Community investment (or community shares) is the investment by ordinary members of the public in enterprises that they wish to support.
Those who invest in the social enterprises are generally likely to become member shareholders with a governance role. If your social business is unable to accept this community involvement in governance, you should look at other forms of finance.
Examples of community shares
There has been a significant recent upsurge in the use of community shares across a variety of sectors. This includes local social businesses such as community-owned shops and pubs, community assets and buildings, as well as agriculture, farming and woodland. Larger scale enterprises like renewable energy projects have also gained community investment lately.
Incentives for community investment
There are a variety of reasons people invest in community shares. Often they do it to save or create a useful asset for their community, or to achieve a desired outcome, such as an increase in green energy.
Although community lenders generally don’t invest for financial gain, a return on their capital and the various tax reliefs available are an added incentive for putting money into social businesses.
Legal structures for community investment businesses
Community investment businesses are almost exclusively Registered Societies. Businesses who adopt this legal format are exempted from much of the restrictive provisions of the Financial Services and Markets Act 2000. They are democratic structures, which issue 'Withdrawable Shares' that do not increase in value and cannot be traded or sold on.
Community investment guide
The Community Shares Wales project delivered by the Wales Co-operative Centre features comprehensive guides, case studies and other resources on community investment and community shares. Browse their Community Shares Handbook for more information.