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Village shop or pub at risk of closure? Want to establish an organic food or renewable energy business? Community shares could hold the answer to your finance issue.
At a seminar about community shares in Gloucester last week, experts explained how co-operatives and social enterprises were selling community shares to raise the start-up capital needed to get projects off the ground.
The Co-operative Futures seminar, called Could Your Community Share?, heard from three businesspeople who had run successful community share issues.
Mark Luntley, chairman of Westmill Wind Farm on the Wiltshire / Oxfordshire border told delegates how his co-operative had raised £4.6 million through the issue of community shares to erect five 49-metre wind turbines, which generate enough energy to power 2,500 homes.
This year Westmill Solar Co-op, on the same site, reached its £4 million community share issue target in a record-breaking six weeks, enabling it to construct a 21,000 panel solar farm.
“Community shares are a way to enable people to invest in something they believe in,” said Mark. “Our investors tend to be local – over half of our investors come from within a 50 mile radius of the farm.
“We sell our electricity to suppliers like Good Energy and Co-operative Energy, and because our shareholders tend to buy their electricity from these companies it means they get a supply of green electricity for 25 years, then they get their money back.
“Community shares give investors a greater sense of ownership, more of the profits remain in the local community, and the system creates an army of advocates.”
Joe Hasell from Cultivate Oxford, a community benefit society bringing fresh, local, organically-grown food direct from farmers to the city, talked about the launch of his co-operative’s £55,000 community share issue to buy a farm, equipment and seeds and a new VegVan.
“We set up a five-acre market garden with a lovely view of Didcot power station,” joked Joe. “Our co-operative was formed to improve the food system from an environmental and social perspective. And our veg van provides us – and other local producers – with an innovative route to market. It’s like a mobile greengrocer.”
Joe said the issue of shares was a good alternative to grant funding. “We’re not beholden to funders, and because our shareholders want us to succeed they are our best customers and advocates: at least 50 percent of our trade comes from our members, and perhaps two-thirds from our members’ network.”
Joe said community shares were something that the public – and the media – could get excited about: “They’re cool and they’re sexy,” he said, “but it takes a lot of work to promote a share issue. In our case we were promoting the venture when we could ave been planting.”
Alison Crane from Gloucestershire Community Energy Co-op talked about raising £105,000 in shares to install 186 solar panels on the roof of the City Works building in Gloucester – the former shirt factory turned community enterprise hub, headquarters of Co-operative Futures, and the venue for the seminar.
“Because of the Feed In Tariff we were able to offer our investors a return of five percent,” said Alison. “We attracted 49 investors, nearly all of whom were individuals. The scheme was a good alternative to the rent-a-roof system system where the installers keep the Feed In Tariff and get rich – here it’s the community that gets rich.
Jo White, director of Co-operative Futures, told delegates that there was a growing trend to move away from ‘fundraising’ and towards ‘investment’, with public recognition that some community services are best delivered through a business, like a co-operative Industrial and Provident Society.
“There is also a growing appreciation,” she said, “that businesses can be run for a social purpose, and not solely for private profit.”
“The typical investor,” said Jo, “sees the purchase of community shares as an investment, rather than a donation. “
To find out more about forming a co-operative or community benefit society, contact Co-operative Futures at www.futures.coop