Crowdfunding Boosts Community Share Offerings For Local Pubs And Football Clubs

Tim Wright | July 27, 2015


Earlier this month, a media publication called Positive News concluded a 30-day crowdfunding campaign on, the largest rewards-based platform in the U.K. But the 1,500 or so readers, journalists and supporters that together committed £263,422 to the project got something more than rewards: they got ownership.

Positive News is the first business to raise money under Crowdfunder’s new Community Shares program. Created in collaboration with the Community Shares Company, the program offers a new option for socially-minded organizations that falls somewhere between donations and venture-style equity investment. To be eligible, a business must be a cooperative or a community benefit organization—a coop-like enterprise that benefits a community. In the U.K., more than 60,000 people belong to such organizations, which can include pubs, football clubs, shops, food producers, renewable energy coops, and more.

Poz News

Community Shares Issues (CSIs) have a long tradition in the UK. They have “saved” dozens of village pubs and shops that were in danger of closing, when an owner was retiring, for example, or the business was struggling. They’ve also been used by football clubs that wanted to engage and involve fans, and communities that wanted to fund local renewable energy projects.

Since 2009, more than £60 million has been raised in close to 250 Community Share offerings—many of them conducted offline. That’s up from 30 share offerings raising close to £5m in the previous five year-period, according to a recent report. Because they are not regulated by the Financial Conduct Authority (Britain’s version of the S.E.C.), the offerings are simpler and less expensive than conventional share issues—making them a natural for British crowdfunding sites.

A Social Investment

Community shares differ from conventional equity in significant ways. They can only be issued by cooperatives or community benefit societies. The shares may pay a modest dividend, but the shares themselves do not appreciate in price, as a way to discourage speculation. In some cases, they are tax exempt. The shares cannot be transferred between individuals, although they may be “withdrawn” under terms set by the issuer. And each shareholder is entitled to one vote, regardless of how much they invested.

Residents of Bath invested more than £700,000 into The Bell Inn, a popular pub and music venue that was up for sale

A CSI by its very nature binds investors in a much deeper and enduring relationship with the issuer, creating a valuable and sustainable asset for the project.

There are many examples across Britain of residents rallying to support a local enterprise and preserve it for the community.

Residents of Bath invested more than £700,000 into The Bell Inn, a popular pub and music venue that was up for sale, becoming owners and shareholders in the venture. The Green Valley Grocer in Slaithwaite raised a more modest £18,000 to acquire and continue to operate a grocery store that was a vital part of the community.

Sports clubs needing facilities, or wanting “fan-led” ownership have taken advantage of CSIs, the most famous being the football club FC United based in Manchester (where else?), home of the cooperative movement and another famous football club. A telephone cooperative, a local TV station, and Hastings Pier are just a few of the inspiring range of asset development and acquisition projects made possible by CSIs.

Boosting Adoption of Community Shares

Community shares have been issued long before crowdfunding came along. In 2011, Microgenius became the first crowdfunding platform to offers CSIs.

But the entry of a platform as well backed and as well known as Crowdfunder (it is partially owned by the UK equity crowdfunding site Crowdcube, and is not related to US-based, could significantly raise awareness of CSIs and boost their adoption. In addition, it is likely to streamline the process and lower the costs of issuing community shares, making them a more accessible option for socially minded enterprises.

Positive News is a case in point. Based in London, the print and digital publication’s mission of covering inspiring news, from elderly athletes to slow living cities, attracted 1,500 investors from 33 countries.

Bala ballAlready, community share issuers are picking up tricks from their crowdfunding peers, including perks and rewards alongside shares. For example, a £125 investment in Positive News netted 125 shares plus an organic food basket. Bala Sports, a maker of fair trade footballs (or soccer balls, as they’re called across the pond) currently raising money on Crowdfunder, offers 25 community shares and a training football for a £100 investment.

The marriage of community shares and crowdfunding is a welcome development that could usher in a new model of local investing in the UK, and help preserve vital community assets on a much larger scale.

Tim Wright is director of twintangibles, a UK-based management consultancy specializing in the crowd economy. Follow him on Twitter at @twintangibles


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