Introducing Community Shares
Community shares in pictures
The Importance of Equity: The Limitations of Debt
Debt
Equity
Debt is mechanistic Controlling and disengaged Seeks security
Equity is patient and engaged
Flexible
Risk sharing
What are community shares?
“The sale of shares in enterprises serving a community purpose, with the aim of raising at least £10,000 in capital from no fewer than 20 members”
Powered by Withdrawable Share Capital Unique to cooperative and community benefit societies
Nontransferable, nominal
One Member One Vote
Exempt from regulation under the FSMA 2000
Interest payment only sufficient to attract investment
“Community shares can give members meaningful involvement in the running of the society”
Operation
“Community share offers can lever further funding based on the ‘first move’ of the community”
Governance
“Community shares offers can provide long-term risk capital linked to the performance of the society”
Leverage
Capital
The benefits of community shares
Community share offers can ‘bake in’ the customer base and promote member involvement in the operation of the enterprise”
Community shares market indicators: 2009 - 2014
Nearly 500 new societies registered
Almost 200 share offers undertaken
Est. £35m raised from over 35,000 members
Average offer raised £175,000
Average membership 175 members
Creative and media Sports 1% 3%
Average investment per member £750
Food and Farming 8%
Pubs and Brewing 15%
Regeneration and development 7%
Energy and Environment 33% Community Retail 24% Social Care 2%
Transport 2%
CLT and Housing 3%
Other 2%
Case study: TreeStation, Manchester
Initially a private tree-work enterprise based in Manchester, converted to a Ben Com in 2011 having recognised the community emphasis of the venture Needed significant capital injection to invest in plant and machinery to secure and deliver woodland management contracts In 2012 it raised over £140,000 from over 100 members through a community share offer
Share offer supported through an underwriting fund, and levered in further grant funding to provide a stable capital base
Key pillars of a successful share offer
Business model
Community engagement
Governance
Offer document
Viable
Scale and scope
Legal form
Accurate
Profitable
Attracting support
Rules
Informative
Sustainable
Building membership
Conduct
Share offer ‘campaign’
What is the Community Shares Unit?
DCLG-funded programme launched in 2012 and running to March 2015
Partnership between Cooperatives UK and Locality
Objective to grow the market for community shares, supporting: • Communities looking to develop share offers • Supporters exploring the community shares market • Intermediaries, practitioners and advisers involved in comshares
With growth comes ‘responsibility’ - the work of the CSU CSU is working to develop the tools and structures that will support greater responsibility over quality for Market community share offers intelligence
CSU compliance mark / Microgenius
Community Shares Handbook
Best practice share offers
Advice and Support
Practitioner training and accreditation
Market Intelligence
Regularly updated directory of registrations, share offers and annual returns
Searchable and exportable data
Forms the basis for more in-depth research into the development of community shares market
Community Shares Handbook
Consolidation of all advice materials to form Community Shares Handbook
Oversight from a technical committee of government representatives and FCA
Collaboratively developed with practitioners through an online platform
Regularly updated and monitored to ensure relevancy and accuracy
Introducing Microgenius
Technological tool for both enterprises and supporters
Secure payment facility
Shareholder register
Social media and online presence
Visible portal for all compliant share offers
CSU and market development
By sector: exploring the use of community shares in new and emerging markets such as heritage, housing, media and transport
By geography: developing a ‘hub and spoke’ model for a UK-wide CSU which works alongside the devolved nations
By audience: engaging new and promising audiences such as local authorities, CDFIs and charities
Get in touch
www.communityshares.org.uk www.microgenius.org.uk
[email protected]
