Social investment bank pledges millions for local change
Community shares give local people more power by allowing them to become part-owners of assets and services in their communities and by enabling them to develop new projects to serve local needs.
The CSUF was created and is managed by social finance company Resonance, and has been designed to encourage and support more equity being raised in community share offers.
Daniel Brewer, managing director of Resonance, says that the £1m investment from Big Society Capital – and announced today – along with further investments totalling half a million pounds from organisations such as the Friends Provident Foundation, will have “a really meaningful impact on the sector of organisations trying to raise community shares”.
He says: “The number and magnitude of organisations we are going to be able to support is quite significant and it’s come at a time when there are an increasing number of community organisations getting involved in community share issues.”
The CSUF provides an “underwriting facility” which essentially acts as a security blanket. Communities who raise money through community shares can apply for top up funding from the CSUF, which is provided in the form of a flexible, interest-only loan. This loan can be repaid from future community share issues once the project is up and running.
This financial support and increased sense of security means that projects are more likely to go ahead. It also allows communities to be more ambitious in the scale of share offer they can launch and encourages individuals to participate in the community share offer by increasing confidence that the project will proceed.
Injecting communities with a dose of autonomy
Big Society Capital is committed to this idea of community empowerment. Jeremy Rogers, chief investment officer at Big Society Capital, says: "Part of our vision for the social investment market is to see thousands of grassroots organisations able to access the finance they need to support their local communities, and individuals contributing to social change through their own personal finance choices."
The CSUF plays an important role in this landscape and will sit alongside existing funds that Big Society Capital has also invested in, including Social and Sustainable Capital's new Community Investment Fund, Pure Leapfrog's Community Energy Fund and the FSE Group's Community Generation Fund.
Aspirations, confidence and autonomy are all key things here.
Resonance’s managing director says: “It’s all about autonomy and creating power in communities.” The CSUF allows the community share project to be almost anything which addresses local needs, from “putting insulation in older people’s homes who can’t afford it,” to “a project which means that for everybody in a community who has been made redundant, the project will pay for their children’s school trips”.
It is hoped that eventually the community share projects will be 100% owned by the communities they serve, with no debt being owed to anybody. Although funding such as that from Big Society Capital will help to stimulate momentum among investors, there is still a lack of confidence in these projects among many. Daniel Brewer says: "Aspirations, confidence and autonomy are all key things here."
Demonstrating its commitment to community share projects even more concretely, Big Society Capital has pleged to invest a further £1m to the CSUF in the next 12 months if the demand for the fund exceeds expectations. Jeremy Rogers says: "We know that there is growing demand for social investment from communities, and we are committed to supporting more grassroots and community projects to access the most appropriate capital to help them deliver social change in their communities."
Photo credit: Chris Potter, Vintage Investing