The sharing economy: the communities changing lives

As Isla McCulloch pulls down the awning and turns the shop sign to ‘open’, she looks just like any other shopkeeper getting ready for the day ahead.

But she’s not just any other shopkeeper. In fact, she’s not really a shopkeeper at all.

McCulloch is one of 320 members with shares in the greengrocer shop she volunteers at, a venture which was established by the community, for the community.

Dig-In Bruntsfield is one of a number of enterprises across Scotland created with the sole purpose of enhancing the local environment and improving the lives of those living there.

The enterprises range from small local shops like Dig-In to community centres, sports centres, hydro schemes and even a whisky distillery.

But despite their different purposes, they all have one thing in common – they are run by shareholders who have each invested a minimum amount of money and each has an equal share when it comes to the business.

The community shares model is becoming an increasingly common solution to community problems from saving the local pub from closure to financing renewable energy schemes and funding new football clubs.

Since 2009, almost 100,000 people have invested more than £100m to support 250 community businesses throughout the UK.

“The easiest way to describe it is it’s very similar to crowdfunding. You’re asking people who support your organisation to put their own money in and ultimately, the money you raise comes from your own community,” explains Toby Sandison, programme and communications officer for Community Shares Scotland.

“The difference to crowdfunding as most people know it is that those people then own the organisation and have a stake in how it’s run, they get to elect the board and they get a say in how things are done.

“But unlike private shares where one person can buy £10,000 of shares, one person has 100 and then the person with the most shares has the biggest voice, it’s a system of one member, one vote so it’s very democratic and everyone has an equal say in how it’s run.”

Sandison adds: “You get two different forms of model that can sell community shares. You can either have a traditional cooperative model or what we see more of in Scotland is a community benefit society and that is very similar to the cooperative but the difference is it has to demonstrate benefit to a wider community rather than just its own members.”

In Bruntsfield, the community greengrocers was established to protect the independent shops on the high street after Sainsbury’s took over the local deli when it closed.

“The community were in uproar,” says McCulloch, chairperson of Dig-In Bruntsfield. “They were quite proud of our high street in Bruntsfield and there was a big public meeting at the Bruntsfield Hotel.

“We already had a good butchers and fishmongers on the high street and the idea was that if you popped into the Sainsbury’s for your fresh fruit and veg, then you might also pick up your meat or your fish and then all the other local shops would suffer. So, the idea was to bring in a greengrocers that hadn’t been on the high street for a while to really support all the other local shops and give people better choice and better value.”

Community Shares Scotland was established in 2014 to raise awareness of the model and support communities looking to raise money in this way.

The programme is funded until 2020 by the National Lottery Community Fund Scotland and the Scottish Government and is delivered by the Development Trusts Association Scotland.

It offers hands-on support to guide communities through every step of the share offer process, which, on the face of it, can be a daunting and lengthy journey.

“We are here to try and take the daunting part out of it for them and take it step by step,” explains James Proctor, Community Shares Scotland’s programme manager. “But I’m always surprised by the capacity of community groups, it’s pretty amazing the kind of people they are able to tap into and the range of skills.

“Our job is to get them from A to B. ‘A’ being where they are currently with their business plan and ‘B’ being a completed, successful community share offer. Our job is to guide them through the whole process and to ensure that the group themselves have got the capacity to deliver that.

“The biggest challenges they have is to get their community to come on board with this idea. That community engagement is the critical part. Our job is to keep them moving towards that goal to complete the share offer. We can help with the technical stuff so that they’re free to do what is their strength – which is community engagement and to be passionate about the community business they want to start or develop.”

Members getting involved with projects are asked to commit a minimum amount of money – usually set at just £25 – but they are free to invest as much as they like, up to a maximum of £100,000, with everyone having an equal voice.

The businesses tend to reinvest any profit made to ensure they are sustainable in the future, although occasionally, there can be a nominal annual return for investors.

So, with no real financial gain, how do you get people to part with their money? And why would anyone invest more than the minimum when putting in more buys you no extra benefits or power on the board?

The answer, according to Proctor, is simple: people really do want to help to improve their communities.

“The largest driver of people putting more money in is because they feel that they want to support it to a level that they believe they can afford,” he says.

“The social return should be greater than the financial return. What it is you’re doing should be valuable and worth something to the people who have invested.

“That’s what they believe, that their money is going to change a little bit of the world. Something’s going to be made better by their money going directly into their community.

“Financial return may be useful, they may not massively lose by putting their £500 or £25 in, they may get a little bit of a financial return, but their main motivation is that this enterprise will somehow do something good and this in itself is enough for them.”

He adds: “We have had groups that when you say, ‘it’s democracy’, they will blanch because they think, ‘hang on a second, what if I put in two grand and somebody puts in 25 quid and we’re going to get the same say?’ The reality is that yes, you are going to get the same say.

