Case studies of local regeneration through crowdfunding
From an article by Nesta
Community-led projects have the power to transform local areas socially, economically and environmentally. In May 2019, Nesta published a 'Taking Ownership' report which explored how investment crowdfunding models can be used to fund projects which are owned and run by the communities they serve, enabling community-led regeneration and boosting local resilience. Local governments, city authorities and institutional funders have a crucial role to play in supporting and growing this sector, to make the most of the opportunity in using these tools to boost social infrastructure and community empowerment across the country.
Building on that report, Nesta published ten case studies of ways in which communities have used crowdfunding investment tools to create change locally. Here are three of these:
Community-powered network - Broadband for the Rural North (B4RN)
Location: Lancashire, England
Financial models used: Community shares, bonds and loans
Amount raised from community: over £5 million
Number of community investors: over 2,300 shareholders
In 2013 the government committed to extend superfast broadband to 95 per cent of the UK by the end of 2017. But what about the remaining 5 per cent? Even before this commitment, a group of neighbours in rural Lancashire decided that if they wanted a good broadband network, they’d have to do it themselves. This led to the creation of Broadband for the Rural North or ‘B4RN’ who, after establishing that their project didn’t fit grant funding applications or bank finance criteria, decided to raise the money they needed from the communities they will serve.
Since they opened their first community shares offer in 2011, they have gone on to raise over £5 million from local communities in shares, bonds and loans, allowing them to bring fast broadband to several previously underserved areas across the North West (alongside community investment they also received a business development loan from the Esmee Fairbairn Foundation, but notably B4RN has received no public funding).
Alongside helping their community access fast broadband, community shares investors currently receive 5 per cent interest while those investing in the recent bond will receive 4.5 per cent a year (while both depend on the ongoing success of the business, the bond interest rate is set in advance, whereas the shares interest is determined annually by the directors).
B4RN’s model is based on rural communities taking responsibility for funding and building their own network as part of the wider B4RN scheme. The network is built by volunteers harnessing the skills, resources and knowledge within the community, and bringing them together around a shared aim. For example, local farmers and landowners support the project by digging trenches for the cables across their land in return for ‘shares for work’ - £1.50 per metre for the distances they’ve installed. The farmers know the best place for the cables on their land, and have an inherent interest in the project succeeding, because it gives them a reliable internet connection too. This means that B4RN are able to install fast broadband to areas in which it would not be feasible for private companies, who do not have this access or local knowledge and so would have to dig up roads at great expense. Further support comes from places of worship and village halls are given access to the network for free if they host a connection point (schools are also charged a low rate with the small schools getting free connections too).
The first laying of cables started in 2012 and a few months later B4RN won the The Internet Services Providers' Association’s ‘Internet Hero’ award. By June 2017 they had connected more than 3,270 properties to fast and affordable broadband and are now present in Lancashire, Cumbria, Yorkshire, Norfolk and Suffolk, demonstrating what empowered communities are able to achieve. Currently over 6000 customers are benefitting from one of the fastest connections in the world.
Bringing back the crafts - Portland Works
Location: Sheffield, Yorkshire and Humber
Community investment model(s) used: Community shares
Amount raised from community: Over £300,000
Number of community investors: 500+
In 1879 Portland Works was an important cutlery works in the UK's emerging stainless steel industry. Now the heritage building is home to a range of local crafts (traditional and modern) through its redevelopment into a collection of workspaces. It was saved from conversion into flats when in 2013 it was bought by over 500 community shareholders raising £300,000 (in return for a vote each), and supported by a range of institutional funders. As a result, the building has been brought out of neglect and into a new, improved use for the local community, hosting over 30 small traditional and modern craft businesses.
A basic survey when the community took over building said that £1m would be needed for restoration. The organisation has been responsible for renovating the building, supporting makers and providing education around the site for the local community. It’s one of the last remaining examples of a purpose-built metal goods factory which has been renovated into centre for small manufacturing, independent artists and craftspeople, some of whom use the original machinery and tools. Since 2013 a weekly volunteer team have been working on the building renovation, room by room, while aiming to inspire the next generation of craftspeople through a number of educational student projects relating to the site.
