It is enormously disappointing that Unity Works, the ambitious community co-operative which restored a prominent Victorian building in Wakefield (once home to the local retail co-operative society) to create a performance space and workspace, has failed.
Staff have lost their jobs and four hundred or so people who invested in the community share issue have lost their money.
I have held back from intruding into private grief but I do now, a few weeks on, want to make some comments.
Firstly, despite the Unity Works story, community share issues are still, clearly, a Good Thing. Millions of pounds of investment capital have been raised for a wide range of community ventures, from locally run village shops and pubs to small-scale wind turbines. My own community land trust will be asking our local community for investment capital in a new affordable homes development next year when we launch our own community share issue, so I have a direct interest in this whole subject.
But we need to remember that community shares investment can be risky. Some groups launch community share issues without adequate business plans or prospectuses, and some investors – carried away by commitment to the idea – fail to read the small print. The way forward here is to encourage best practice, and the community shares Standard Mark is an excellent initiative in this respect.
Secondly, we still need vision and enthusiasm. I’m sorry that the vision behind the Unity Works project turned out not to be enough to create a sustainable business venture, but let’s not be daunted. Let’s still be ambitious in what we try to achieve for our communities.
An old friend, someone I first got to know a long time back when we both lived in the same housing cooperative, has emailed. She and her partner are currently in the middle of running a community share issue, where they’re hoping to raise the money to buy a much-loved local pub as a jazz music venue. They’re at the nerve-racking stage when they’re very close to raising the amount of money they need and have their fingers crossed that the final amount they’re after will come in.
I know the feeling: the town where I live has a little local pub renowned for its atmosphere and real ale, which the community has recently rallied round to save through a successful community share issue. The pub is due to reopen under cooperative ownership in a matter of days.
It’s important that we discuss ways that we can empower our money, in order to ensure that it is put to work for the same goals as we ourselves have, and I therefore welcome the growth in the community share movement in recent years. I’m not sure I can do a direct plug for my friend’s initiative (journalistic ethics and all that) but I can certainly help by mentioning the Microgenius website which acts as the central point of contact for all current community-led share offers. Microgenius is worth bookmarking and checking regularly.
The Treasury announced today an important change potentially affecting all cooperatives and ‘bencoms’ (societies for the benefit of the community) registered under the Industrial & Provident Societies Act. From next year, the maximum amount which an individual member can invest through the usual ‘withdrawable share capital’ route is to go up from the current £20,000 to £100,000.
There’s been criticism for some time that £20,000 is too low (the threshold was last increased in 1994). Some agricultural cooperatives in particular have argued that the number of farmer-members in a typical agri-coop is small relative to the amount of capital that can be required, and that therefore a £20,000 limit unduly restricts their development. Co-operatives UK has also warmly welcomed the increase in the limit.
The increase to £100,000 will potentially apply to the rapidly growing number of community share issues, including those for community pubs, village shops, and community-led renewable energy projects. Major projects using community share issues could now find it possible to raise quite significant amounts of capital.
The fundamental cooperative principle that all shareholder-investors have one vote regardless of how much they have invested remains, of course. But the new £100,000 limit will be discretionary and each individual coop and bencom will need to discuss whether they really want to have investments of this size held by individuals in their business. One point to consider is whether, even with a one-member-one-vote rule, big investors might in practice be able to make their views count for more. Another is the cash flow implications for a business if an individual with a major investment requested the return of their money.
The change is coming in during 2014. The government has also tabled today in parliament a consolidation act covering coops and bencoms, and this is expected to get royal assent next year. A consolidation act merely tidies up previous legislation (there are no new provisions) but is still a welcome move.
The Treasury report is available online here.