“It’s the sort of question that the groups have to get their head around – why would somebody put in anything more than the minimum? Because if it’s purely about the vote, the right to have a say, then it can be the minimum £25, £50 or £200, whatever it is, what makes you then go above that?

“I think we see the averages will nearly always be double or treble the minimum. Their motivation is largely that they believe they can afford to do that and they want it to be a success. Their biggest motivation is the social return, seeing something good happen in their community.

“[If there’s any profit], what would happen to that profit is probably most of it would get reinvested into the business because you’re looking for sustainability, so whether it’s building up a reserve or growing the business a bit more, but there is that ability to pay back a small amount of interest to the people who have invested.

“There’s no profiteering, there’s no getting rich off this. They only do it if they can afford to do it so it gives a community business that ability to keep going for longer, even if times are tough and maybe ride out a couple of tough years and see themselves through in a place where maybe a private business might have to just stop at that point.”

Proctor says that there are two main drivers when it comes to setting up a business using a community shares model.

“One is the driver whereby you’re about to lose something from a community, so saving a shop,” he explains. “Community pubs…these pubs tend to be more than just somewhere to go and drink. They’re at the heart of the community. It happens to sell alcohol but also does about 20 other things with the dominoes club and all that kind of thing.

“There’s the motivation of let’s save something and the other motivation is how would this community make something better? What is it that we’re missing? The ‘what are we missing’ part is probably something that we need to do a bit more work on in terms of just inspiring communities a little bit to say, you could do this too, you don’t have to wait for the panic to set in by losing something.

“Probably right now there’s the money there in that community to do something. What would we do if we had the opportunity to access community shares funds? Every time we do it, there’s definitely money out there.

“There’s probably lots of communities around Scotland where if they had the great idea and were inspired to do it, with a little bit of help and support, they’d be able to do exactly what these other communities are doing.”

One community which was driven by the prospect of losing something was New Galloway in south-west Scotland, which in 2015 faced the closure of its only remaining shop.

A community benefit society was formed – New Galloway Community Enterprises Ltd (NGCE) – with 80 local people buying £10 shares initially.

After applying for a Big Lottery grant to buy the shop and adjoining house, refurbish the shop and fit-out the house as two self-catering units for tourists, they were successful, subject to the society increasing its shareholders from 80 to 180 and the share capital from £800 to £20,000.

“This was an immense challenge for a small community,” says Mike Brown, chair of NGCE. “We mounted a high-profile advertising campaign locally and staged fundraising events, including a jazz concert and communal meal.

“We also reached out to former residents and encouraged people to spread the word among friends and relatives who had connections or affection for New Galloway.

“We had already kept the community aware of our plans, conducted surveys to identify needs and expectations and addressed any concerns at public meetings.

“Within six weeks of the launch, we had increased our membership to some 250 people (and a few local organisations) and the share capital to £24,000, representing an average share purchase of £100.

“This valuable income helped us to meet costs not covered by the Big Lottery award, such as the purchase of goodwill and the stocking of the shop.

“It also enabled us to fit out the accommodation to meet VisitScotland’s four-star standard, securing an important income stream for NGCE and the community.”

As well as running the shop and self-catering accommodation, the project also includes a self-service laundry facility for both residents and the general public, one of the features identified as a need in local surveys.

In addition, community engagement workers have launched an extensive programme of activities ranging from an oil-fuel buying co-operative to reduce the cost of domestic fuel and reduce tanker traffic, to introductions to sporting activities, healthy eating programmes and information sessions by charities on subjects such as dementia awareness.

So from an initial driver of saving an amenity from closure, the New Galloway community has created a range of initiatives to improve the lives of those living there, ticking the ‘what are we missing’ box.

Proctor believes there are many similar projects that are just waiting to get off the ground across Scotland and is urging people to use Community Shares Scotland – and the available funding of up to £5,000 per project – to realise their dreams.

The programme has already helped 30 projects to get up and running since it was established, ranging in value from community shops, which cost between £30,000 and £60,000, up to the renewable energy schemes which cost in the region of £500,000 to £750,000.

The most expensive by far, though, has been the Glenwyvis Distillery project in Dingwall which has seen 2,441 members invest more than £2.5m, making it the biggest community share in the UK.

“There is no doubt in my mind right now there are communities out there who could use community share-type funding but they don’t know about us and we don’t know about them,” says Proctor. “Part of our challenge as an organisation is always to try to spread the word as broadly as we can.

“If it wasn’t for Community Shares Scotland, there would not be the level of activity around community business and community shares that there is now. But we think we are still scratching the surface of that.

“I don’t think there are hundreds of thousands of businesses out there waiting to happen, but I think there’s potentially tens of businesses, and maybe over the next five, ten years, there might even be hundreds of businesses that communities could quite reasonably start, develop, grow using community shares finance.”