Community Shares

In an era where funding is increasingly challenging to secure, charities and community organisations need to think creatively about raising capital. Community shares are emerging as a powerful way to engage local people and build financial sustainability while maintaining community-driven governance. This article explores the concept, benefits, and practical steps for launching a community share offer.

What Are Community Shares?

Community shares are a form of equity investment in a cooperative or community benefit society. Unlike traditional shares traded on the stock market, community shares are purchased by individuals who support your organisation’s social mission and want to invest in its success. Investors receive interest on their shares, and in some cases, their initial investment can be returned. However, it’s important to note that these shares do not promise high returns and come with financial risks, as they cannot be traded.

The Appeal for Charities and Community Organisations

For charities and community groups, community shares offer more than just a funding opportunity; they foster a deeper sense of ownership among members and residents. They are well-suited for projects that provide tangible community benefits, such as renovating community buildings, launching renewable energy initiatives, or saving local amenities from closure.

Here’s why community shares might be the right option for your organisation:

  1. Democratic Control: By engaging your community as co-owners, you ensure that your organsation remains aligned with the needs of those it serves. Community shareholders usually have equal voting rights, no matter the size of their investment.
  2. Unlocking Grant Funding and Support: Some grant makers and support programs specifically encourage or match fund projects that use community shares. Successfully raising money through your community can also strengthen your case when applying for further grants.
  3. Long-term Financial Sustainability: Community share capital often comes without fixed repayment schedules, giving your organisation more flexibility. This stability is crucial for projects with longer development timelines.

Who Can Benefit from Community Shares?

Organisations best suited for community share offers often have projects with a broad, local impact. Examples include:

  • Community-owned pubs and shops: Prevent the loss of vital services by giving residents a stake in local amenities.
  • Renewable energy projects: Install solar panels or wind turbines that generate clean energy and income.
  • Housing co-ops: Address the housing crisis with affordable, community-owned homes.
  • Sports clubs: Upgrade facilities and ensure long-term viability.

Steps to Launch a Community Share Offer

  1. Assess Your Organisation’s Readiness: Start by evaluating whether your organisation is a suitable candidate. This includes confirming you are, or are willing to become, a legal entity that can issue shares, such as a community benefit society or cooperative.
  2. Engage the Community Early: A successful share offer relies on strong community support. Organise meetings, run surveys, and use social media to understand local needs and build excitement around your project.
  3. Develop a Business Plan: Outline how the funds will be used, the expected social impact, and how you plan to generate revenue to pay interest to shareholders. Be transparent about risks, as honesty builds trust with potential investors.
  4. Set Your Offer Terms: Decide on the minimum and maximum investment amounts, the interest rate you will offer, and the terms for withdrawing investment. Ensure these terms are fair and reflect the financial realities of your project.
  5. Promote Your Share Offer: Launch a marketing campaign that highlights your mission and the community benefits. Use testimonials, local media, and events to spread the word. Clear communication about the risks and rewards is crucial.
  6. Ongoing Engagement: After a successful share offer, keep your new community shareholders engaged. Provide updates, hold annual meetings, and celebrate milestones together. Remember, they are more than investors—they are partners in your mission.

Real-world Success Stories

  • Fordhall Farm, Shropshire: This community-owned farm raised over £800,000 from 8,000 investors to save their land from development. Today, it thrives as an organic farm and education center, with a community that feels a genuine sense of ownership.
  • Southampton’s West Solent Solar Cooperative: Raised £2.5 million through community shares to develop a 2.4 MW solar farm. It generates clean energy while providing returns to its investors and supporting local sustainability initiatives.

What Are the Risks?

It’s essential to acknowledge that community shares are not a risk-free investment. There are no guarantees of financial returns, and investors may lose some or all of their capital if the venture fails. As a charity or community organization, you need to manage expectations carefully and focus on the social value of your project.

Conclusion

Community shares can transform how charities and community organisations raise capital. By engaging supporters in a meaningful and impactful way, they not only provide funds but also foster a committed community invested in the project’s success. If your organisation has a vision for a community-driven initiative, a well-executed share offer could be your path to making that dream a reality.

Interested in Learning More? Reach out to organisations that support community share initiatives, such as the Community Shares Unit, for resources and advice on getting started. Empower your community, strengthen your finances, and drive lasting social change with community shares.