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!
