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Wed June 19 2019

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Study highlights options for funding community developments

28 May The Scottish Land Commission has identified 13 different approaches that have been used successfully across the country to fund communities seeking to own and develop land.

The community ownership study has found that a mix of funding is needed for success. Communities have many options to secure and develop land, but the full range of financing models is often not widely known, the report finds. There is more scope to develop innovative finance models to support community ownership, it says.

The report, which is called The range, nature and applicability of funding models to support community land ownership, includes well-known approaches such as charitable and philanthropic grants, crowd-funding, commercial lending and corporate social responsibility. The report also notes that individual models are not mutually exclusive and that community organisations often use a mix of models to achieve their aims.

The most significant funding for buying land and building assets is provided by the public sector – particularly through the Scottish Land Fund. The fund is now in its third funding round with an annual budget of £10m per year for the period 2016-21.

However, the Scottish Land Commission advises that, while public funding remains important, the fullest range of potential funding models should be considered because of increasing interest from communities, and wider challenges to public finance. Chief executive Hamish Trench said: “Following our recommendations last year on what is needed to support community land ownership as a normal option across Scotland, we have looked more closely at the range of potential financing models. Community ownership is not an end in itself, but a means to achieving a range of positive outcomes from social and economic development to environmental management and restoration.

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“This report shows that communities are already tapping into a wide range of funding options and that more can be done to share the awareness, experience and availability of these. It also suggests there is scope to develop new innovative financing models that meet the needs of both communities and investors, drawing on some emerging international practice.”

The report includes a case study about the West Harris Trust, which was formed in 2008 to purchase three crofting estates belonging to the Scottish government. The estates consist of 7,225ha of land with 119 residents. Since the purchase in 2010 it has released land for housing, created a community hub and invested in several renewables projects to create an income stream.

The Trust has been able to secure public sector resources for projects that would not deliver a free-market return and has been successful in using a range of alternative financial models to finance revenue-generating projects, particularly in renewables. It has been excluded from traditional bank lending due to its lack of start-up capital, limited initial revenue streams and assets being held in crofting tenure. However, it used social impact lending from Social Investment Scotland and different forms of private sector investment to deliver projects. Preferential lending from the voluntary sector to buy the estate and from the local authority to enable housing development has also played an important role. Other factors in successful development have included institutional support from public sector partners. The report says that the combination of available financial models, public sector support and local determination has enabled the trust to develop significant revenue streams, provide important community and business infrastructure, create employment opportunities and raise the population from 119 to 143. 

MPU

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