Spin-out social enterprise launches pioneering community share offer

A social enterprise in Staffordshire that was spun out of a statutory service has become the first such organisation to issue shares to local people.

Biddulph Youth & Community Zone, which has been established as a charitable community benefit society, won a contract to take over the running of youth services from Staffordshire County Council in April this year following a competitive bid process.

It has also received substantial grant funding from the Big Lottery Fund.

The social enterprise has now launched a community share offer to raise £20,000. The funds will be used to invest in improving facilities and services, including a live performance space, professional studio and soft play area.

The share offer is being run through the Community Shares Unit’s (CSU’s) crowdfunding platform, MicroGenius.

The enterprise plans to pay a 2% dividend on the money invested from Year 3 onwards, providing trading surpluses allow. Investors will also qualify for the new Social Investment Tax Relief.

Share offers by community benefit societies are exempt from much of the FCA regulation which applies to public share offers by limited companies.

The Biddulph Youth & Community Zone offer is the first to be endorsed with the new Community Shares Standard Mark, which has been created by the CSU.

Mark Johnson of Elderflower Legal, adviser to the social enterprise, said: “Community share offers are based on the issue of withdrawable share capital by community benefit societies. This is a very flexible financing instrument which can be used to raise ‘patient capital’ from local people and businesses.

“We are creating a virtuous circle here by encouraging service users and customers to become investors in the new enterprise. Strong engagement with the community will help to build a successful enterprise, by encouraging residents to use our services and facilities and giving them a real stake in the future plans.”

Johnson added: “This is the first time that a statutory service has spun out into a social enterprise, which has gone on to issue shares to local people. This is a technique which could be really powerful for other public services, where a high level of engagement with member service users is beneficial.

“This is a model which could easily be applied to health and social care services, where co-production of integrated services is a priority, leisure services or community libraries, for example.”