Charities in the glare of critical media attention
Community co-operatives using community shares
1.
2. Who Are We?
• Set up in 1982, offices across Wales, 50+members of
staff
• Delivering projects on behalf of Welsh Government
and the European Union
• Our vision: For Wales to be the international leader for
co-operative thinking and action
• Our mission: To develop sustainable businesses and
strong, inclusive communities by working co-
operatively
3. Three key areas of work
• Enterprise Support
Support to set up and run co-operatives and social enterprises, including
employee buy-outs, community based co-ops and co-operative consortia.
Business consultancy service provides paid-for support.
• Digital Inclusion
Helping enterprises, community groups and voluntary organisations
become more competitive and take advantage of information, services and
opportunities online.
• Financial Inclusion
Advising public sector organisations on how to help people avoid financial
problems, and supporting credit unions in their mission to provide
affordable, secure financial services to all parts of our community.
5. At the end of the workshop we should
have an understanding of: -
• Community Shares - The Model
• Benefits of Community Shares
• Different legal forms
• Challenges of Community Shares
• How to Develop a Community Share Issue
7. Why Community Shares
• Funding from the public sector is going to get more
difficult. Community shares will provide a new
avenue for investment capital
• A business that is able to utilise community share
capital is more likely to be able to access social
loans
• Share capital is unrestricted
• Less expensive than borrowing capital from a bank
• Potential tax benefits for investors
8. The
Community
Offer Viable
Document Business
Robust
Legal
Business
Structure
Plan
9. The Community
• Can the community afford to buy shares
• How long can they afford to leave the
money within the Society
• Financial return or philanthropic investment
• How will you engage with the community
and sell the vision
10. Pengwern Cymunedol
historical and cultural context
How the community came together
Selwyn Williams
11. The
Community
Offer Viable
Document Business
Robust
Legal
Business
Structure
Plan
12. The Business Case
• Is there a trading business idea?
• Will the communities money be safe?
• Will the business be able to earn
enough money to buy back shares
when necessary?
• Will the business fit in with the co-
operative principles?
13. Legal Forms
• Company limited by Guarantee
• Company Limited by Shares
• Community Benefit Societies
• Co-operative Societies
14. Benefits of Community Shares
• Withdrawable Share Capital
• Shareholder Democracy
• Involvement and Empowerment
• Economic Sustainability
• Asset Lock
• Interest on Shares
15. Community Benefit Societies
• Run primarily for the benefit of non-
members “the community”
• Cannot distribute profits (can pay
interest on shares)
• Can lock the assets for community
benefit
• Can offer withdrawable shares
16. Co-operative Societies
Previously referred to as bona fide co-
operatives
• Run for the benefit of the members
• Can distribute profits to the members
• Can pay interest on shares
• Can offer withdrawable shares
18. The
Community
Offer Viable
Document Business
Robust
Legal
Business
Structure
Plan
19. The Offer Document
This should include:-
• Target amount that needs to be raised
• Minimum and maximum allowable
investment
• Opening and closing dates for the offer
• Potential risk to the investor
• How the business would deal with
multiple requests from investors to cash
in their shares
20. Pluses and minuses of community shares in
the case of Pengwern Cymunedol
An individual can invest up to £20k within a society structure As public sector resources reduce over the next few years the Centre feels that there is a need to develop a new social business model that allows community members to invest money into it but is also eligible to access an element of public funds. One such model could be The Community Investment model.The Community Share Programme: One Year On defines Community Investment as: - “The sale, or offer for sale, of more than £10,000 of shares or bonds to communities of at least twenty people, to finance ventures serving a community purpose.”This model can be used to develop local service based businesses such as the local pub, shop, petrol station or even the local swimming pool
Community Share Schemes are not new – Give the historic context/Miners Institutes local Cottage Hospitals A business that is able to utilise community share capital as part of its funding strategy is more likely to be able to access social loans - In the future we are more likely to see social loans being offered as opposed to grants. Loan providers will be keen to spread the risk of investment..Share capital is unrestricted (unlike grant funding) and not linked to specific project outputs.Community share capital could be less expensive than borrowing capital from a bank – many investors are happy to make a philanthropic investment and will not always expect to make a full commercial return.Potential tax benefits for investors, there are sector limitations and investment must remain within the business for three years.
Explain the process flow explaining that I will go through the technical issues associated with this process and Selwyn will bring a real life perspective.
Engaging with the CommunityCommunity share schemes will only work if the community want it to work and are willing and able to invest.An individual or a group of individuals who want to develop a community co-operative must motivate the community to back the business idea. There is usually a call for volunteers to help put the vision together and then sell that vision to the community. Community engagement will start with a call for support and hopefully end in community members investing money in the business idea.Selwyn can tell us how the community at Pengwern came together.
Selwyn would you be able to discuss the work you have done to develop the business case you could include any support you have had to do thisYou could also include how you have or intend to raise finance from the community.