Citizenship and communities

Citizenship and communities

Communities are using social investment to develop local solutions to local issues.

£43.9m
committed to charities and social enterprises

68
investments

250,000
people benefiting from £3.4m generated by community energy projects

93%
of investments ahead or on track to deliver social impact

Summary

Communities across the UK can face significant challenges including poverty, crime and the closure of vital local services. Some places suffer from particular disadvantages. Social investment, including community shares, can be the catalyst to help communities develop local solutions to meet local needs with the right kind of finance and support.

Communities are using social business models to buy community buildings, develop community spaces and install community energy schemes which generate unrestricted income from selling energy which can be spent on local services. There have been over 350 community share raises, supporting a range community businesses from energy and housing to pubs and sports clubs. Recent community share issues have also used Social Investment Tax Relief to offset some of the risk for investors.

Impact evidence is variable in this outcome area as many local projects are run by volunteers with restricted time or capacity. We are working with partners to develop a shared measurement approach for community groups. For example, Pure Leapfrog are currently developing a toolkit to support community energy projects by developing proportionate tools for impact measurement. 

Further information is available on our social issue pages for communities and criminal justice

HCT Group

Social Impact

Developing community energy

We have supported over 20 communities to develop community energy over the past five years. Plymouth Energy Community used £3.9 million of repayable finance from Pure Leapfrog to install a 4.1MW solar array on a derelict brownfield site. Revenue is generated by selling energy to the national grid and Feed-in Tariffs, a government scheme to encourage the uptake of renewable and low-carbon electricity generation. The solar array will produce enough clean energy to meet the annual needs of 1,000 homes and generate an estimated £2.9m of additional income to help tackle fuel poverty and develop climate change projects. 

Supporting locally owned assets

Local people in Burley Gate created a Community Benefit Society to retain the Post Office and Village Shop that was under threat of closure, raising £57,000 using Social Investment Tax Relief. As the only shop and post office on a 15-mile road between Bromyard and Hereford, it is a valuable asset to local residents. The new larger store offers a wide range of groceries to meet local needs and promotes local food and drink products. The revenue generated from sales will repay the investment. 

Improving community spaces

Unit3Sixty is a skate park for young people in Dudley. They took on an unsecured loan from Charity Bank that will be repaid by income from visitors. The skate park supports around 1,500 young people each week and helps them to be creative and active in a safe, supportive and inspiring environment. Local police report that anti-social behaviour has decreased while local businesses have noticed a marked reduction in the number of young people skating near their premises.

Learning

Understanding the context and local issues are key factors for establishing a successful community enterprise such as Bramley Baths in West Leeds. In instigating new projects, peer learning can be very valuable but what works is one community may not necessarily work in another – and the approach taken to asset transfers can vary between local authorities.

This model of investment can raise long term, low cost finance from local people and other investors to develop assets such as shops or pubs for the community. We have learnt from the Community Shares Underwriting Fund that having local shareholders enables projects to raise patient capital, where investors anticipate returns in the long-term. It helps to build an engaged and invested local customer base which increases the chances of success.

Many community organisations are run by volunteers with limited time so capacity building support is an important ingredient for success. Grant subsidy may be needed to complete community development work to engage local people, assess the viability of projects and prepare a business plan. Large scale, complex projects such as energy, housing and asset transfers can need professional support to help the community negotiate fair terms with other parties such as landowners and local authorities, and deliver on time and within budget. 

There is a risk that stronger voices can dominate and some people can be excluded. Effort must always be made to ensure that projects do all they can to include the voices of all members of a community. This should be reflected in governance structures with consideration given to how these will evolve over time

The drivers of impact and sustainability for community business models can be very different depending on the nature of the activities and local demand. Community organisations need to consider how they will generate revenues to cover the costs of maintaining a building or providing a local service. Some models may not be able to sustain entirely repayable finance, particularly in the initial years, creating a role for blended finance.