Community co-operatives using community shares

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Glenn Bowen of Wales Co-op Centre discusses community shares. WCVA Funding Conference 2012.

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  • THIS IS THE TITLE SLIDE – TYPE AWAY…!
  • 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.
  • Community co-operatives using community shares

    1. 1. 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
    2. 2. 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.
    3. 3. Community Shares Glenn Bowen Selwyn Williams
    4. 4. 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
    5. 5. Community SharesAllows ordinary people to invest money in tobusinesses that deliver services within their community.
    6. 6. 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
    7. 7. The Community Offer ViableDocument Business Robust Legal Business Structure Plan
    8. 8. 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
    9. 9. Pengwern Cymunedol historical and cultural contextHow the community came together Selwyn Williams
    10. 10. The Community Offer ViableDocument Business Robust Legal Business Structure Plan
    11. 11. 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?
    12. 12. Legal Forms• Company limited by Guarantee• Company Limited by Shares• Community Benefit Societies• Co-operative Societies
    13. 13. Benefits of Community Shares• Withdrawable Share Capital• Shareholder Democracy• Involvement and Empowerment• Economic Sustainability• Asset Lock• Interest on Shares
    14. 14. 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
    15. 15. 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
    16. 16. Pengwern CymunedolThe finances and the business plan Selwyn Williams
    17. 17. The Community Offer ViableDocument Business Robust Legal Business Structure Plan
    18. 18. The Offer DocumentThis 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
    19. 19. Pluses and minuses of community shares in the case of Pengwern Cymunedol
    20. 20. And FinallyQuestions?Thoughts! Debate!

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