4.4.4 Financing the commons

Helpful prior knowledge and learning objectives

Helpful prior learning:


Learning objectives:

In the 1970s, the city government of Fortaleza, Brazil  relocated low-income families from informal settlements near the city center to make way for expensive business and residential buildings. These families were resettled in Conjunto Palmeiras, an area on the edge of the city lacking basic infrastructure like paved roads, clean water, schools, and health services. Public transport was scarce, leaving residents isolated from jobs and opportunities. Over time, poverty and unemployment increased.

In 1998, the community founded Banco Palmas, a community bank to meet local needs. It offered micro-loans to start small businesses and introduced a community currency, the Palma, to keep money circulating within the neighborhood. These efforts sparked the creation of shops, green spaces, and community centres. By pooling resources and acting on their shared values, the residents of Conjunto Palmeiras transformed into a vibrant local economy.

A photograph of a gas station that accepts Palmas

Figure 1. Example of local business which accepts Palmas ("Aceitamos Palmas," meaning "We accept Palmas")

(Credit: Pmorizio, CC BY-SA 3.0)

Figure 2. The neighbourhood celebrated its 50th anniversary in 2023

(Credit: Palmeiras 50 Years)

Why is financing commons a challenge?

Commoning requires funding for essentials like repairs, tools, and shared spaces. But financing commons differs from financing businesses in markets. Businesses in markets can take out loans (debt finance) or sell partial ownership in the business to investors (equity finance) to raise money. The lenders or investors can be paid back with the profits earned from selling the business’s products (Section 3.3.5).

Commons, managed for shared use rather than profit, often lack revenue streams to attract banks or investors. Instead, commoners turn to creative strategies, known as relationalised finance or solidarity finance, that work with shared responsibility and collective benefit.

An illustration of people and money flowing between them to represent ralationalised finance

Figure 3. Relationalised finance supports commoning, aligned with values of care and distributed value. 

Note: the ¤ symbol is used to represent a generic currency

What are some types of relationalised finance?

Relationalised finance usually pools smaller contributions from many sources to cover costs, and usually, though not always, comes from those who directly benefit from the commoning activities.

Crowdfunding

Crowdfunding gathers small contributions from many people, often online. Platforms like Goteo support civic projects, while Patreon aids creative commons. There are several forms of crowdfunding:

The short video below describes how the Magrana Vallesana food cooperative in Spain used debt-based crowdsourcing to fund a cold room.

Cooperatives

Cooperatives, like Magrana Vallesana mentioned in the video above, are member-owned organisations that pool resources for shared projects. Members make financial contributions, like paying membership fees, and manage the cooperative together.

In agricultural cooperatives like those in Kenya and India, small-scale farmers collectively buy seeds, tools, and land. In community supported agriculture (CSA) (Section 4.2.2) members pay farmer(s) upfront, a kind of guaranteed income, for a share of the farm’s products each week. In both types of farming cooperatives, the wider community shares both risks and rewards.

Another cooperative example is Spain’s Mondragon, a federation of worker cooperatives across various sectors, including manufacturing, retail, finance, and education. Workers own shares of Mondragon, and make decisions about distributing and investing profits such as funding renewable energy and community education projects.

A photograph of a community supported agriculture farm

Figure 4. Shared Harvest Farm in Beijing is an example of Community Supported Agriculture (CSA)

(Credit: Ian Teh for Panos Pictures/Food and Land Use Coalition)

State financial support

State support for commoning can provide financial stability, but may also come with rules. Successful state-commons partnerships ensure that the community retains control of the commons. Some types of state support include:

An illustration of people and money flowing between them to represent ralationalised finance and money flowing from the state

Figure 5. States can finance commoning in a number of ways. Note: the ¤ symbol is used to represent a generic currency

(Credit: HAZHA, Noun Project)

Community currencies

Community currencies are used for exchange only between local residents, encouraging more production and spending within the community. Local currencies can also help finance commons by enabling people to pay for community projects and services without relying on national money or outside investors. 

As mentioned earlier, Banco Palmas’ Palma currency is used by local residents to buy goods and services locally, supporting neighbourhood businesses. The currency is also used to finance commoning projects like gardens and public spaces.  Banco Palmas strengthens local ties and builds a resilient economy, even though residents have limited access to outside sources of finance.

A photograph of the Palmas currency

Figure 6. The local Palma currency enables residents of Conjunto Palmeiras to fund projects independently of access to national currency or traditional finance

(Credit: Camille Meyer, original source unknown)

Philanthropy and donations

Philanthropy involves wealthy individuals or foundations funding commoning projects for the long term, like a multi-year grant. For example, the Global Greengrants Fund supports grassroots work in Ecuador by funding local seed banks. This steady funding allows the commoners to plan long-term without constant financial worries.

Individual donations are great for covering smaller, immediate needs. Local donors might give one-time funds for things like materials or repairs. These donations aren’t as steady as long-term philanthropy, but they’re still important. Together, philanthropy and donations offer both long-term support and quick fixes, helping communities fund shared goals.

Figure 7. The Global Greengrants Fund is an example of philanthropic funding often directed at commoners

(Credit: Global Greengrants Fund)

Bioregional financing facilities

Bioregional Financing Facilities (BFFs) (Figure 8) fund local grassroots projects aligned with ecological and social needs in bioregions, like regenerative farming or reforestation. By raising funds from grants, impact investments, and local contributions, BFFs group and channel resources to initiatives that restore ecosystems and strengthen communities. This approach ties finance to local well-being, bridging local economies and ecosystems.

