Stewart McCarthy of Eigg Brewery

The organisation’s biggest ever study of the community shares market finds that of those businesses who have raised finance with community shares to date, a remarkable 92% are still trading.

Community shares has become a popular approach to raising finance for co-operatives and community benefit societies – businesses owned and run by local communities across the UK. This finance model has helped to save local community spaces from closure, such as pubs, shops and football clubs.

In Scotland, there is a growing appetite for community share offers, with seven campaigns being launched by Community Shares Scotland over the next few weeks and two just launched, representing a total fundraising target of £2 million.

This is the busiest period ever for Community Shares Scotland, reflecting the growing popularity of community ownership models as a way of creating a new generation of British businesses that are better equipped to withstand the Covid-19 crisis.

Community Shares Scotland is an initiative set up with funding from the Scottish Government and the National Lottery Community Fund to support the raising of money through community shares, has supported in the region of 400 community groups since the programme launched in 2014.

The organisation have launched 35 community share offers over the past six years, totalling over £12m worth of investment from over 12,000 community members, which has been match funded by £24m from other sources.

Active community share offers in Scotland include Common Ground Against Homelessness, a solution to homelessness developed over many years by partner charity Rowan Alba. The community benefit society has just launched its first share offer and already raised over £156,000 in a matter of weeks. With a target of £650,000, Common Ground’s aim is to purchase a property in Edinburgh and convert it into a nine-bed home for life for homeless men.

Also active is Moray-based R-evolution for Good, who are looking to raise £40,000 to run a programme aimed at tackling child poverty in the region and Yetholm Community Shop and Post Office in the Scottish Borders, which is looking to raise £80,000 to secure this vital service for the local community. Community share offers due to launch next month include Eigg Brewery, who are looking to raise £200,000 and Raasay Hydro and Sleat Hydro schemes who are looking to raise £630,000 and £300,000 respectively.

According to the research, 80% of people invest in community share offers because of the wider social or environmental benefits of the organisation. More than half (53%) of community shares investors said they felt the share offer would create a stronger community.

Investments in community share offers can be from as little as £10, with an average investment of £395 and an average annual return of 4.8%. The process is highly democratic too, with one vote per member, regardless of how much is invested.

Since 2012, £155 million has been raised by over 103,000 community share investors across the UK to save and create more than 440 vital community spaces and businesses.

Rose Marley, recently announced as the new CEO of Co-operatives UK, believes that as the coronavirus pandemic continues to drive mass business closures, more communities will consider how they might benefit from setting up community shares schemes.

She said: “As more and more major businesses announce closures and redundancies, it’s clear that the COVID-19 pandemic is reshaping our economy in fundamental ways. But this adversity will create opportunity, rebuilding and rethinking the way we do business and operate our communities. Now is the time to consider those co-operative business models that can sustain jobs and communities going forward. The growing community shares market is certainly one viable option.”

The sustainability of collective ownership was also a feature in research published earlier this year by Co-operatives UK which showed that whilst just 42% of new enterprises survive their first five years of operations, 76% of co-operatives are still trading after reaching the same milestone.

Ms Marley added: “As this new research shows, community shares are an extremely effective vehicle for building sustainable businesses that are also tackling fundamental challenges. Look at Student Co-op Homes addressing the housing crisis, raising £300,000 to support a new generation of student-owned housing in universities across the UK. Or Equal Care Co-op who are developing an ambitious new way of delivering social care.

“By giving people a stake in a local business, and by encouraging community participation, businesses will flourish and help their communities to thrive too. They don’t have to answer to faceless creditors or landlords who don’t have their best interests at heart. Instead, the research reveals that community share investors are driven to make a positive impact in local areas.”