If you’ve got them buying equity their hearts and minds will follow

I think the growth in community share schemes is potentially one of the most exciting areas for development in the social enterprise world. The Social Enterprise Coalition clearly disagree as – judging from the attendees list – they couldn’t even be bothered to send the work experience kid to last week’s launch of the Community Shares project’s new resources for practioners who want to sell shares to their communities, and investors who might want to buy them.

The creative tension between the Co-Operative movement and the rest of the shiny new world of social enterprise was hinted at during a storming contribution from Ed Mayo, Secretary General, Co-Operatives UK, covering everything from the failure of the financial services sector to the fact that 10 out of 11 of the winning Spanish World Cup side played for co-operatively run clubs. When reflecting on lessons from early co-operators, the Rochdale Pioneers, Mayo observed that instead of the 28 pioneers: “nowadays it would probably be 1 social entrepreneur and 27 others, because we live in that sort of John Wayne world.”

While John Wayne’s views on community ownership are not widely known, the underlying point is that much of the New Labour-era rhetoric on social enterprise was based on the notion that many social problems could only be solved if we could find a charismatic individual to breeze into town, brandish their forceful personality and shake things up with an amazing innovative plan, and quite a bit of shouting.

As mentioned here before, while lots of charismatic shouting has taken place – mostly to limited effect – there isn’t really any connection between the swashbuckling, mythological social enterpreneur and the real life, socially beneficial pragmatism of flagship social enterprises such as GLL or Sandwell Community Caring Trust but it’s not surprising that the perceived focus on ego-preneurs hasn’t gone down well with many in the Co-Operative movement, who naturally have more of an emphasis on groups of people working together to achieve a common goal.

It would be wrong to overstate the numbers of Co-Ops offering community share issues or the levels of cash involved. Speaking at last week’s event, Jim Brown of Baker Brown Associates reported that there’s currently 142 community enterprises with more than 20 members who’ve raised more than £10,000 from a community share issue – financing everything from football clubs to wind farms. It’s relatively small beer but it’s an increase from single figures ten years ago and the vast majority are Co-Ops, with only two or three CICs.

Once the early flushes of post-election optimism have died down, the social enterprise movement will have to face up to the fact that, while there are many positive elements to the Big Society agenda, these won’t entirely cancel out the effects of massive cuts in public spending. Most existing social enterprises will not end up at the forefront of public service delivery and, if they want to continue to exist and increase their social impact, they’ll have to find cash from somewhere else. There’s nothing wrong with loan finance in principle but, if you’re going to take out a loan, you need to be carrying out the kind of activity that’s going to enable you to generate enough profit to pay that loan back with interest.

With Community Shares research showing only 14% of investors in community shares issues stating that ‘receiving a good financial return’ was important to them, the other 86% are definitely the kind of people that social enterprises want investing in them in times of scarcity. These investors are people who are interested in their communities (or in socially beneficial activities taking place in other communities) and who want to put in some cash while also taking an ongoing interest in the success of the work they’re funding. Surely it’s worth social enterprises thinking about how they can engage these people and encourage more people in more communities to take a financial stake in social business.

The answer probably isn’t lots of CICs, for example, shutting down and becoming Co-Ops but what we do need to do know is put some thought and effort into finding simple and comprehensible ways for local people and ethically engaged people who don’t live locally, to invest in our businesses. Not least because getting, for example, 500 people to part with £100 of their own money provides both a decent chunk of cash and a serious endorsement of what you’re doing.


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One response to “If you’ve got them buying equity their hearts and minds will follow

  1. Pingback: Different ways of funding new ideas « Beanbags and Bullsh!t

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