Illustration of the role of bioregional finance facilities between grassroots orgs and pools of financial capital

Figure 8. The role of Bioregional Financing Facilities between grassroots organisations and pools of financial capital

(Credit: Bio-Fi Project, CC BY-SA 4.0)

Mutual aid and self-financing

In some cases, commoners rely on mutual aid networks and self-financing to sustain their projects. Mutual aid involves community members helping each other with resources or services, without money changing hands. In Cuba, urban farmers exchange seeds and tools for agriculture. In India, communities maintain water reservoirs (johads, (Section 4.3.1)) through household contributions to communal funds for repairs, ensuring shared access to water.

The methods of finance support community wealth building, a strategy that focuses on strengthening local economies by keeping resources, wealth, and decision-making within the community. It aligns with the principles of commoning by ensuring that local assets, like land, businesses, and public spaces, are managed for the collective benefit of all members rather than being exploited by external investors or centralised institutions.

Activity 4.4.4

Concept: Regeneration

Skills: Thinking skills (transfer)

Time: 40 minutes

Type: Individual, pairs, or group


Option 1: Considering relationalised finance for commoning

Note: if you did the Option 2 activity in Section 4.4.3, this can be a continuation of that work. In that case you could skip the first two steps and start with discussing sources of finance.


Ideas for longer activities and projects are listed in Subtopic 4.5 Taking action

A photograph of an old empty warehouse space with a glass ceiling

Figure 4. What would you do with a vacant building and lot in your community? How could the state support commoning with this shared resource?

(Credit: Antonio Friedemann, Pexels licence)

Checking for understanding

Further exploration

Sources

Bollier. D. (2021). The Commoners Catalog For Changemaking: Tools for the Transitions Ahead.  https://commonerscatalog.org/

Bollier, D.  (2025). “10. Relationized Property and Finance”. Think Like a Commoner: A Short introduction to the Life of the Commons, 2nd edition. https://www.thinklikeacommoner.com/

Kognity. (2022). “3.2.3 External sources of finance: Debt and other finance.” IB DP Business Management HL FE2024. https://kognity.com/

Parry, Lucy J. and Participedia Team (2020). “Banco Palmas: Solidarity Finance in Conjunto Palmeiras”. Participedia. https://participedia.net/case/6662

Plana, Bart Grugeon. (n.d.) Commoning in Catalonia. https://commoningcatalonia.org/

Power, S., & Seefeld, L. (2024). Bioregional financing facilities: Reimagining finance to regenerate our planet. The BioFi Project; Dark Matter Labs; Buckminster Fuller Institute. https://drive.google.com/file/d/1yznJ324biVX_RyVcTKNB96vNMqFbYUI3/view

Terminology (in order of appearance)

Link to Quizlet interactive flashcards and terminology games for Section 4.4.4 Financing the commons


informal settlement: residential areas where the people who live there do not own their property and have no formal legal right to settle there

infrastructure: large scale physical systems that a society needs to function (roads, railways, electricity networks, etc)

poverty: the state of being poor

unemployment: when someone is willing and able to work but does not have a paid job

community bank: a deposit and lending institution that is typically locally owned and operated

microloan: a small sum of money lent at low interest to a new business

community currency: a type of money that is created and adopted by individual communities to meet their own needs for cooperation and exchange within a locality

loan: a sum of money that an individual or group borrows from banks or other financial institutions

debt finance: finance that comes from borrowing money from banks or other financial instiutions

investor: an individual that puts money into an entity such as a business for a financial return

equity finance: financing that involves the business giving part ownership to investors in exchange for funding

profit: total revenue minus total cost

revenue stream: the various sources from which a business earns money from the sale of goods or services

relationalised finance: also called solidarity finance, involving pools of small contributions from many sources to cover costs of an activity, usually coming from those who directly benefit

solidarity finance: also called relationalised finance, involving pools of small contributions from many sources to cover costs of an activity, usually coming from those who directly benefit

crowdfunding: a financing method that raises small amounts of money from many people, often through online campaigns on platforms

peer-to-peer lending: when a person borrows money directly from another person, without a bank or other financial institution involved

cooperative: an organisation owned and controlled by people to meet their common economic, social, and/or cultural needs

community supported agriculture (CSA): where people from a neighbourhood or town pool their money to support a local farm; they pay the farmer upfront at the beginning of the season, and in return, they receive a share of the farm’s produce each week

renewable energy: energy from sources that are continuously available or regenerate quickly

grant: a sum of money given by a government or other organisation for a particular purpose

subsidy: a payment made by the state to a business or individual to encourage certain behaviour

tax: payment from individuals or organisations to the government, used to provide public infrastructure and services

commons-public partnership (CPPs): where the state partners with commoners to provide goods or services, or manage resources

infrastructure: large scale physical systems that a society needs to function (roads, railways, electricity networks, etc)

resilient: able to recover after a disturbance

philanthropy: charitable giving by individuals and organizations

foundation: a type of nonprofit organisation or charitable trust that usually provides funding and support to other charitable organisations

grassroots: a movement that uses the people in a given district, region or community as the basis for a political or continent movement

bioregional Financing Facilities (BFFs): organisations or programs that provide money to support projects that help people and nature in a specific region

bioregion: a region defined by characteristics of the natural environment rather than by human-made divisions

regenerative farming: farming in balance with and strengthening natural systems

reforestation: the process of replanting an area with trees

economy: all the human-made systems that transfer and transform energy and matter to meet human needs and wants

ecosystem: the interaction of groups of organisms with each other and their physical environment

mutual aid: when people in an area, or a community, come together to support one another, collectively meeting each other’s needs without the help of official bodies like the state or NGOs

urban farmer: someone living in a city or town who uses their green space to grow food and/or raise smaller animals

community wealth building: a range of strategies that help communities become stronger and more independent by supporting local businesses, working together to build assets and create local jobs