According to new research from Co-operatives UK, community ownership models are helping to create a new generation of UK businesses that are better equipped to withstand the Covid-19 crisis.
The organisation’s biggest ever study of the community shares market finds that of those businesses who have raised finance with community shares to date, a remarkable 92% are still trading.
Community shares has become a popular approach to raising finance for co-operatives and community benefit societies – businesses owned and run by local communities across the UK. This finance model has helped to save local community spaces from closure, such as pubs, shops and football clubs.
According to the research, 80% of people invest in community share offers because of the wider social or environmental benefits of the organisation. More than half (53%) of community shares investors said they felt the share offer would create a stronger community.
Investments in community share offers can be from as little as £10, with an average investment of £395 and an average annual return of 4.8%. The process is highly democratic too, with one vote per member, regardless of how much is invested.
Since 2012, £155 million has been raised by over 103,000 community share investors across the UK to save and create more than 440 vital community spaces and businesses.
Rose Marley, recently announced as the new CEO of Co-operatives UK, believes that as the coronavirus pandemic continues to drive mass business closures, more communities will consider how they might benefit from setting up community shares schemes.
She said: “As more and more major businesses announce closures and redundancies, it’s clear that the Covid-19 pandemic is reshaping our economy in fundamental ways. But this adversity will create opportunity, rebuilding and rethinking the way we do business and operate our communities. Now is the time to consider those co-operative business models that can sustain jobs and communities going forward. The growing community shares market is certainly one viable option.”
The sustainability of collective ownership was also a feature in research published earlier this year by Co-operatives UK which showed that whilst just 42% of new enterprises survive their first five years of operations, 76% of co-operatives are still trading after reaching the same milestone.
Rose added: “As this new research shows, community shares are an extremely effective vehicle for building sustainable businesses that are also tackling fundamental challenges. Look at Student Co-op Homes addressing the housing crisis, raising £300,000 to support a new generation of student-owned housing in universities across the UK. Or Equal Care Co-op who are developing an ambitious new way of delivering social care.”
“By giving people a stake in a local business, and by encouraging community participation, businesses will flourish and help their communities to thrive too. They don’t have to answer to faceless creditors or landlords who don’t have their best interests at heart. Instead, the research reveals that community share investors are driven to make a positive impact in local areas.”
Community share offers are helping communities across the UK tackle a range of societal issues. In Edinburgh, Common Ground Against Homelessness is pioneering a solution to homelessness developed over many years by partner charity Rowan Alba. The community benefit society has just launched its first share offer and already raised over £156,000 in a matter of weeks. With a target of £650,000, Common Ground’s aim is to purchase a property in Edinburgh and convert it into a 9-bed home for life for homeless men.
The property will be leased on a long-term basis to local charity Rowan Alba, who have over 25 years of experience in making homes for life for street homeless people. By using community shares to raise the capital, supporters will be offered the chance not just to donate money but to invest in a sustainable social enterprise, with the prospect of seeing their money returned if the venture is a success.
In London, an exciting community share offer is helping a London sports centre raise funds and generate an income – as well as giving local investors a stake in their community. North Kensington Community Energy is working with The Westway Sports Centre to offer a 3% return to investors who pledge money towards a set of solar panels.
As organiser, Eva Goudouneix says having a low minimum investment value has opened up the project to a wide range of people. “We have a minimum of £100, £50 if you live in the borough, are under 25 or on benefits, so it really is very accessible. It gives people a stake in their area, in their community and that means they are part of the decision-making process too. That’s very powerful for people.”
For community businesses or potential investors interested in finding out more about how to get involved in community ownership models visit www.uk.coop/comshares.