Community Shares – it’s not just about the money

We’re really pleased about the launch earlier this month of our £1 million initiative to support and stimulate community share offers. It is being delivered on our behalf by Co-operatives UK and Locality, via the Community Shares Unit (CSU).
It’s intended to be an exploratory programme in which new and innovative models for community shares can be explored through working with a series of community businesses. They will receive a small development support grant at the pre-launch stage, have access to match funding in the form of equity or grant at the point of the community share offer, as well as the prospect of further support at the post-offer stage.

One reason we’re excited here at Power to Change is that we’ve seen that community shares are an ideal way for communities to invest in organisations serving a community purpose: local businesses, accountable to members, serving and benefiting the whole community. We want to see how we can support and stimulate involvement with community share offers, particularly in more disadvantaged areas and sectors where community businesses are under-represented.

According to recent analysis of the community business market, many community businesses find accessing repayable finance challenging. We also know that many of them have highlighted community shares as a priority to look at when considering how to access the right kind of cash on the right sort of terms. All community businesses need risk capital, whether this is to start, to grow, or to become sustainable. Community shares enable this investment to come from the very community the business intends to benefit.

But it’s not just about the money.

With a fully engaged community providing the capital for a community business, there is real scope to improve the quality of community life. Ownership and investment go together to form a strong bond, engaging communities in businesses that serve their interests. Investors are more likely to become loyal customers, volunteers and activists that support the business in achieving its community purpose. And communities can end up owning important assets: pubs, football clubs, shops, a fleet of ferries. The people of Hastings own a pier! This creates an enormous well spring of goodwill.

Within our portfolio, we will support successful community businesses to keep growing their revenue and impact. But we also want to back those with great potential who have limited track record, and those who operate in more disadvantaged markets where creating a sustainable business can be challenging.

As a grant maker we will sometimes take risks that others cannot. Community shares, like any investment, are not a zero risk or even low risk endeavour. Inviting people to invest in an enterprise and risk losing their money must be carried out in a responsible manner. But there is no money that works harder for the community than finance raised from the community.

If this sounds of interest, please do get in touch to find out how your organisation could get involved in this programme. You can read more about it here. The first round of nominations closes on Friday 25th March 2016. But don’t worry, there will be further opportunities to get involved as we go through the year.