Towards a Community Shares Unit
The Community Shares Programme formally came to an end on 31 March 2011. Funded by the Cabinet Office and the Department of Communities and Local Government (DCLG), this 27 month action-research project, delivered by Co-operatives UK and Locality, has given new meaning to the terms “community investment” and “community shares”.
Early in the programme we came to the conclusion that a co-operative and community benefit society issuing withdrawable share capital is the most effective legal form for a smaller enterprise seeking community investment. This legal form had previously been largely overlooked as a vehicle for investment; a government review in 2002 described it as a “useful, but underused” legal form.
At the start of the programme in January 2009, we identified 84 examples of community investment in the UK, including 26 enterprises that used other legal formats, mainly plcs and CICs. Since then, the number of co-operative and community benefit societies financed by or planning to offer community shares has grown from just 58 to 164 societies. During the same period there have only been four cases of community investment using other legal forms.
This rapid growth in the number of societies demonstrates the public appetite for investing in enterprises that serve a community purpose. Since the start of the Community Shares programme, 86 new societies have been registered with the express intention of offering community shares. This compares with an average of just four offers per annum in the preceding decade. The rate of growth continues: in the first three months of 2011 sixteen new societies have been registered. To put this into context, the AIM market launched just 123 public offerings within the two year period spanning 2009-10.
Now our aim is to build on the momentum of the Community Shares Programme by developing a Community Shares Unit within Co-operatives UK. We are talking to DCLG and the Cabinet Office about how this Unit can be financed.
Modelled on the highly successful Asset Transfer Unit within Locality, the new Unit could be steered by an independent Stakeholder Forum, composed of representatives from membership organisations, government, financial intermediaries, community shares practitioners and other expert professionals. In addition to market development and intelligence work, the Unit could develop co-regulatory standards of good practice, provide training to community shares advisers and practitioners, and encourage new financial mechanisms that align community investment with the broader social investment and ethical investment markets.
For now, market intelligence, newsletters and updates will continue to be available through the Community Shares website (www.communityshares.org.uk). We will be publishing The Practitioners Guide to Community Shares, a definitive study drawing on the lessons of the action-research programme, to be launched at a policy seminar in early summer.
Jim Brown, Community Shares Newsletter editor
Could the Big Society Bank be big for community shares?
The Government’s vision for the Big Society Bank includes references to the Community Shares programme in its framework for action. The programme is credited with having “contributed to the rapid growth of interest and activity in community investment”. Community shares are seen as a vital part of creating the right business environment for social ventures. The Cabinet Office’s recent publication Growing the Social Investment Market, calls for the creation of a “new asset class” of social investment, a term which could deservedly be applied to community shares, given their unique attributes, underpinned by co-operative and community benefit society legislation.
The centrepiece of the Government’s strategy is the Big Society Bank, an independent wholesale provider of investment finance, capitalised by a £200m injection from the largest UK banks, plus an initial £60-100m from dormant accounts.
The Community Shares Programme would like the Big Society Bank to back a range of community investment products. The previous issue of the Community Shares Newsletter described three such products: a fund to underwrite community share offers, bridging finance for societies promoting member investment by instalments, and a pioneer fund to match high-risk investment in pre-starts to help them get investment-ready.
Budget mixed news for community shares
The recent Budget contained mixed news for community share initiatives. First, the good news: Enterprise Investment Scheme (EIS) tax relief has been increased from 20% to 30%. But there was bad news for community renewable projects with business plans based on getting Feed-In Tariffs (FITs). These schemes will no longer be eligible for EIS if they are not generating electricity before 6 April 2012. This is a bitter blow for many communities developing small schemes which are only viable if both FITs and EIS are available. It follows more bad news about a reduction in FIT rates announced earlier this year. Click here for more
Fox and Hounds celebration
Monday 4 April 2011 is the date set for the grand re-opening of the Fox and Hounds public house in Ennerdale Bridge, Cleator, Cumbria. A highly successful community share offer raised £82,250 from 174 local investors, far outreaching the minimum target of £60,000. And although this investment has been vital, so has the volunteer support that has transformed this boarded-up building into a thriving centre for the local community. Registered as a community benefit society called Ennerdale Hub Limited, the pub will be selling home-cooked food, which really is home-made by members who have been registered as suppliers to the Hub. In addition to the pub and restaurant, there is a bed and breakfast business which already has over £11,000 worth of advance bookings.
The Fox and Hounds joins a growing list of community-owned pubs, building on a trend started by the Old Crown in nearby Heskett Newmarket back in 2003.
Market News: New registrationsThe following new societies, all of which are planning a community share offer, have been added to the Community Shares directory since the last newsletter in February 2010:
- Plotgate Venture Co-operative and Community Land Trust Provision of rural homes and livelihoods in Glastonbury, Somerset
- Lyvennet Community Pub in rural Cumbria
- Fresh From The Fields Community Compost in Nottingham
- Slindon Forge Society Community shop in West Sussex
- Green Energy Nayland Renewable energy scheme using photovoltaic solar panels in Suffolk
- Bay of Colwyn Community Benefit Society Social care initiative in North Wales
- Ennerdale Hub Community buy-out of Fox and Hounds public house in rural Cumbria
- Holne Community Shop and Tearoom in rural Devon
- Clyde Valley Energy Co-operative Community-owned wind farm being developed by Energy4All in Lanarkshire, Scotland
- Kingsbury Community Enterprise Community shop in rural Somerset
- Five Valleys Energy Co-operative Renewable energy in Stroud and surrounding district (registered October2010)
Current share offers
The following societies have recently launched community share offers, which are still open to investment:
Recently completed offers
- Visitors to Voice 11 at O2 London learn more about Community Shares