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Communities raising their own funds to help provide affordable homes is a relatively recent addition to the cocktail of funding sources, but it is now becoming more widely used.

  • The Financial Conduct Authority (FCA) has identified five main types of crowdfunding: donation-based, reward-based, loan-based, investment-based, and exempt. The first two are unregulated activities, whilst community share offers fall into the last of these categories and are also exempt from the need for FCA authorisation or regulation
  • Local authorities and housing associations can assist community-led housing organisations with this type of funding if they are aware of how to go about it. They can also contribute to community share issues themselves, particularly where they have a stake in the development being pursued
  • To offer community shares a community-led housing organisation has to be registered as either a Community Benefit Society, a Charitable Community Benefit Society or a Co-operative
  • Community share issues can attract tax breaks, earn interest and be repaid, and with shares comes ownership of the development which together can form a powerful mix
  • Community-led housing groups can raise large sums of money through community share issues, the sort of amounts they would normally need to borrow – but the money comes from ordinary people who support a specific project. With community shares there is no debt to manage, just a group of dedicated investors who want to see the project succeed
  • Power to Change has recently run a £1 million Community Shares Booster Programme which has enabled them to match investment raised through community share issues and to increase take up in areas of disadvantage and in under-represented sectors
  • Crowd funding can support pre-development revenue costs as well as capital: St Anne’s Redevelopment Trust (CLT) in London recently raised £24,000 to cover architect’s fees for a scheme to redevelop two-thirds of a former hospital site in Haringey
Last updated in April 2018