Sharing is caring: how community shares have helped businesses stay resilient

A new report, Understanding a maturing shares market, demonstrates the significant impact that community shares has had on businesses and communities across the UK.

The report is full of information pointing to the success of community shares, demonstrating how community shares create and sustain successful businesses:

  • Community businesses that have issued community shares are resilient – 92% of businesses that have raised finance with community shares are still trading.
  • Community shares are an influence on bring in additional money – for every £1 invested in community shares, an additional £1.18 is leveraged through grants, loans and institutional investment.


The first five years are notoriously difficult for new businesses – just 42% of new companies make it through to the end of year five. At Power to Change, we are looking to create sustainable community businesses, so what can social investment do to support that? Ultimately, community businesses don’t have enough access to investment that is flexible, patient or forgiving enough.

Community shares offer community businesses an ideal way to access risk capital, from the community they serve, to ride the ups and downs of the first few years of trading, in order to start to turn a steady profit which stays in community hands.

This has been acknowledged in the recent report from Danny Kruger MP, calling on Government to “do more to stimulate retail social investment in the form of community shares [and] provide equity matches (perhaps geared to give greater support to areas in need of levelling up) to make investment in community share schemes more attractive.”

The report also has a focus on who is investing in shares. Community shares make investment accessible – giving people a stake and say in what matters to them – 80% of people invest in community share offers because of the wider social or environmental benefits of the organisation – less than 20% stated the prospect of financial returns as a reason for investing.

For many people, social investment – in any form – is still a novel idea, bringing together the apparently polar opposites of capital and social purpose. A novel aspect of community shares is that people are invited to invest directly in enterprise. This is a new experience for most of the population, who are more used to handing over their savings to financial institutions to manage their behalf, and with little involvement in how it is used.

But the number of individual shareholders on the London Stock Exchange has halved over the last thirty years (from 20% to 11% as a proportion of overall ownership  – see Respublica: Unfinished Business).

Indeed, less than 10 years ago, community shares were almost unheard of, with just a handful of share raises in the 2000s. Yet since 2012, £155 million has been raised by 104,203 people supporting more than 440 vital businesses. Community shares are one of the standout success stories when we talk about social investment in the UK. And the investors in community shares are not your typical investor:

  • The report found that 41% of community shares investors are female in comparison to just 9% of angel investors – that number gets even smaller when you look at ‘conventional’ venture capital.
  • 56% of people investing in a community share offer earn £35,000 or less – the UK average salary – while only 4% earn over £100,000.


There is additional work to do, however, on diversity. 73% of investors are university graduates, over half (54%) are homeowners and more than half (54%) are employed. A further 36% are retired – with one in three investors being over 65. Only 4% of investors are under 35. Community shares investors are also predominantly white (92%).

But although the term community shares was not a commonly used term ten years ago, this type of capital has been around for years. The first mutual building society was formed by immigrant Irish labourers, working on the canals in Birmingham, and charged high rents for living in substandard accommodations in the city. They clubbed in and provided the capital to each build their own homes.

In the UK during the 1930s, about 7.5 million members invested over £135 million in locally owned co-operatives, benefiting the whole community (over £9bn in today’s prices). More recently, the first ever Credit Union in the UK, the Hornsey Co-operative, was established in North London in 1964 by Caribbean families excluded from mainstream finance, and was the foundation of what is now London Capital Credit Union. These are all examples of what can happen when investment is developed directly to the needs of the social economy, and not the best interest of commercial financial intermediaries.

These are all near neighbours of the model that underpins this type of financing for businesses run by – and for – the community. We have modern examples, and want to see more. The report notes that community shares has significant potential to reduce inequalities and ‘level up’ society. We need to look at community shares as an opportunity to democratise ownership and encourage people to work together in ways that have a positive community impact, beyond the narrow aim of maximising profit.

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