William Eichler 01 May 2019

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

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

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.’

Where are your services on the Smart City journey? image

Where are your services on the Smart City journey?

With technology moving into the next era of 5G and AI, The MJ and BT recently conducted a survey into the extent that local authorities are using shared services to develop their Smart Cities and Places. Michael Burton reports
SIGN UP
For your free daily news bulletin
Highways jobs

Social Worker - Family Support & Protection

Essex County Council
£30300 - £41475 per annum + plus benefits
We are one of the most effective and progressive Children and Families Service in the country. Our vision is to support families through strengths bas England, Essex, Basildon
Recuriter: Essex County Council

Senior Sustainability & Resilience Officer

Essex County Council
£30001.0 - £34017 per annum
This opportunity is to be offered on a 6-month, fixed term / secondment contract basisInterviews scheduled to be held Friday 17th April Job Purpose Es England, Essex, Chelmsford
Recuriter: Essex County Council

Senior Social Worker or Senior OT - Older Adults Team

Essex County Council
£38400 - £46475 per annum
Interviews for this role will take place via video calling using Microsoft Teams.Seeking skilled, motivated Senior Social Workers and Senior OT's who England, Essex, Colchester
Recuriter: Essex County Council

Principal Litigation Solicitor

Thanet District Council
Starting Salary £41,676 per annum, with opportunity for progression to £47,508 per annum.
We are a small and friendly team and are looking to expand with a number of senior legal roles Thanet, Kent
Recuriter: Thanet District Council

Information Governance and Equalities Manager

Thanet District Council
Starting salary of £38,916 per annum, with opportunity for progression to £44,352 per annum
We are a small and friendly team and are looking to expand with a number of senior legal roles Thanet, Kent
Recuriter: Thanet District 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