The document proposes an alternative model of capital ownership called a Capital Partnership. A Capital Partnership is formed around a specific productive asset like land or property. The asset is held by a custodian while investors provide financial capital and managers provide human capital. Users pay rent or fees for using the asset, which they return to the custodian. Profits are shared between investors, managers, and potentially users in the form of "sweat equity." The model aims to lower funding costs by issuing perpetual, land-backed stock instead of fixed-term debt. This allows capital to be raised more affordably for projects that benefit users and communities.

1. Resolution
Banking on Ourselves
Chris Cook Schumacher College
15 November 2012

2. There are conventionally two types of
ownership - Public or Private
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3. There are two conventional types of
investment: Equity and Debt
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4. Equity: shares in a Joint Stock Limited Company
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5. The 19th Century legal dinosaur...
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6. ...which makes the Private Sector Private
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7. Debt: typically credit created by banks
secured eg by mortgages
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8. ...giving two conflicting claims over the
same productive asset
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9. But there are new creatures out there
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10. Equity vehicles: Trusts, ETFs, ETCs, ETPs,
REITs, Master Limited Partnerships (MLPs)
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11. Simple Corporate entities such as the UK
Liability Partnership (LLP)
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12. UK Company Limited by Guarantee
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13. These enable Open Corporates
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14. Over 68,000 UK LLPs are now in pervasive
use for purposes never intended...
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15. ...even in the Public Sector, where Glasgow
has five municipal LLPs
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16. Capital Partnership – direct investment in
productive assets
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17. Embryonic Capital Partnership 2002 (> £1bn)
Gross Revenues
Capital Partnership LLP
10 UK Hotels
% %
Hilton Group Consortium LLP
Capital User Capital Provider
% % %
Property Hotel
Bank
Developer Specialist

18. Generic Capital Partnership
Users
Payment Use
Custodian
Custodian
% %
Investors Managers

19. Productive assets are held by a Custodian
Ownership
Assets
Assets Custodian
Custodian

20. ...who safeguards the asset and accounts
Ownership
Assets
Assets Custodian
Custodian

21. Investors provide Financial Capital in
money, or money’s worth…
Custodian
Custodian
Financial
Capital
Investors

22. Managers provide Human Capital of
time, expertise and experience....
Custodian
Custodian
Financial Human
Capital Capital
Investors Managers

23. Users pay for the use of Capital
Users
Payment Use
Custodian
Custodian
% %
Investors Managers

24. Result: Capital Partnership
Users
Payment Use
Custodian
Custodian
% %
Investors Managers

25. Capital Partnership reinvents Equity

26. Equity Shares - % age shares in flows of
revenue or production
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27. Stock – units returnable in payment for
use value eg rentals, Kilowatt Hours

28. Albion Trust - a charity providing
affordable office space
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29. Due to demand for affordable space they
bought the adjacent disused church...
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30. ...and planned a £4m development
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31. But if they borrow, rentals will be unaffordable
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32. Solution? An Albion Partnership
Tenants
Tenants
£
Custodian
Custodian
% %
Investors
Investors Managers
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33. Unitisation
Users
Users
Rental
Custodian
Custodian
Stock %
Investors
Investors Managers
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34. Stock - credit instruments returnable in
payment for value received.
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35. Resolution – stock based upon use value of land
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36. Stock – undated credits returnable in
payment for occupation
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37. Custodian is appointed or incorporated
Houses Custodian
Custodian

38. Affordable rental is set
Occupiers
Rental
Custodian

39. Proportional Share allocated to Manager
Occupiers
Rental
Custodian
%
Manager

40. Balance available for unitisation and sale
Occupiers
Rental
Custodian
% %
Investors Managers

41. Units of stock are sold to Investors at a
discount to the rental value
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42. The discount determines the return
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43. The rate of return is literally the rate at
which stock may be returned to the issuer
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44. Debt: £300k pa will fund <£4m debt
over 20 years at 5% compound interest
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45. Stock - £300k (initially) funds £5m @ 6%
£10m at 3%; £20m @ 1.5% (index-linked)
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46. Investors lend 'Peer to Asset' to the land –
not to the owner
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47. Surprise! No compound interest + no principal
repayment = drastic cut in funding costs
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48. Occupiers - may invest simply by paying
rent in advance
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49. Receive 'Sweat Equity' Units if they maintain
the property themselves
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50. Investors – Units of stock are a secure and
liquid new asset class
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51. Secure – credit default risk in respect of
capital becomes liquidity risk
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52. Secure - affordability of rental means income
is by definition more certain to be paid
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53. Liquid – units of stock are not fragmented by
date, rate of return or even issuer
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54. Liquid – even if Investors do not buy Units,
Occupiers will buy and return to issuer
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55. Intermediaries (eg Banks) – transform from
a transaction model to service provision
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56. ...and need Capital only for operating costs
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57. Back to the Future? Stock pre-dates modern
banking
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58. Resolution - exchange of dated land-backed
debt for undated land-based stock
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