Different Approaches to Community Investment

[heading]Community Investment Strategies[/heading]

Portrait of a large group of a Mixed Age people smiling and embracing together. [url=https://www.istockphoto.com/search/lightbox/9786738][img]https://dl.dropbox.com/u/40117171/group.jpg[/img][/url]

If you are looking to give local people the opportunity to financially invest in a tangible local community resource, or ways to maximise financial giving, you could think about [highlight dark=”no”]Community Shares[/highlight], [highlight dark=”no”]Crowdfunding[/highlight], or [highlight dark=”no”]Match-Funding[/highlight]. The approach you take will depend on the opportunity and the appetite of your community.

Below, we take a look at each one in more detail:

[highlight dark=”no”]Community Shares[/highlight] – ‘The term ‘community shares’ refers to withdrawable share capital; a form of share capital unique to co-operative and community benefit society legislation. This type of share capital can only be issued by co-operative societies, community benefit societies and charitable community benefit societies.’ As defined by the Community Share Unit.

Community shares have been used to fund local shops and pubs, community facilities, football clubs etc. Since 2009, almost a 100,000 people have invested over £100m to support 350 community businesses throughout the UK. Check out the Community Shares Unit animated video to find out more

The average amount given is £200-£250. Some examples include:

Hastings Pier – raised £900k from over 5000 owners. The first uk charity to issue shares. Prospective 3% interest and withdraw after 5 years.
Portpatrick Harbour Charity – £103k from 363 investors
Positive News Magazine – £265k from 1571 investors. Investors own editorial charter and elect board.

[highlight dark=”no”]Match Funding Donations[/highlight] – Match-funding is defined as: when a Funder (who could be an employer, a grant-making trust, a major donor or the government) offers to match part or all of a donor’s gift to charity. The aim of match-funding is to incentivise more people to give and people to give more.

Recent research by the Big Give, found that:

‘More people give when their donations are match-funded, and Match-funding is currently the most likely factor to make donors give more.’

Read more at A Great Match: How match-funding incentivises charitable giving in the UK and unites funders and donors in tackling social. The report, which was co-commissioned by Charities Trust and RBS and undertaken by The Researchery, is the first in-depth exploration of match-funding in the UK.

[highlight dark=”no”]Rewards Crowdfunding[/highlight] – Whether you are an individual, a leader of a community project, social enterprise or charity, you could crowdfund from the general public, with the promise of giving investors non-financial rewards. For example free tickets to the venue, priority booking slots to events. The average investment is £50 for this type of scheme. Example schemes include:

 

Leeds bread co-op – £8,690 – 49 days and 144 backers
Porthtowan playground – £1395 – 7 days and 66 backers
Union corner £10,704 – 28 days and 82 backers

[highlight dark=”no”]Equity Crowdfunding[/highlight] – Is suitable for social enterprises where their legal structure enables them to give equity in return for pledges of money, meaning everyone who invests becomes a shareholder – As a result they take partial ownership of a company depending on the amount of money they have invested. With this type of model financial repayments are made over time. Suitable models could be a Community Interest Company by Shares. To find out more check out Crowdfunder.

At Economic Change, we help non-profits to collect and manage their community donor and investors data using Salesforce CRM (Client Relationship Management System) and implement communication tools, to help foster strong relationships between the giver and the organisation for the long-term. To find out more arrange a free consultation contact us.

To find out more, join our next event on Community Investment Strategies on the 23rd September or sign up to our newsletter to receive a copy of the shared learnings from this event.

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