Community Investors are the Original ‘Impact Investors’
Thursday, 7th June 2012 at 11:10 am
“Community investment” and its renewed growth in Australia is an area of “impact investment” that appears to be overlooked in new research by the Federal Government according to Alan Greig, a director of both Social Business Australia and a new advocacy body for employee owned enterprises, Employee Ownership Australia Ltd.
The Federal Government recently released a report on “Place-based Impact Investment in Australia”. The report promotes impact investing as a new way to generate private investment in public benefit projects. Impact investing is about encouraging institutional fund managers, banks and corporate and private philanthropists to seek out those social investment opportunities, which will provide a financial return as well as social impact. As DEEWR describes it, impact investing, “offers a new way of mobilising both financial resources and non-financial resources for the purpose of providing positive social change”.
Another important area of impact investing not mentioned in the new report, that of ‘community investment’, is occurring in communities around Australia.
Community investment processes already make a substantial contribution to community capital building (both social and financial) and social change. Community investment relies on individual members collectively investing in community owned enterprises that serve their community needs whilst building social capital and community well-being. These important ‘social’ outcomes tend to be overlooked in corporate style impact investing which has a focus on measuring impacts over a shorter term.
Community investment works though people investing in a local enterprise (by purchasing a stake in the business usually through a member share). These citizens, as member shareholders, democratically control the enterprise, which might be legally structured as a co-operative for example.
Community investment starts with community engagement. Without a community that has a shared identity and a common purpose, the idea, and therefore the enterprise, is unlikely to work. But, with a fully engaged community providing the capital for a community enterprise, there is real scope to improve the quality of community life. Grassroots community businesses, including shops and pubs and vital services and facilities such as health clinics, childcare centres, renewable energy co-operatives such as wind and solar farms and ‘fan-owned’ sports clubs, have succeeded by raising capital from their members in many locations across Australia.
In the UK, support for community investment projects is widespread (with at least 300 such new projects in the last five years). Steve Wyler, chief executive of the support agency Locality said of its community shares work with Co-operatives UK that this is, “one of the most important developments over recent years in community regeneration in the UK".
Social Business Australia Director Melina Morrison says there is a global trend towards involving community members as investment stakeholders in community service delivery and community regeneration. 2012 is the United Nations International Year of Co-operatives so it is especially important to talk about the social impact of community investment right now.
Morrison says there is room for a variety of approaches to generating social impact, but SBA is also keen to ensure that the new enthusiasm for impact investing does not ‘crowd out’ other approaches especially the long standing capacity of communities to help themselves through community investment.
In declaring the International Year UN Secretary-General Ban Ki-moon has said that “co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility, in recognition that these forms of community owned enterprise deliver important social and community impacts.”
Decades of research have shown that local ownership and community investment develops that strong bond which engages communities in social enterprises that serve their interests. It is essential that this activity is also recognised and supported if communities are to thrive and re-generate. New development organisations in the community investment area, such as SBA, are now looking towards establishing action research projects to map this territory, extend its reach and grow the community investment pie.
Community investment in co-operatives in housing, childcare, disability services and aged care have been happening for many years. More recently, there has been a move by the citizens of country towns to protect their vital services through community buyouts of stores, service stations and theatres.
At its National Congress in early May, the ACTU resolved to support union backed co-operative ventures where they impact on employment in the manufacturing industry such as the Earthworker Cooperative in Morwell in Victoria.
The Earthworker Cooperative of union members is a micro-financing venture aimed at resourcing manufacturing start-ups, including the recently launched Eureka’s Future Workers Cooperative. It will begin production of solar hot water units in July and is the first of a series of union-based worker-owned renewable manufacturing businesses to be rolled out across the nation.
Another successful example of community investment in Australia is the West Belconnen Community Health Service Co-operative, which is part of a growing trend towards community ownership of primary health care.
The Co-operative has over 5000 community members, and the patients control the employment of health service professionals. They currently employ 11 doctors, several dentists, a physiotherapist, two psychologists including a children’s specialist, a diabetic educator and an audiologist. They have proven that healthcare is an area where the co-operative model is not only very beneficial to its members, but to the community’s sense of pride and well-being.
The renewable energy sector has also proven to be open to the co-operative model. Hepburn Community Wind Farm Co-operative commenced its commercial energy operations last year with a community investment of almost $10 million.
The co-operative was formed in Hepburn, Victoria after a nearby district rejected a proposal to build a commercial wind farm. The wind turbines that resulted after the Co-operative’s formation now powers all 2300 homes in the district, and it is the first 100 per cent community-owned wind farm in Australia.
Embark, another environmentally focused venture, is one of a number of co-operative led initiatives to promote community investing. It aims to accelerate the uptake of community renewable energy projects. They have a portfolio of around 40 projects encompassing wind, solar, hydro and wave technologies – which are all community owned.
Food security is another successful sector of community investment in Australia. The idea of sustainable, organic food products is exemplified by the Bathurst Food Co-operative, which sells organic food from within a 100 mile radius of Bathurst. The Co-operative has 200 suppliers and makes economic savings by using volunteers in the packaging process, who receive a discount on all produce in return.
Based on supporting local suppliers, the Bathurst Food Co-operative is similar to the Food Connect venture, which is based on the principles of community supported agriculture. Food Connect sources seasonal food from local farmers outside Brisbane and Sydney, and delivers it to Food Connect stores in the cities where members collect their orders.
Co-operatives as a social movement have made an enormous contribution to social inclusion, economic ownership and shared prosperity, at both the global level and in Australia. Co-operatives are the foundation organisations of the social business movement that is termed ‘social enterprise’ and have been generating high social impact, community investment for over a century.
In SBA’s view it is critical that policy initiatives in the area of impact investing should include the very large and important part of the social investment landscape that is community investment – the role that co-operatives, credit unions and employee ownerships play in generating social impact through the kind of self help, community owned initiatives that are readily evident in communities everywhere.
Developments such as ‘community shares’ support groups and action-learning projects have spearheaded the development of community-owned businesses in partnership with community investors in the UK. These approaches are yet to permeate the discussion around social impact investing in Australia.
It is a ‘blind spot’ that could run the risk of leaving us behind in international developments in the impact investment space, but we are also heartened to see how co-operative-led ventures are promoting community investing at the grassroots.
Alan Greig, director of Social Business Australia and the new advocacy body for employee owned enterprises, Employee Ownership Australia Ltd. Social Business Australia (SBA), has been set up to create renewed interest in community investment through member owned and controlled community enterprises, co-operatives and social businesses.