What is community investment?

Community investment builds on community engagement. It is about ordinary people investing their own money – sometimes small sums, sometimes larger amounts – to support the development of something they need or care about.

Communities have an innate collective power. When community power is engaged it can wield political and commercial strength that provides both tangible and intangible benefits to the community and beyond.

Local or geographical communities already exist as social units. However social media provides a ready-made platform for persons with a common interest to form a community that can exist without geographical boundaries. Our daily newspapers publish stories about how communities can achieve change, support development and demonstrate satisfaction or strength, particularly when faced with a common problem or goal.

When we think of investment, we primarily think about placing money or value into a venture with the purpose of gaining a reward or profit. Community investment is much broader than this.

For individuals in a community it means placing money or value into a venture that may provide a monetary gain or that may provide a service or other intangible benefit either for themselves as individuals or to their broader community. For the community, it means that a small or medium enterprise can access the social and financial capital of individuals in the community not only to sustain that enterprise but also to support its growth for the benefit of the whole community.

Communities may be geographically local groups of people defined by a town, suburb or rural location or they may be a geographically diverse group that is linked by a common interest or goal. Communities such as these may identify a common need or service that they believe will bring a benefit to their community but it is likely to need funding to operate. Some communities may turn to the government to fund and operate such a service, but this has the drawback that funding may or may not be available or may be withdrawn in the future and the service may be delivered in a manner that complies with government design or policy but does not necessarily satisfy the community’s need.

Communities may need to start their own enterprise to supply these services, and this means starting a business that requires funding. While some funding may be available through governments, it will not be ongoing and it will require effort by the community to use it effectively. Community enterprises are not all about the satisfying of altruistic goals, such as the provision of services that are needed within a community. They can be any enterprise that satisfies a community’s needs or interests. More importantly, as a community enterprise funded by community investment it is owned by community members. Ownership is crucial to community engagement and sustainability.

A community that does not have a retail store is unlikely to be able to access direct funding to open a retail store; a community interested in renewable energy may find that government funding is not readily directed towards developing a renewable generator to serve that community.