Consumer & donor ownership

Considerations towards when consumer and donor ownership could be effective

Consumer and donor owned organisations could often have a number of limitations. These are still important approaches that could be adopted for certain organisations.

Limitations & concerns with consumer & donor ownership

Participation & scalability limitations

For medium sized to larger organisations, it could be difficult to expect that consumers and donors will vote on every decision that is involved in governing and operating an organisation. This approach would often be not pragmatic or desirable as the cost of becoming well informed about each decision and then voting on each one could become extremely high. The larger the number of voters the more problematic this factor could become. If only a limited number of people participate in governance this could distort decision outcomes to favour certain individuals over the general preferences of the wider collective.

Informed voter concerns

Organisations often need to adapt and evolve over time and update their processes and systems that help them to operate most effectively. An ongoing problem with consumer or donor based ownership is that these contributors might not be sufficiently well informed unless they are properly aware of what is happening in the organisation and what problems or opportunities exist. Voters that are not sufficiently well informed could lead to suboptimal decision outcomes.

Commitment concerns

Consumer and donors could have multiple choices in where they allocate their attention and capital. A donor could find another charity to donate to. A consumer could find another organisation to buy a similar good or service. Consumers and donors could have a limited incentive and justification to be highly committed and actively engaged with an organisation. Limited incentives can translate into a risk that important decisions are not prioritised by these individuals.

Influence over workers concern

Ownership of an organisation by consumers or donors means that they would receive governance rights to influence how the organisation is operated. These governance rights would influence how workers contribute towards the organisation. This control over the organisation could cause conflict if the consumers or donors are not as well informed as the workers about how to operate the organisation as effectively. Consumers or donors also might not fully understand the problems and opportunities that exist within the organisation when compared to the workers who are actively contributing.

Use cases for consumer & donor ownership

Donation or consumption dominant organisations

Organisations that are more donation or consumption dominant instead of labour dominant could be suitable for consumer or donor ownership. An example of this could be a local table tennis club where each member contributes by paying a small annual fee so that they can join and play at the local venue each week. Members would contribute with more consumption than labour in this organisation as they would be mostly playing table tennis. This organisation would still require some amount of labour to handle club administration and things like setting up and putting away the tables each week.

Smaller organisations

Smaller organisations are inherently more viable for consumer or donor owned organisations as they wouldn’t have the voter scalability complexities to handle. Larger organisations that have many consumers or donors is where the governance complexity can become increasingly time consuming and problematic.

Active and engaged consumers or donors

Situations where consumers or donors are highly active and engaged in an organisation could also be a valid reason why the consumer or donor might be the most suitable contributor to own and govern the organisation. It will be important for the consumers or donors to be well informed when making decisions about how the organisation is operated.

When to use worker ownership

Worker owned organisations would be a very common type of organisation under contributionism. Labour is often one of the most important and ongoing contributions for many organisations. Workers should usually be the most well informed and suitable for handling governance decisions as they contribute towards the organisation on a regular basis. Worker organisations can sometimes benefit from delegating certain decisions to consumers or donors to give them more influence over the organisation. This can help with building trust and could also help with fixing specific incentive imbalances or alignment issues. For example, donors may prefer to make donations to organisations that enable them to vote on how their donations will be used. This helps to give donors more influence over what the charity prioritises to help other people. Organisations that expect a growing amount of labour contributions will often benefit from being worker owned as workers will then be able to handle the growing complexity of governing that organisation.