Community projects 'are underusing bond issues'

Charities and social enterprises raising money for community projects do not make enough use of share and bond issues, according to a social enterprise consultancy.

Keep it in the community: the Camberwell Project helped buy a shop in Leeds
Keep it in the community: the Camberwell Project helped buy a shop in Leeds

The Camberwell Project, which works on regeneration schemes across Yorkshire, helped a community raise £100,000 to buy a local shop in Headingley, Leeds, and has recently worked with the same community to launch another share issue to buy a school.

"For a relatively small fee, you can set up an industrial and provident society, which has the right to issue shares," said Chris Hill, the project director, who has produced a Development Trusts Association guide on how to issue shares for not-for-profit organisations.

"It's a method I would almost universally recommend, and it's underused - there have been few share issues of more than £10,000.

"Shares allow communities to show their support and involvement in a project. Most people will accept a relatively low return on their money if it's being used for a social good, because they can earn what they'd get from a bank and they can get the money back if they really need it."

Hugh Rolo, investment manager at the DTA, said using shares and bonds to raise money was a valuable tool to have. "As well as gaining community investment, it sends out a powerful signal to other funders," he said.

Rolo said that Venturesome, the funder run by the Charities Aid Foundation, and several grant-making foundations had given their backing to share issues and some were looking at providing them with marketing or underwriting support.

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