Should you consider Community Shares if you have good idea or simply stick with grants and more traditional sources of funding?
What are Community Shares?
Community Shares raise money by offering local people to invest in the ownership of a new cooperative venture. It’s not an ‘either/or’ alternative as Community Shares are often used to supplement more traditional sources of funding.
When do they work well?
Community Share Offers appear to work particularly well where there is a building or other physical asset involved that is well-loved or provides an important local service. Community Shares are a great test of local support and build-in an ongoing loyalty from shareholders as customers.
How much might a Share Offer raise?
Community Shares can be raised on a small or a large scale. Normally the minimum investment is set at £50-£100 and typically there will be hundreds or even thousands of usually modest investors.
When Hastings Peer had a shortfall in funding already raised from the Heritage Lottery Fund and other sources, it raised £575,000 through a Community Shares offer.
Benenden Community Shop in Kent raised £60,000 for a refit, initial stock and to provide working capital that includes maintaining a Post Office and opening a small café.
The Bell Inn, Bath was faced with closure in 2012 but successfully raised over £780,000 from 538 investors. An additional small bank loan was secured. Funding is locked in to the pub for three years but shareholders can expect a return of 5-7% p.a. -so achieving a good local and a sound investment!
Is the process very bureaucratic?
In order to issue shares, you will need to think about the structure of your organisation or the new business. Shareholders get a say in how the initiative is run and can even get a return on their investment.
You will have to prepare and promote a legally-binding share offer and process many relatively small amounts of cash. Help is at hand though: Microgenius provides easy-to-use software run by the Community Shares Unit and backed by Co-operatives UK and Locality. With Microgenius you can collect money and your new members’ details securely and electronically instead of via lots of paperwork.
Where can I go for advice?
For more information about Community Shares, visit the Community Shares website . It is packed with useful advice and contacts.
You can also watch this useful introductory video and share it with others.
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