In line with the community ownership, Portland Works have focused on the development of their organisational governance structure into one which aims to prioritise transparency and accessibility, within a framework of open directors’ meetings and working groups covering different activities within the project. Their directors and board meeting format means that meetings are nearly always open, and other stakeholders are enabled to participate, for example working group representatives, users, workshop tenants and shareholders. The flexible nature of this structure means that various working groups of volunteers and users have been set up along the way to make decisions on different themes from renovation work to finances. Each of these groups then feeds into the directors’ meeting, so that there is meaningful input from a wide range of stakeholders in top level decision-making.
Reinvigorating the high street - The Clipper
Location: Plymouth, South West England
Community investment model(s) used: Community shares
Amount raised from community: £206,750
Number of community investors: 165
Local residents saw Union Street in Plymouth looking run down and unused, with what was once a bustling area now home to fifteen empty buildings. Key members of a group, that had previously had success creating the Union Corner community space, wanted to do more to revive the main street for their community, and saw ownership and renovation of one of the empty buildings, the old Clipper Inn, as a way of achieving this more sustainably.
Local residents completed legal and start up work with £10,000 of support from Plymouth City Council’s social enterprise fund and then bought the old Clipper Inn building for £120,000 in 2017 under the newly-formed Nudge Community Builders Community Benefit Society. The purchase was made possible with short-term loans including an £85,000 one year bridging loan from the Affordable Housing Loan Facility of the Council and £35,000 from private investors (all repaid within the first year), but money was still needed for the renovation work.
In 2018 Nudge Community Builders raised £206,750 from 165 community shares investors to bring the Clipper back into use. This included £20,000 funding from the council and £100,000 invested by Co-operatives UK’s Booster Programme. The group are expecting to pay 3.6 per cent interest on investments from November 2019. Nudge Community Builders chose to ask their community to invest in the project because they would rather pay interest back to local community than to a bank or a mortgage provider, and want a healthy sustainable business that doesn’t rely on grants to stay open.
The building which used to be a 24 hour pub is now transformed into a real hub of activity - with a community market, pop up cafe and two homes for local people. The emphasis has been on working collaboratively with the local community, and tackling challenges in a fun and creative way. The footprint of the project deliberately goes beyond the building itself. They have intentionally used the ground floor market as a pedestrian link to a Council-led redevelopment in a neighbouring street and, as a nod to its heritage, they have retained a 1940s mural in the building, using it to inspire the decoration of the space, and have invited the community to boost creativity through creating a mosaic in the building together. The nine retail units can be hired by local small businesses to strengthen local enterprise.
The prioritisation of benefit for the local community is evident throughout the project, with a focus on “local spaces, local spend, local skills and local love” with an aim for nine out of ten jobs to go to local people and 40 per cent of spending to be with businesses within 1 mile of the Clipper and 75 per cent within Plymouth. In the first 12 months they achieved 76 per cent spend within a mile and 92.5 per cent within Plymouth. From the start they planned how they would measure social impact, as they believe that there are positive wellbeing benefits from the community that forms around such projects. In order to give everyone in the community an opportunity to own part of the Clipper, as part of their crowdfunding campaign investors paid for 7 volunteers working on the project to receive £100 each in shares.
The aim of the organisation from the start has been to use this as a first project, from which they will apply learnings to redevelop other buildings in the local area in a similar way. However, when we spoke to the project leaders they mentioned that it can be a challenge to balance pushing new projects forward while still keeping existing operations running.
They also spoke to us about the challenges that come with the fact that often these projects are run by people new to the specific type of activity. For the Clipper, it was local enterprises that stepped up to support the project with advice, and additional mentoring and invaluable business support came from Rio, a key social business support organisation in the city. Whilst there are no set rules for how to run it, Nudge’s approach is about finding different ways to do business: with kindness, authenticity and putting people at the heart of what they do.
Read more case studies here.
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From an article by Nesta, 22/10/2019