March 2023

The journey to community ownership

In 2007, three music lovers based in Bristol – Matt Otridge, Peter Wright, and Paul Horlick – launched The Croft, a live music venue that hosts bands of all genres every night of the week. Within the first few years of operation, their neighbourhood became a popular location for its cultural offerings, and it began to gentrify rapidly. The Croft was threatened by various challenges, but most prominently by developers and rising rents.

Matt, Peter, and Paul knew that once their lease ended, they would not be able to afford the venue anymore. Even amidst the gentrification, they had never changed their business model. What they cared most about was showcasing great music for everyone to enjoy. 

Understanding that they needed a sustainable, long-term solution, they made the decision to purchase a building rather than lease. In 2012, they reopened as Exchange, and in 2017, converted into a community benefit society – a non-profit entity that exists for social purpose. Exchange was already operating with a community-focused approach, so having a legal structure that fit their values just made sense. 

In 2018, Exchange made the bold leap to shift to a community ownership model. The owners believed that conventional lenders were more interested in maximizing their return on investment than supporting Exchange to grow, so they turned to their community. They issued a community share offer and raised £300,000 from over 400 community members in just under two months. Individuals and institutions invested anywhere from £250 to £100,000. You can view Exchange’s community share offer document from 2018 here. 

The impact of the community share offer

Exchange used funds from the community share offer to improve the venue’s sustainability and accessibility. They built new stages, improved the lighting and sound systems, and built an accessible toilet. In fact, the funds helped them become the first grassroots music venue in the United Kingdom to achieve the Gold award on the Attitude is Everything Live Events Access Charter, an accessibility award for venues in the United Kingdom. As of Feb 2023, they are also in the process of retrofitting the entire roof with solar panels!

On top of the venue’s improvements, Exchange embedded long term sustainability into the business model. With over 400 co-owners, the venue will continue to exist, even if one of the original owners decided to step away.

Exchange is a community benefit society… but what exactly does that mean? 

A community benefit society is a legal, not-for-profit entity in the United Kingdom whose purpose is to serve the interests of the community. Similar legal forms are only legislated in two provinces in Canada, including British Columbia’s “Community Contribution Company” and “Benefit Company” and Nova Scotia’s “Community Interest Company”. Community benefit societies may be compared to co-operatives in Canada, however, co-operatives serve the interests of their members rather than the broader community. There are four key characteristics of a community benefit society: 

1. Purpose: A community benefit society’s business must be entirely for the benefit of the community
2. Membership: A community benefit society issues shares for community members to invest in the business and become owners, or members. They operate on the one-member-one-vote principle which ensures equal say for all members regardless of how much they invested. No one member is granted greater rights or benefits because they invested more money into the business. 
3. Application of profits: Any profit generated by the community benefit society must be used for the benefit of the community. Profits cannot be distributed to its members, unlike in a co-operative. 
4. Use of assets: Assets must be used for the benefit of the community. There is an asset lock which means if a community benefit society is sold, for example, its assets must continue to be used for the benefit of the community rather than distributing them to members. 

More Than Music

Exchange is certainly a music venue, yes, but it’s so much more than that. It’s a record shop and recording studio for local promoters and record labels. It’s a coffee shop and bar that offers sustainable, local coffee and snacks. It’s an event space for the community to host workshops, plays, flea markets, art exhibitions, conferences, and pop-up kitchens. Exchange is a pillar of its community, providing real social and cultural value.

It’s no surprise that community members rallied together to invest in Exchange’s future!

Photo credits: Exchange, www.exchangebristol.com 

About this Blog Series

Hi, my name is Jasleen Bahia, and I was once an Intern at Tapestry Community Capital. I am now completing my degree in business with a focus on social finance, and I’m currently doing a semester abroad in Europe. While here, I am Tapestry’s Ambassador to the UK. This blog series documents my adventure abroad learning about the social finance ecosystem in the UK and connecting it to our growing community investment marketplace in Canada. I am eager to find out what we can learn, replicate and share!

In the UK, the pub is more than just a place to sip on a beer – it’s a unique social center, and often the heart of community life in villages and towns. So the fact that hundreds of communities around the UK have rallied to take joint ownership and save their pubs should come as no surprise. In 2021 alone, 15 community pubs raised £3.9 million from their communities in the UK to purchase their local joints.

To learn more about how community pubs operate, their impact in the community, and the financing models that have allowed communities to save these important spaces, I spoke with Chris Cowcher from the Plunkett Foundation, a national charity that supports rural communities across the UK to tackle the issues they face through community business. 

What is a community pub?

A community pub, or community-owned pub, is a business owned and operated by people within the community for local benefit. Individuals become owners by investing in the pub’s community shares. They invest as little as £1 or a maximum of £100,000 and become a shareholder, or member, of the pub. Members then create a centrally-elected committee that is responsible for the governance and maintenance of the pub. The committee elects management and staff to run the day-to-day operations. 

Community pubs have proven themselves to be sustainable businesses. In 2020, despite widespread pandemic closures, only one out of 147 community pubs closed. And the sector continues to experience steady growth. 

Plunkett Foundation encourages rural assets into community ownership so that they can generate greater social, economic, and environmental impact. To best serve the needs of locals, community pubs expand their offerings beyond food and drink. For example, many community pubs offer meeting spaces, host community clubs and bands, or operate cafes and post offices within the pub. It’s clear that they’re not just community pubs – they’re community hubs. 

How are community pubs financed? 

The largest barrier to establishing a community pub is the initial capital needed to purchase and set up the pub building. In 2021, the average cost of purchasing a community pub was £314,000 and the average set-up cost was £244,000. Community pubs are most often financed using community shares. According to Chris, there are two important reasons why the community share model is a good fit. First, significant amounts of capital can be raised quickly. Second, community shares amass collective membership from many people in the community, with pubs averaging 200 members. They also return wealth to the communities that support them – Chris shared that the current rate of return for a community pub investment ranges from 2-3%.

What can we learn?

Community-owned businesses are sustainable businesses. Despite the COVID-19 pandemic and cost of living crisis in the UK, community pubs experienced continual growth. Community pubs in the UK present a strong case for the economic value and social benefit that emerges from expanding the community-owned enterprise sector. 

Having a dedicated program of support for community-owned businesses is game-changing. For instance, Plunkett offered a program in England called “More Than A Pub” which provided groups with business development support and funding to enable community ownership of pubs. This program grew the sector by 50% over five years and England now has the highest density of community pubs in the UK. The UK Community Ownership Fund is another initiative by the government which has allocated £150 million over five years to the ownership of assets at risk of being lost to the community. Community pubs have been the largest beneficiaries in early rounds of this initiative. 

Success breeds success. Plunkett has seen a cluster effect where community businesses are more likely to locate themselves in areas with other successful community businesses so they can inspire and learn from each other. It can be scary to be one of the first organizations to adopt a new structure or financing model, but know that change can bring immense benefits AND you’ll be inspiring many others to follow suit. With resources and guidance from organizations like Plunkett and Tapestry, you’ll be well positioned to achieve your goals. 

About this Blog Series

Hi, my name is Jasleen Bahia, and I was once an Intern at Tapestry Community Capital. I am now completing my degree in business with a focus on social finance, and I’m currently doing a semester abroad in Europe. While here, I am Tapestry’s Ambassador to the UK. This blog series documents my adventure abroad learning about the social finance ecosystem in the UK and connecting it to our growing community investment marketplace in Canada. I am eager to find out what we can learn, replicate and share!