Part 1 – Introduction

Part 1 introduces concepts of community investment using the UK model of community shares through  crowdfunding campaigns. This Part relies on resources produced for communities in the UK, and provides simple guidance on how to stimulate community engagement in a project based on a community investment enterprise. It also examines the Australian regulatory environment for crowdfunding, in particular crowdfunding for co-operative securities. 

Co-operatives have played a key role in many Australian communities for more than one hundred years… Today, co-operatives exist in all sectors of the Australian economy contributing 7% to the country’s GDP (including superannuation funds) and an immeasurable amount of social and economic benefit to the not-for-profit sector and the communities they serve.

The Handbook is written primarily for communities that have little or no experience in raising funds for a local or community enterprise. It uses plain English where possible to explain legal concepts and it is a general guide that is not intended to be a substitute for professional financial, business or legal advice.

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.

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.

Investing in community shares engages communities in a ‘virtuous’ circle where it is in their interests as members and investors to also be active as customers, supporters, and volunteers. The same applies to other stakeholders, including employees and suppliers, giving new meaning to the term multi-stakeholder, where the same person engages with the enterprise through a multiplicity of stakeholder roles.

In the UK the community shares programme began in 2009. Since its launch, more than 90% of community share offers have been made by new co-operative societies.

The very nature of the community shares business model leads to the conclusion that techniques for crowdfunding are a good fit for community based funding initiatives. Crowdfunding is a relatively new means of raising money. There is no legal definition of crowdfunding and there is no specific crowdfunding regulation in Australia.

Australian companies are regulated under the federal Corporations Act. This legislation provides for the circumstances and manner in which companies can issue securities, and thereby raise funds, from the public.

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