaping Our Own Economic Destiny
One of the most significant challenges to local communities and organisations lies in the lack of immediate funding made available for investment and development opportunities.
Place-Based Capital (PBC) is an approach that shifts financial dependency to empowerment. Harnessing the unique assets and potential of a specific place – whether it be a city, town, or rural region – enables communities to solve their own unique challenges, whether its rising living costs, job creation, sustainable energy, or affordable housing.
Historically, its concepts stem from the political and social uproar of the 1960s where activists and movements began challenging certain mindsets on issues such as equality, race, imperialism, and military adventurism.
By the mid-2000s, Community Wealth Building (CWB) began to take shape through the efforts of The Centre for Local Economic Strategies (CLES) and the Democracy Collaborative from Cleveland, USA.
Whilst there is no universal definition of PBC, the Griffith Centre for Systems Innovation has characterised it as:
‘A systematic approach to supporting and growing diverse forms of local capital (including financial), particularly through increasing local control and ownership of those capitals; improving the alignment of external sources of finance with locally identified priorities; and locally reinvesting the value created by economic activity so as to improve equity of access to opportunities and grow local prosperity.’
Capital is not just monetary in nature, it can also come in the form of:
- Natural Capital: biological flows and resources that help support life
- Asset Capital: assets that help assist in local production and services
- Social Capital: centralised and decentralised networks, connections and groups
- Human Capital: intrinsic skills and knowledge
PBS is underpinned by the CWB framework, which encapsulates a series of guiding pillars and principles to help assist in producing sustained, lasting, equitable outcomes:
Pillars:
- Inclusive and Democratic Enterprise
- Locally Rooted Finance
- Fair Work
- Just Use of Land and Property
- Progressive Procurement – Sustainable Supply Chains
Principles:
- Labour matters more than capital
- Local, broad-based ownership matters
- Active democratic ownership and participation matter
- Multipliers matter
- Localised investment matters
- Collaboration matters
- Place really matters
- Community wealth is where the next system begins
Polyculture of Participation
Despite not having a formalised PBC framework to assist them, communities across the globe have jettisoned themselves into organised networks, adapting the trademark principles and pillars of CBW from which we previously described.
This coordination of capital has also led to the development of unique models of enterprises, such as co-operatives.
Unlike companies which are run to maximise return on investor capital, co-operatives are democratically operated with each member being granted a single vote to cast on issues pertaining to the group.
The investments made by the co-operative are primarily for the benefit of its associated members and the local economy.
The cooperative model has been shown to have great synergy with local energy grids, with one of the prominent examples being Hepburn Energy in Victoria, Australia.
Beginning in 2007, Hepburn residents and community members banded together to promote localised energy production.
Though initially met with rejection, the group ran a significant engagement piece leading to 2000 community members becoming shareholders to raise $9.9 million in funding.
With community backing, including partnering with Future Energy, this enabled the construction of two wind turbines that currently produce 13,000 megawatts of energy annually for the council.
This development laid the groundwork for the cooperative to install an additional 110 kW solar array with plans to make the entire shire 100% renewable by 2030.
CWB and the implementation of its principles has also been a case study on dealing with economic stagnation.
When faced with the dilemma of a rising unemployment rate, Preston City Council in the UK developed what has become known as the ‘Preston Model’ – a reorganisation of its local economy so that wealth was not extracted, but broadly held with local income being recirculated locally.
The Preston Mode blended five unique strategies, anchoring the economy in redirecting procurement to local suppliers and cooperatives. This redirection saw the emergence of new jobs and fairer work, leading to economic expenditure expanding from 38 million to 112 million pounds annually.
Cleveland, Ohio also faced the same problem of high unemployment and poverty, brought on by post-industrial economic decline.
Workers within the community banded together to form the Evergreen Cooperative to improve wealth distribution and local job creation. With the help of anchor institutions from hospitals to universities, they were able to formulate a single coordinated strategy to alleviate social and economic pressures.
Through implementing CWB principles, the Evergreen cooperative was able to create 200 jobs across underserved neighbourhoods that offered living wages, benefits as well as opportunities for equity ownership.
Economic output resulted from this, too, leading to US$15 million in generated revenue and an estimated US$3 billion spent annually from anchor institutions on local goods and services.
These examples illustrate the strength of PBC. Through the CWB framework, communities can have the flexibility to adapt capital to the uniqueness of their place and solve its inherent problems.
By strengthening the connection between people and place, we can create a system that increases local participation and ownership as well as growing equity and prosperity for communities to enable an environment that nurtures self-determination.
