August 3, 2010
Who might invest in your community?
As traditional funding routes dry up, the search for new ways to raise funds continues to widen. In particular, community share issues are attracting a lot of interest. The Development Trusts Association held a seminar recently to explore some of the issues and launched a couple of useful guides on the subject. They also published some research into who actually buys community shares. Four categories of investor have been identified
Key Findings (Download a copy of the full report)
The aims of this research were to find out who was buying community shares; what were their
motivations when they bought the shares; what was most important to them – the financial, social
or environmental returns on their investment; and, informed by the findings, what marketing
techniques would be best suited to this form of capital raising. An internet questionnaire to 11
Societies which had recently issued Community Shares was emailed out to 1785 members and 240
respondents completed the survey (a healthy response rate of 13%). This was followed up with 30
semi structured interviews by telephone. Data was also analysed from the share register of Societies
on amounts of individual shareholding and location of members. From this research we have been
able to build up a picture of who is buying community shares.
There are 4 categories of investor
– The Local Community Investor – an individual who wants to create or maintain local
facilities for social return, can also include those with connections to, but no longer living in
the area (e.g. investing in a community owned shop or pub); “…seemed like a good idea to
own the store between us and maintain it…”
– The Community of Interest Investor – an individual who wants to create or maintain
facilities they have an interest in for social return (e.g. investing in a community owned
railway); “..purely out of interest! I am interested in railways and railway management…”
– The Social Investor – an institution or high net worth individual interested in receiving a
blend of social and financial return, possibly social investment is only a small part of a larger
investment portfolio (e.g. investing in a co-operative wind farm); “…the finances have to
stack up or we won’t invest, but if the social impact and mission isn’t there then we won’t
invest either…”
– The Ethical Investor – an individual with no obvious connection to a Society other than
approving of its social aims, sometimes motivated by democratic structures and ideology,
and wishing to invest as a means of receiving primarily a social return (but not foregoing
financial compensation – a small amount of interest or a tax incentive); “…When we have a
bit of extra money we’ll put a £1000 in something if it seems good…”
Two guides also launched at seminar : Investing in Community Shares
Community shares: A practitioners guide to governance and offer documents