Over the past three years Shared Assets have been fortunate enough to be part of the Making Local Woods Work programme. Hannah Gardiner reflects on the work and the sector.
Through the last three years work we had the chance to work with twelve inspirational community businesses, such as Friends of Tower Hamlets Cemetery Park; they have been managing an urban woodland for more than 20 years under a Service Level Agreement, running fun and educational events throughout the year including history walks, a forest school and even an arts festival. After so many years they need a strategic reset, so we supported them to create a new business plan, and to think through how roles and responsibilities are shared in the organisation. We also worked with Parndon Wood, a woodland run in collaboration with the Harlow Council by a local environmental conservation cooperative; we looked at financial modelling and how to diversify their multiple income stream business model in order to grow the initiative into a sustainable enterprise. Participants often stated it was useful to “have time to think about the business instead of just doing the business”, which is indeed a luxury, and I have been glad to share my knowledge of business planning with those with so much heart and passion.
The poster child for the Woodland Social Enterprise movement is Hill Holt Wood, a sustainable community business with a million pound turnover, and a registered charity. Amongst other things they produce bespoke wooden products, including building houses. A big part of their focus is providing training for local young people, and schools can refer to them for alternative provision. However, it has taken them more than 15 years to get to this point, and herein lies a challenge.
In our digital age the trend is fast growth, high return, with a whole industry of accelerators and investment firms created in the hunt for the so called ‘unicorns’ with their million dollar returns for investors, and contribution to GDP. This trend has been compared to a modern day gold rush, it creates unhealthy company cultures, is exclusionary and reproduces extractive dynamics and wealth concentration.
“it’s a lost opportunity if those who innovate for a sustainable worldTweet this
are funnelled into business models which maintain wealth inequality”
I have talked before about how we can restructure society through doing business, and recently, there has been a kick-back in the industry with the proposal of ‘Zebra’ start-ups, an alternative conception where slow, sustainable growth and cooperation are valued.
The kind of community businesses discussed above sound like Zebras to me, and are one piece of the puzzle in the development of community wealth building strategies; aiming to build regenerative economies which keep money flowing within a locale and into a greater diversity of hands, reducing inequalities and building local resourcefulness. Community business profits tend to go directly to local people as wages or be reinvested to provide additional benefits. Research from the New Economics Foundation also shows there is a local multiplier effect, with locally owned businesses spending more of their profits locally.
But these businesses can be slow growing, and are run by people with passion but not always the skills needed. In the ‘unicorn’ world there is relatively low barrier seed funding, many opportunities for free high quality business training, and in the three months before June 2018 alone venture capitalists pumped £1.6bn in UK businesses. Comparatively, in the emerging community business sector it can be hard to gain the start-up capital and support needed, with time-limited ‘project focused’ grant funding more often the main source, and often supporters wanting to see you will be self-sustaining after one grant, or that you can demonstrate you will grow or scale rather than demonstrate ‘sustainable prosperity’.
Recently there have been some developments; Local Trust are demonstrating that there is another way for grant givers to work, delivering their Big Local programme where £1 million was given to 150 locales throughout England to spend over 10 ten years with very few rules. Crowdfunding offers another solution, and investors can now receive Community Investment Tax Relief (although the system to do so appears complicated). There are also many foundations offering ‘patient capital’ loans, but loans have different implications for businesses than equity. Quasi-equity is a third way but so far relatively niche. Power to Change and the School for Social Entrepreneurs are amongst those providing incubator and accelerator type programmes for community or social businesses – upskilling and preparing people for the challenges of running an enterprise, including invaluable peer learning opportunities. Making Local Woods Work was similarly focused on tailored business development support. Crucially these programmes don’t take equity, and therefore don’t pressure the fledgling businesses towards the profiteering ‘investment raise’ route. Of course, raising investment isn’t intrinsically bad, but the terms and expectations will draw the focus of the business in certain directions, and may affect how profits and benefits can be shared.
Despite all this, there are as yet relatively few pathways for the community innovator to follow and the risks can be high, for example, the route for people to transfer from universal credit to self-employment is unforgiving. I hope the emergence documented here is a sign of things to come, and that community businesses will start to be taken seriously for the contributions that they give to the economy, financial and otherwise, so they and their founders will be given more of the support they need to flourish and grow a new collaborative economy fit for the future. I wonder, is there a Zebra in your local woodland?