Co-operatives UK is to deliver a £2.2m investment in the community business sector, targeted at harder-to-reach and deprived areas.
The funding has been granted by Access – The Foundation for Social Investment to help people use community shares as a form of raising finance to save local assets or set up vital services. Co-operative and Community Finance (CCF) and Community Shares ICOF will also help to deliver the scheme.
Access says community shares provide a genuine “patient equity product” – a long-term investment where investors are prepared to wait several years before seeing any financial returns – in the social investment market.
The goal of the funding is to help communities exploring community shares to access more types of business development support, grants, equity and even loan finance. This will be administered through the existing Booster Fund, managed by Co-operatives UK. Priorities for the fund include expanding the reach of community shares to new communities, excluded communities, organisations with diverse leadership and younger people.
The Community Shares Booster Fund has been supporting community businesses since 2016 with development grants and equity investment for community share offers, thanks to funding from Power to Change and Architectural Heritage Fund.
The Booster Fund is delivered by Co-operatives UK’s Community Shares Unit (CSU) in partnership with Locality, Plunkett Foundation and Co-operative and Community Finance. It continues to be backed by Power to Change, now with additional investment from Access.
John Dawson, head of market development at the CSU, said: “Through this new investment we will be working closely with our partners CCF and Community Shares ICOF who will also be a match investor and will offer the option to underwrite individuals buying community shares over a twelve-month period. CCF will also be able to offer loan finance to Booster applicants if this is needed as part of their overall investment raise.”
Data shows that the Booster Fund also generates greater interest in community share offers, said Dawson. “Our report in 2020 revealed that institutional investment gives communities confidence in a share offer,” he added. “Our stats show that for every £1 invested by an institutional investor, it unlocks an additional £3.44 from community investors.”
According to the CSU’s 2023 report, to date 130,000 people have invested £210m in 539 community businesses and organisations through a total of 709 share offers.
Examples of local assets rescued by community shares include Heptonstall Community Assets, formed to save a village post office under threat of closure in Heptonstall, West Yorkshire. Thanks to a successful community share offer, which received support and investment through the Booster Fund, the post office is now owned and run by the villagers.
Local resident Lindsay Smith said: “You realise what a lifeline it is. It functions very centrally in the little community that is Heptonstall. A shop facility like that is key for the future of the community. That’s why it was important for me to invest in it, wanting that sense of support to continue for everyone.”
A much-loved independent local cinema, the Ultimate Picture Palace in Oxford, received support through the Booster Fund to launch a share offer which, by keeping share prices low, meant a wider range of people were able to invest.
Volunteer and former committee member Pat O’Shea said: “This cinema is an institution. It’s in a commercial area but it’s also important that there are cultural things going on. It’s a facility people love and it’s important to the community. The minimum investment was £50 – lowered to £30 for young people and local residents. It meant lots of people put in small amounts, which is why we’ve got so many members; it’s a broad, inclusive base.”
And the Joiners Arms pub, an LGBTQ space in Tower Hamlets, East London, was saved by regulars after it was closed for redevelopment.
Amy Roberts, chair the Friends of The Joiners Arms, said: “We started a campaign shouting loudly about how important LGBTQ spaces are – and how losing these spaces is detrimental to a marginalised community. The Joiners Arms wasn’t just a pub, it was a vital hub for the LGBTQ community.”
In June 2022, they launched their community share offer, after receiving a Booster Fund grant to get it into shape. Within months, they’d exceeded their target and raised £152,000.
Other organisations to benefit include sign language co-op Signalise, whose share offer raised £331,400 from more than 200 investors; East Marsh Community – which converts derelict properties into decent, affordable
homes in Grimsby’s East Marsh – whose share offer raised £500,118 from 162 investors; and People Powered Retrofit, which helps people retrofit their homes to improve energy efficiency– who raised £731,749 from 358 investors.
Ana Van Bilsen Irias, senior programme manager at Access, said: “Community shares are a flexible and effective way to raise finance – benefiting community businesses, investors and the wider community. This is the first time we have supported this type of offer – using funds from Dormant Assets through our Flexible Finance programme to expand the reach of community shares to underserved communities and providing the type of flexible and patient finance that people and communities need.”
CCF’s business development manager, Tim Coomer said: “We are absolutely delighted to be partnering with Co-operatives UK on the new Access-funded booster programme. Helping co-operatives and community businesses access truly patient and supportive capital is incredibly important and works alongside our finance options to help grow the sector sustainably. We are keen that the combination of development support and investment will unlock the potential for disadvantaged and underrepresented communities to take ownership of local assets and control of enterprises that make their lives better.”
Tim Davies-Pugh, CEO at Power to Change, added: “We know that when buildings and services are owned and run by the community they serve we see the creation of community wealth with resources, jobs and money staying local, helping to grow and build economically resilient places that people can feel a real sense of pride in.
“The Community Shares Booster Fund continues to be a great way for community businesses to raise much needed funds, helping them develop and launch a community share offer, giving local people the power to invest and own the local buildings, cherished institutions and important services that matter to them. As an early backer of the programme, Power to Change has always recognised the potential and impact of community shares and what they can do for communities.
“We are delighted that Access have also recognised the value of the programme – this additional investment will allow Booster to engage more people with community shares and unlock power in more communities.”