Exeter City, which enjoyed the windfall of an FA Cup draw against Manchester United in January 2005, have survived as a wholly supporter-owned club in the Football League. Photograph: Tom Jenkins

With barely a breath caught since the World Cup, the Premier League season sprinted forth at the weekend to stadiums packed with expectant crowds, customarily feverish television coverage and a flurry of stories with one unifying theme: money.

 Prospective bidders from overseas to buy debt-laden Liverpool football club; the manager of Aston Villa, Martin O'Neill, walking out apparently over lack of funds ; three Football League clubs staving off winding-up petitions in the high court.

Released earlier this summer with a touch less fanfare was a report that found that for all its crises and financial overkill, football remains a sport of immense social value, and its clubs – when not falling into ruin – are widely considered to be rallying points for civic pride.

Commissioned by Supporters Direct, the government-backed initiative to encourage democratic, mutual ownership of football clubs, the report documents the beneficial impact that clubs can have in their communities, and recommends a series of ways in which this can be improved.

Principally, it argues that football clubs should formally recognise their social role and adopt it as one of their core purposes, honestly examine how well they are meeting that aim, and strive continually to improve their relationships with supporters, local authorities, residents and businesses. The report found that clubs labour under the financial pressure of putting a competitive team out, and often hive off their social role to semi-separate community departments. Although they often do excellent work on social inclusion and other projects, the report calls for a more "holistic" approach, in which that social purpose is incorporated into clubs' constitutions.

"We have explored the regulatory framework that currently exists in English football," it says, "and the question of football's social role and value is almost completely submerged beneath [clubs'] status as private companies.

"Clubs should adopt company objects that make clear their commitment to local communities, and set out ways in which this will be reported on an annual basis."

The financial strains, which have seen 53 insolvencies among the 72 Football League clubs – some clubs more than once - since the Premier League was formed in 1992, are described as a major barrier to the game's ability to be a force for good.

Nevertheless, in the research, conducted via interviews with chief executives of 10 clubs, ranging from a Premier League club "in remote foreign ownership" to much smaller, mutually-owned clubs in semi-professional football, and in-depth case studies of four – all with agreed anonymity – the researchers found a unanimous view that football clubs are institutions of social value.

Supporters' views are the most striking: "When we asked supporters what they valued about their clubs, it was not their success on the field, nor the value of the club's shares, or whether it was in profit or not, but their importance within their family, social and community life that was paramount," explains Adam Brown, the report's author and a director of research at the consultancy Substance.

Similar views were expressed almost uniformly by the clubs' chief executives, staff and local residents and businesses. "Everybody emphasised the social function of a football club," says Brown. "So there is a clear need to integrate that mission into the core purpose of clubs and the game itself. In modern business, there is a move towards reporting annually on social and environmental impacts as well as financial accounts. Football clubs should do the same."

The report, The Social and Community Value of Football, suggests a range of ways in which clubs might commit to having a positive impact in their communities – many, at all levels, do some of them already. They include developing local transport plans, environmental best practice, supporter volunteering schemes, opening club facilities to disadvantaged groups, operating preferential local employment and purchasing schemes, and pricing match tickets at levels that "recognise economic exclusion".

Also included is "broadening ownership structures", and this is a key element of the report, setting out the social value of clubs incorporating some democratic form of ownership by supporters.

The chief executives of clubs that were mutuals or feature large stakes held by supporters argued that their model delivered "clear social benefits", including the promotion of democracy, keeping the club linked to the community, creating stability, and even a business advantage, because of improved working relationships with the local authority.

Norrie Stewart, chief executive of supporter-owned Exeter City, describes the mutual model as an "important [ownership] alternative".

"There is an alignment of the club with its supporters, so they are absolutely involved and included. We constantly strive to be good citizens, and local businesses can actually fulfil part of their corporate social responsibility by supporting Exeter City, because we are owned by our supporters and acknowledged to be integrated into the community," he told SocietyGuardian.

Andy Walsh, general manager of FC United of Manchester, which was formed by supporters following the takeover of Manchester United by the Florida-based Glazer family in 2005, agrees: "It is part of our company objectives to be of benefit to the community and our structure has been critical to establishing a good relationship with Manchester city council, which is very supportive."

Specific advantages to clubs of being supporter-owned, identified in the report are: a greater sense of "engagement and inclusion" with fans and wider stakeholders; better integration with the community; more open and responsible governance; good relationships with local authorities, and partnerships with voluntary organisations.

That this social model is in such a minority compared with the overwhelmingly dominant ownership of clubs by rich individuals is a feature of football's history in the UK. Just about all British clubs were originally formed as mutuals, but almost all became limited companies as long ago as the 1880s and 90s, when the game became professional and clubs needed money to invest and wanted limited liability for members. Gradually their shares were bought by local businessmen, then, more recently, as clubs have become valued in the multimillions, by billionaires from overseas.

Founding ideals

The campaign for supporter ownership is a rediscovery of clubs' founding ideals, and largely a reaction to what has been seen as mismanagement or financial exploitation of clubs by an individual owner. The principle, that clubs should incorporate the democratic voice of fans, was recognised by the last Labour government, which established Supporters Direct in 2000. The idea is seen to chime with the "big society" concepts of voluntarism and community engagement promoted by the Conservative-Liberal Democrat government. Its coalition agreement includes a commitment to "encourage the reform of football governance rules to support the co-operative ownership of football clubs by supporters".

The supporter ownership movement has grown hugely over a decade, with trusts formed at 160 British clubs, involving 120,000 members, including at Manchester United. Liverpool and Arsenal, whose trust is this week launching a "sharesave" scheme to enable more rank and file supporters to buy a stake in the club. Awareness has developed of the mutual ownership that has persisted in Europe, with Barcelona – not perfect, having last month declared huge debts, but nevertheless one of the great clubs – regarded as inspirational, and the German Bundesliga (top division), which recently reaffirmed its rule that clubs must be majority owned by a democratic supporters' association.

In the UK, though, it has been difficult to establish supporter ownership at clubs that are privately owned and whose shares cost so much to buy out, even when a club is insolvent. During the Football League's financial crisis after its television rights holder ITV Digital collapsed in 2002, several clubs were saved and became owned by supporters' trusts, but at York City and Chesterfield, financial pressure led the trusts to cede control back to businesspeople. Only Exeter City, which enjoyed the windfall of an FA Cup draw against Manchester United in January 2005, have survived as a wholly supporter-owned club in the Football League, while Lincoln City and Swansea City incorporate substantial stakes still held by trusts.

The flagship supporter-owned clubs are outside the Football League, started from scratch by committed fans: AFC Wimbledon in 2003 by fans resisting the move of Wimbledon FC to Milton Keynes; AFC Telford was reborn in 2004 after the old Telford club went bust; and this season, supporters established Chester FC after Chester City went into liquidation.

FC United of Manchester is shortly to launch a community share issue, inviting supporters to invest for no financial return within the first three years, with the aim of raising £1.5m towards a new stadium and community sports facility. "Supporter ownership means the club is democratic and transparent, and that gives confidence to fans, the community and local politicians that all money raised will go to the stadium project," says Walsh.

Expansive view

Dave Boyle, chief executive of Supporters Direct, says: "The report shows that clubs that incorporate supporter involvement have a more expansive view of what they are for, and can have a more beneficial social impact. It links clearly to the wider movements to encourage mutual models of ownership, and the big society agenda."

The report is to be sent to the chief executives of all clubs in England and Scotland, and to the Football Association and leagues. The intention is to jolt them into remembering what they are at heart.

• The Social and Community Value of Football is at supporters-direct.org

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