The Community Shares Unit, led by Co-operatives UK in partnership with Locality and Plunkett Foundation, has responded to the Dormant Assets consultation with a headline call for £40m to be invested into growing the community shares market.
There is expected to be around £880m made available for good causes under the Dormant Assets scheme, with the consultation from the Department for Digital, Culture, Media & Sport asking whether social investment should continue to be a cause.
The Dormant Assets Act presents a rare opportunity to refine how social investment works to support communities and invest in growing and boosting community share offers. That’s why we have responded to the government’s consultation on how Dormant Assets in England are used.
Dormant Assets money has previously been used to provide the ‘wholesale’ money behind the scenes that social investors can access.
We think this is important and needs to continue. However, there is more that could be done to provide the right sort of patient, equity investment that communities need for economic growth of community led and owned projects – like community pubs, shops, hubs, energy, housing, sport and leisure facilities. These raise money directly from individuals in communities through community shares.
We are calling on government to make £40m of that available over the next decade specifically for community shares to grow this activity, which would contribute towards government priorities of levelling up, sustainable local economic growth and community empowerment.
Co-operatives UK hosts the country’s largest matched equity investment fund, the Booster Fund. This would be the ideal recipient for such funds. Through our Booster Fund, we have been able to match this pound for pound to help communities achieve their ambitions.
Making the case
There is a compelling case to use Dormant Assets to back social investment products like community shares, by providing wholesale investment into the market. A £40m Dormant Assets wholesale facility to the community shares marketplace would fill a gap for patient institutional investment into community backed projects over the next decade.
At present there is a lack of real genuine equity investment from institutions that can sit alongside community investors. It would complement the Community Ownership Fund, the Levelling Up agenda and any new community wealth funds.
There are already established routes to achieve this. Our Booster Fund offers matched equity investment in community share offers, which incentivises local investment from individuals. To date, for every £1 the Booster Fund has invested, this has levered in over £3 of private investment from individuals in communities, as well as additional loan and grant finance.
This is a unique way to pool private, public and community investment to achieve joint aims where private and public investment alone has not succeeded.
Community shares is one form of social finance that can work in less advantaged areas. This is especially true when an institutional investor like the Booster Fund backs a share offer with matched equity, so for every £1 they raise, Booster will match that on the same terms up to an agreed limit.
To date, the Booster Fund has invested 40% of our equity in the 30% least affluent areas. So we know that community shares can be an accessible form of social finance that can reach disadvantaged communities. With more capital we can catalyse more community driven and owned projects like this.
Community shares are the one form of social investment that generates real broad community ownership, a sense of renewed pride in communities and a genuine method of enabling community power, as investors become voting members of the society with a stake and voice in future success.
– John Dawson, Head of Market Development Development Unit, Co-operatives UK
East Marsh United, Grimsby
For example, In 2022 East Marsh United ran a share offer to raise money to buy and refurbish houses in their community in Grimsby. The East Marsh is one of the most deprived wards in England which was struggling with housing issues. The residents took it upon themselves to start solving these problems and raised £500,000 in community shares to renovate and let houses on affordable terms. Co-operatives UK invested £25,000 as matched equity through our Booster Fund.
Jubilee Pool in Penzance is a celebrated art deco lido. It is also community owned, being a charitable community benefit society. In 2018, they raised £529k from 1,380 investors including £100k matched equity investment from the Booster Fund. This enabled them to secure significant grant funding. The money raised was invested in geothermal heating to expand the season and increase their impact and trading income.
Dormant Assets is a rare opportunity to refine how social investment works to support communities and invest in growing and boosting community share offers.
Find out more
- Read our response to the Dormant Assets consultation
- Read about support for community shares in the UK, including the Booster Fund in England
- Find out about community shares
With thanks to Co-operatives UK