The Value of Shared Ownership

Shared ownership actually began as the cooperative form of corporate structure in the 1700s. Shared ownership, as it has evolved today, still offers unique advantages. While some of these advantages may not be readily apparent, they are most certainly distinct from other forms of business–and are something you might want to know more about.

Shared Ownership as a form of corporate structure is defined by circumstances where the users of the product or service from a company also own the company and provide the capital. Unlike traditional stockholder-owned corporations, where the shareholders are primarily investors with voting rights based on the proportion of shares owned, the shared ownership model aligns stockholder rights to the specific customer who receives one vote, just like any other customer.

Probably the most obvious difference is that each owner within a shared ownership company has one vote, which provides far more voting influence than for a traditional corporation where the voting strength may be consolidated among a very few large shareholders.

Southwest Georgia Farm Credit has operated under a shared ownership structure for nearly three decades. Its users are members who regularly receive dividends and participate in the election of the directorship.

Where is the value of being an owner?

Like any corporation stockholder, a shared ownership member has claims on annual earnings as dividends beyond those needed to recapitalize the business.

A shared ownership member can participate in the nomination and election of directors with far more influence than might be achieved through traditional ownership, where the voting strength may be within a very few number of stockholders.

Shared ownership members typically have voting rights on specific issues that can have a significant bearing on the organizations. These might include major acquisitions, divestitures, mergers or even changes to the capitalization program.

The closer alignment between voter strength and the actual consumer preference can lead to a company that is more in tune to its customer’s preferences and desires.

So what is the wallet value of being a shared owner?

Probably the most obvious value is derived from the fact that as a member who patronizes the business they own, they are entitled to any declared dividends.

A simple example may help understand:

  1. Consumer or business owner sees value in shared ownership and the benefits it provides.
  2. Consumer or business owner becomes member and receives 1 year loan for $100,000 at a competitive interest rate.
  3. Purchase of at-risk stock to become member for $1,000 (usually funded within the loan proceeds)
  4. Makes principal and interest payments throughout the year with accumulated interest of $4500.
  5. Upon declaration by board of directors, member receives dividend of $800 in cash.
  6. Cash dividend represents an 80 percent return on $1,000 investment or reduces the rate of interest by three-quarters of one percent.
  7. Member receives their $1,000 investment back after final payment and retirement of stock.

So how is this possible?

It is actually quite simple. First, capital has been accumulated over many years from the membership of prior members, so that the $1,000 stock investment is sufficient to capitalize this business and establish a financial interest in the business. Second, since dividends are distributed on the basis of the degree you patronize the business rather than how much you own of the business the benefit is not concentrated within a selected sub-set of owners.

If owning the financial institution you are borrowing from makes sense to you, just let us know how we can help. We have very experienced land financing experts who can make the process smooth and provide common sense solutions to problems that invariably crop up.


Richard Monson is President/Chief Executive Officer of Southwest Georgia Farm Credit. He has worked in the Farm Credit System for the past 31 years, serving in a variety of roles. Mr. Monson received his Bachelor’s degree in agricultural economics from West Virginia University, Master’s degree in agricultural economics from Clemson University, and attended the Graduate School of Banking at Louisiana State University.

View All Articles