Community Shares: the UK experience

The launch of community share offers in the UK demonstrates the potential for communities to invest in local enterprises.

Since 2010 there have been over 250 community share offers by UK co-operatives, raising in excess of £50 million from more than 50,000 people. Co-operatives were formed and issued shares to establish or support a diverse range of projects from the Manchester football club, FC United, to the saving and ongoing operation of a local pub in Bath, the Bell Inn, to establishing community solar projects. These share offers are facilitated by a crowdfunding platform, Microgenious2.

In the 2014 Nesta report on alternative finance in the UK3, it was found that the average amount raised in a community share offer was £174,286 and the average investment was £368. In a survey of community share investors, Nesta reported that:

When deciding to invest through community shares, the factors identified as being most important are the social aims of the project receiving investment. More than 90 per cent of respondents reported ‘doing social or environmental good’, ‘feeling their money is making a difference’ and that ‘the organisation or projects invested in will create a stronger community’ as important or very important factors. The prospect of achieving financial returns was only important or very important to 24 per cent of investors. 68 per cent of respondents say they invested amounts that they felt they could afford to lose.

Community shares, however, are not just about raising capital. The community share is a door-opener for individuals who may never have considered investing in shares or debentures, but who have an interest in supporting enterprises in their local community, particularly when those local enterprises provide services that the community members want. In this way they become a vehicle for community engagement.

Translating the success of community share issues in the UK to the potential for similar capital raising campaigns in Australia requires a closer examination of the nature of co-operative securities and the local regulatory landscape.