Can Community Shares Save Local Pubs, Shops and Football Clubs?

Ethical finance schemes such as community shares have saved hundreds of local shops, pubs, cafes, transport schemes and broadband projects from closure. They are particularly popular in remote areas such as Cumbria because of the challenges involved in making rural businesses succeed.

I've just been for a drink at one of my locals. Living in rural Cumbria, the second nearest pub is a good 15 miles away. In there I got talking to the owner. In fact, I got chatting to 12 of the owners, all having a quick lunchtime pint. The Old Crown in Hesket Newmarket is owned, in total, by 125 people, who all saved it from closure in 2003. Back then it become Britain's first co-operatively owned pub.

But today the Old Crown isn't alone. The UK is now home to hundreds of community-owned businesses, bought by local people who pay small sums, often as little as £100 to have a share and a say in how things are run.

Recent controversy around bankers' bonuses has only served to promote ethical investment opportunities such as community share schemes, which can offer better rates of return than many other options. The popularity of ethical banking is borne out by the wave of support pledged this month to the 'Move Your Money' campaign, which urges people to switch from big banks to more 'socially useful' alternatives.

Ethical finance schemes such as community shares have saved hundreds of local shops, pubs, cafes, transport schemes and broadband projects from closure. They are particularly popular in remote areas such as Cumbria because of the challenges involved in making rural businesses succeed.

Companies in the countryside can often struggle to generate enough income or to secure investment because of sparse populations. With a lack of private investment or public funding available, more and more rural firms are adopting co-operative models. This means they can seek capital from local people and spread the risk across the community.

Take the village of Nenthead in the north Pennines. In 2006 the local shop and post office closed when the owners retired. Residents had to make a 10 mile round trip to buy groceries. When it became obvious that they would lose the old shop, villagers decided that the only thing to do was to run one themselves. Although it meant a lot of work for everyone involved, locals managed to set up a community business and they sold shares to raise capital.

Over 100 villagers bought a stake in Nenthead community shop and post office, raising £9,000. Potential funders saw there was a lot of local support for the project and pledged further cash. The shop and post office re-opened in 2007.

And what about Manchester football club FC United which has just raised £1.6m by selling community shares to build a new stadium? Or Penrith cinema the Alhambra, which, facing closure back in 2011, set up a co-operative and sold shares at £150 to buy its building? Following a swell of community support, the landlord granted the cinema another ten year lease so it could stay and supporters didn't have to raise further funds.

But this way of raising capital is not regulated and there are many pitfalls. What are the best ways of selling the maximum number of shares? What about governance and legal issues? How do you administer a community share offer? Sharing best practice is key here. It only takes a few disasters to affect the whole community shares movement.

My organisation Cybermoor is currently going through a community share issue. We are a social enterprise providing fibre optic broadband services to remote communities such as Alston Moor in Cumbria where big telecomm companies don't reach. We've already raised £10,000 in four weeks by selling shares to local people and we want to generate another £90,000 by the end of March.

But our aim isn't just to secure investment for Cybermoor. We want to spread the word about community ownership. Hence why we're holding a free event in Penrith today where entrepreneurs such as Julian Ross who runs the Old Crown pub will share their experiences. Watch the event live on the internet - more information on Twitter at #comshares.

Figures show that around 25 local pubs close every week. If we want to safeguard much-needed community services then more local organisations must consider this type of finance mode. Community share schemes allow communities to take control and invest in themselves. In the current financial climate this is best way to deliver sustainable community businesses.

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