William Eichler 01 May 2019

Investment-based crowdfunding has ‘untapped potential’ for councils, study says

Crowdfunding has ‘huge, untapped potential’ for public sector infrastructure finance, a new study has concluded.

The University of Leeds study, entitled ‘Financing for Society’, has found that investment-based crowdfunding can offer substantial benefits for public sector bodies seeking capital for infrastructure finance.

It argues that finance can be accessed at a comparable rate to loans from the Public Works Loan Board (PWLB), and be efficiently raised and drawn down utilising a new Community Municipal Bond Structure.

Funded by a grant from the Department for Digital, Culture, Media and Sport, the researchers worked with six case studies drawn from three councils and three NHS bodies to help them conduct feasibility studies.

They found that funds can be raised at a scale commensurate with the needs of local authority project finance. Swindon Borough Council, for example, the only council to use crowdfunding in this context, raised £4.3m in 2016/17 to fund two solar parks.

‘At a time when public sector finances are under increasing pressure, crowdfunding – still mistakenly seen as being just another form of charitable giving – has the potential to offer this radical alternative via an investment-based business model that generates social, environmental and economic returns,’ said Dr Mark Davis, associate professor of sociology at the University of Leeds.

According to the report, the potential take-up of investment-based crowdfunding could be very high. The crowdfunding sector had invested a cumulative total of £6.2bn into the UK economy at the end of 2017, but the wider retail investment market is much larger at £1.6tn.

Crowdfunding could raise between £0.25m to many millions in a single issue or via a programme of bond raises for individual projects, the study estimated.

As well as a new source of capital, the research also suggested that crowdfunding could provide a new model for local authorities to engage and communicate with their residents.

Bruce Davis, co-founder and managing director, Abundance Investment, commented: ‘During a time of severely reduced budgets, local authorities are being asked to lead on some of the biggest issues facing the country, from decarbonisation, to building social housing, to delivering effective social care to an ageing population.

‘Successful delivery requires innovative thinking as well as maintaining the support and trust of residents. If local authorities are to meet these challenges over the coming decade, sourcing capital at a competitive rate and a suitable scale while engaging effectively with local people will be critical – this report shows unequivocally that crowdfunding should be a valuable weapon in their armoury.’

Creating net-zero public engagement image

Creating net-zero public engagement

Local Climate Engagement is a project to support local authorities or partnerships to plan, commission and deliver high quality public engagement in how best to reduce carbon emissions. Sarah Allan explains.
For your free daily news bulletin
Highways jobs

Rights Of Way Officer

Cambridgeshire County Council
£27,741 - £29,577
We are looking for a candidate who has practical experience of working with Rights of Way and access issues and... Cambridgeshire
Recuriter: Cambridgeshire County Council

Casual Assistant Swimming Instructor

Chelmsford City Council
Grade 4 - £11.01 per hour
Riverside Leisure Centre is Chelmsford City Council’s flagship leisure facility, offering a variety of sporting activities where there is something... Chelmsford, Essex
Recuriter: Chelmsford City Council

Systems Support Analyst

The Royal Borough of Kensington & Chelsea Council
£26,544 - £30,618 per annum
We are committed to promoting equality and respecting diversity and welcome applications from all sections of the community. Kensington and Chelsea, London (Greater)
Recuriter: The Royal Borough of Kensington & Chelsea Council

Service Manager

The Royal Borough of Kensington & Chelsea Council
£59,111 - £67,900 per annum
Create a better quality of life for our most vulnerable children and young people. Kensington and Chelsea, London (Greater)
Recuriter: The Royal Borough of Kensington & Chelsea Council

Contracts and Commissioning Manager

The Royal Borough of Kensington & Chelsea Council
£44,370 - £50,964 per annum
An opportunity has arisen within the Adult Learning team that develops and oversees the contracting and commissioning function for this service.  Kensington and Chelsea, London (Greater)
Recuriter: The Royal Borough of Kensington & Chelsea Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue