Community shares have become a real co-operative game changer for local projects across the UK.
Community shares allows communities of people to come together, to crowdfund to save or launch enterprises, such as pubs or renewable energy projects, by investing often small sums of money and becoming co‑owners in the process.
Over the last decade, and we are working on the data so these are tentative, around 120,000 people have co-invested well over £100 million in 350 community businesses.
Getting the quality right, to flag up risks and keep trust high has been key to its success. Three years ago, at the community sports centre of FC United, we launched the Community Shares Standard, a quality assurance mark for the field. Since then, exactly one hundred initiatives have received the standard mark. That’s nice timing as this week, in England, is Communities Week.
The Community Shares Standard Mark was developed by the Community Shares Unit, run by Co‑operatives UK and Locality, with early support from the Financial Conduct Authority (FCA) to underpin the quality of share offers.
The 100th standard mark recipient, Eden‑Rose Community Limited in Suffolk, aims to raise £80,000 from the local community to support its mission to use woodlands and the natural environment as a way to provide support to children and adults with life‑limiting illnesses, such as cancer.
Capital matters for projects like this. Equity is what most social ventures typically need: patient capital for the long term rather than expensive short-term debt, which is where the wider field of social investment has tended to focus. Most social enterprises are under-capitalised and over-trading. They are on a knife edge, with tight balance sheets and nervy cash flow.
For a community share offer, you need a clear business at its heart with income over time, so that there is a route to repaying capital over time. The assets are then locked. They can’t be distributed, but they can of course be repaid – at par value.
By becoming a member owner of a community benefit society and investing through community shares, a person who may have once “donated” and be at arms length from the operation of a charity can now move closer to the cause they believe in and have a real say and involvement in how their money is used. The story of Clevedon Pier is an example of one organisation retaining its charitable status but moving to a democratic society model to enable it to raise community shares – set out in a Charity Commission case report as a positive example for other charities to follow.
Some open market research that Co-operatives UK has conducted shows that one in four people would invest money or time to help save local community assets.
23% would be likely to invest to help save their local pub from closure, and they would give time and energy to help run other local assets such as a local park or public space (25%), historical site or building (24%), or cinema or theatre (16%).
Local shares? Local people investing in local enterprises? If it sounds like a return to a community capitalism or mutuality of the past, remember that it is different. It uses modern technology platforms, mobilises communities to act as communities and, critically, keeps control in the hands of democratically organised members.
It is a reinvention of the co-operative form for new times. Community shares is a way to get things done.