A New Way To Bring Community Benefit

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I took this photo while visiting Pakistan to see where Fairtrade Bala Sport balls were made and the impact the Fairtrade premium was having upon the local communities. This photo was taken at an orphanage where Bala Sport donated footballs to the children staying there.

Ownership of things matter. Good ownership gives people a say in things they care about, a sense of motivation and a stake in its success – much like being part of a sports team.

However, poor ownership and governance of clubs can have catastrophic effects. Over the years, many professional sport clubs have seen the impact private (and sometimes reckless) ownership can have on clubs, with numerous clubs falling into administration and sometimes liquidation. The same effects of poor governance can hamper non-professional and amateur clubs too, with many being unsustainable and eventually wound up through lack of engagement from volunteers, members and participants.

A preventive step to avoid such disasters is to really think about the ethos, legal structure and ownership of the club. Many clubs claim to already be or feel community orientated and owned, but might not technically be. Many unincorporated organisations or companies limited by guarantee may have significant input from a membership and run in a community’s interest, but not setup in the best way to deliver value to them.

A model we’ve been promoting and working with sport clubs for over 15 years now is the Community Benefit Society model, a type of cooperative ownership structure. This model does exactly what it says, operating for the good of the community, rather than one or two individuals, and enshrining community benefit within its governance structures and constituting documents.

From the outside, cooperative clubs may look like any other club, but inside they are very different. Members have an equal say in how the business is run and they even decide what to do with the profits, working on a one-member/one-vote basis.

Not sure if it’s right for your club?
Maybe you’re unincorporated and thinking about growing your club through development of a facility or taking on ownership of an asset to encourage more participants, successes and have to a greater impact within your community or society. If so, a cooperative CBS model could be a great fit. The major benefit of community ownership of clubs is it gives the community a greater influence in how the organisation operates, in turn leads to superior off the field performance. However, there are many other benefits of the CBS model,

Including:
-limited liability for its board,
-asset protection,
-increased trust in your governance through partners (including members, councils and funding bodies),
-increased sustainability,
-increased volunteering through members feeling more engaged with the club,
-increased engagement with your members (who are now co-owners),
-knowledge that your profits are being reinvested back into the club and community,
-a commitment to delivering social value being written into club rules,
-perhaps most significantly, an ability to raise capital through a unique and innovative form of crowd funding – community shares.

Community Shares
Community shares are a way of raising finance by offering shares, but in a secure, co-operative legal form. As opposed to ordinary shares in ordinary companies, they seek investment from people that are most interested in the long term success of the Club as a community asset – with the added bonus that it is cost effective way that avoids the red tape that a private Company would face. By giving your supporters and community the chance to invest in the Club it strengthens their connection with it, and as we have seen with FC United it can open you up to significant grant funding opportunities.

It’s the same model that helped Portsmouth supporters take control of their club. Supporter owned Wrexham built a new shop and offices at the Racecourse Ground, and FC United of Manchester raise almost £2 million towards a new facility in Moston that will cost about £5.5 million. Outside of sport, more than 300 pubs and small shops which are now owned by their customers, many relying on community shares to raise the finance.
If you’re interested in either the CBS model for your club, or launching a community share offer, you should speak to Club Development Scotland, leaders within the community ownership and sport sector. To date we’ve helped clubs raise over £6million through community shares and offer a range of support mechanisms to clubs through our consultancy services. Visit our website @ clubdevelopment.scot now or read our brochure here.

Club Development Scotland is Supporters Direct Scotland’s consultancy arm. Supporters Direct Scotland are a cooperatively owned organisation concerned with the promotion of good governance and sustainable sport clubs. They have 25 members across Scotland and are a member of the Scottish FA Congress. You can follow them on Twitter @SuppDirectScot

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