Gareth nash What are community share offers


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Gareth nash What are community share offers

  1. 1. Gareth NashCo-operative and Mutual Solutions Limited
  2. 2.  Community investment is the practice of members of a community buying shares in an enterprise that serves a community purpose It empowers communities by giving members (as part owners) a say in the direction of the community enterprise Investor members are encouraged to play an active part in the enterprises future Members receive a fair financial return on their investment as well as sharing in the social, environmental and community benefits
  3. 3.  Grants, gifts and donations are best. They are ‘free’ but how much free money is available, how difficult is it to get hold of? Loan finance can be obtained from institutions/individuals but commits the venture to fixed interest and capital repayments Equity investment through community shares is more flexible, longer term and connects the investor to the enterprise, thereby sharing risk and reward
  4. 4.  Recognition that some community services are best delivered through a business model Growing public appreciation that businesses can be run for a social purpose, not just private profit Historic shift in financing community enterprises: from fundraising approach (events, gifts, donations) to investment in community shares Greater autonomy for communities
  5. 5.  Most people are savers not investors, (and some people aren’t even savers) Most people donate to good causes, rather than invest in them But most people can invest more than they can afford to donate! Shift from purely philanthropic to community investment proposition
  6. 6. Community Shares
  7. 7.  Unique features of IPS share capital: ◦ Withdrawable and/or transferable ◦ One member, one vote democracy ◦ Flexible cap on returns ◦ Upper limit on person shareholding ◦ Withdrawable shares exempt from the financial promotions regulations
  8. 8. Pre Post 2009 2009 Member ShareTrade sector societies societie s capitalRenewable energy 34 s 13 8,831 £15,304,000Community shops 20 9 2,492 £903,000Community regeneration 14 9 3,041 £1,908,000Food & farming 18 4 10,228 £1,171,000Consumer co-operatives - 20 8,553,000 £191,275,000Pubs and brewing 10 2 687 £733,000Community finance 1 9 1.837 £2,114,000Community land trusts 7 2 318 £25,000Fair trade 2 1 9,222 £26,151,000Other 9 9 38,530 £7,345,000 Totals 115 78 8,629,000 £247m
  9. 9. Projectedtotal 2011Jan- Jun 2011
  10. 10.  115 new societies registered ◦ (66 community benefit societies, 49 co-ops) 43 community share offers 32 share offers completed £5.74m raised from 6,164 members Average raised £179,000 (median £85,000) Average membership 192 (median 151) Average investment £930 (median £180)
  11. 11. ¬ Shares provide ‘patient’ capital and are almost always better than loansp Co-operative and community benefit societies are the most effective legal format mainly because of financial regulation exemptions and investor democracyc Withdrawable share capital provides liquidity but societies have to plan for withdrawals and capital flowsc There are business benefits from engaging members in multiple roles, e.g. investors, customers, promoters, volunteers, activists etcm Pre-starts often need lots of development support and financial incentives Financial intermediaries (such as Co-operative and Community Finance and The Key Fund) have a key role to play in supporting share offers
  12. 12. Community Shares website:• Community Shares Factsheets• Community Investment using IPS legislation• The Community Shares Programme: One Year On• Guide to governance and offer documents• Investing in community shares• A practitioner’s guide to community shares (published today)