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Hydro Resource Evaluation Tool
public acceptability and engagement
How can a community or social enterprise project be set up?
There are different ways of developing and deploying a project, which will involve different numbers of people, different ways of financing it, different options for distributing the benefits and different opportunities for positive engagement. This section offers advice and resources for setting up a scheme in the ‘mode’ [make ‘modes’ a web-link to Walker and Cass paper?]of a community group, charity or social enterprise, a model which has implications both for engagement and acceptability, transforming both into positive aspects. The advice focuses on the social enterprise (IPS or Co-operative) model, as one which has had demonstrable success, and which is considered ‘best practice’ in terms of government policy on community renewable energy schemes., but begins with advice that is more applicable to any project.
Building a Group
Unless you are intending to develop and implement your project completely in isolation, it is likely that you will need to establish some sort of project group. Potential members should be identified in the 4-step process outlined before, and other interested parties can come on board as awareness is raised. The following points are taken from presentations by directors of two community scale projects and two project development consultants.
The following skills are useful in a project development group:
- Volunteers who are willing to help out. Almost every community will include retired engineers
- Shareholder group (If a share offer is part of the fundraising process) will include people willing to offer advice and support, and are a wide pool of potential expertise and experience.
- Need to have ideological commitment. Local environmental groups such as Friends of the Earth or Greenpeace may provide a pool of people already committed to renewable energy in advance of your project. Watching progress, videos etc on internet very good idea!!
- Administration and internet skills. Skills involving setting up mailing lists, keeping (e.g. excel) databases of contacts and correspondence will be vital. At any engagement opportunity/event, remember to collect email addresses as well as telephone numbers!
At a later stage of project development, people will be required to oversee many more aspects including:
- Financial accounts/Insurance for plant and personnel/Energy trading. More simply a bank account will be needed for whatever company or financial entity is used, so make sure you set one up and make sure enough people can access or manage it.
- Engineering/ Maintenance and safety/ Risk assessment
- Operations and safety/Risk assessment
- Legal aspects/Contracts. As an example, securing finance may involve deciding about whether the installed technology counts as assets in terms of liability – if it fails, who gets the kit? This depends on the legal structure adopted, and different funders will have different timescales of involvement: none, 6 years, or without limit.
- Engagement skills including managing relationships with public and stakeholders and shareholders, other organisations such as the planners and Environment Agency, and the press and the media. Experience with conflict resolution or social work, voluntary work and education, can all provide useful skills for a group.
It is worth considering how the group will be structured and run. Are such persons to be contractors or directly employed? How are they to be paid? Retainer fees? Time and materials? Are there to be directors? Will there be any remuneration, and if so, how will this be decided? How will appointments be decided? Enthusiastic volunteers? Contractually engaged professionals? A mixture of the above?
The following organisations can offer advice on running a local group, especially in the social enterprise model:
For NW - http://www.cms.coop/ A worker's co-operative themselves, they offer support and advice for co-operative groups.
For Cumbria: http://www.secod.thinkforwarddesign.co.uk/ - Advice and support for non-traditional business models. Contact Howard Long, supportive of ‘radical’ business models.
Seeds For Change Lancaster: http://seedsforchange.org.uk/vcs/index.html This activism and campaign-based workers co-operative no longer offer much advice on the legal and structural aspects of setting up a business, but do facilitation for co-operatives and social enterprises who are starting up, getting them to work out all the basics (aims, mission, membership criteria, day to day running, questions on decision making etc).
For community development aspects of engagement (community outreach, campaigning etc with 'normal' people rather than setting up social enterprises) you may want to contact Sostenga, based in W.Yorks.
Options for the legal structure of a community-owned or operated scheme.
Future Energy Yorkshire has developed a way of assessing the appropriateness of different financial models for RET schemes, a decision tree that includes questions such as: do you want directors? Dividends to shareholders or owners? Are the profits to be reinvested in the community or used to lever other funds? Answering the questions should produce a resultant choice of model. http://www.fey.org.uk/eddy/default.aspx funding decision tree...
The ‘Social Business Model’ stresses social enterprise rather than the ‘grant dependency’ of charities, and an ethical/value choice about attitudes to community, self-reliance etc. Its advantages include:
- An ability to achieve a mix of finance sources, attracting grants, social equity and loans.
- The social equity factor is raised through a share offer, and is based on the idea (expressed by a Settle Hydro director) that “there are people out there who generally invest in environmentally friendly things, so we try to get them to invest in ca venture that is community-based AND green ”
- A community-based group draws on the “vested interest people have in something on their doorstep, individuals wanted to donate and help financially”. As an IPS (Industrial Provident Society) structure cannot receive donations, unlike a charity, the share offer is intended to draw on this local goodwill, as well as national sources.
- The Cooperative Society and Cooperative Bank/Group are good sources for help and money (bank loan/equity) if your project adopts a social business model.
Why use an IPS structure specifically?
- You will need a legal structure anyway, to pursue finance for the project, and an IPS can place and sign contracts as a legal entity.
- The IPS structure is an affordable company model.
- It can accept and attract grants, especially through the ‘community’ benefits aspects.
- An IPS can accept bank loans (the specific arrangements in the example projects include no ‘assets’ being involved, and a secured loan with a 10-year, fixed interest rate of 6.75%), and can make a public share offer, drawing funds from both the interested local community and (by law)the broader public.
Other options for the ‘social business’ modes include Community Interest Companies and Charity status.
Community Interest Companies (CICs) have been promoted heavily in the voluntary sector and by the government, but have their own implications. For example, they cannot receive gift-aid like a charity. It is however possible to issue a share offer under FSA rules as a CIC.
Charities:
- Traditionally have not been able to approach people for donations but in effect have done.
- They can also get loans for specific purposes, meaning that if your project is to be approached as a charity, you must from the outset draw your charitable aims broadly, e.g. to allow regeneration as an aim/function of charity. This has only recently become legal, with the Prince’s Trust setting the precedent.
- Charity status also means that loans made to a charity legally can later be transformed into gifts as the behest of the loaner.
- A lot of grant funders will ONLY give grants to charities, enabling grant funds to be sourced from outside the immediate or regional area of the community.
- Business activities are familiarly undertaken through a ‘trading arm’ as a subsidiary of a charity structure.
In the final analysis, the choice of structure should perhaps be down to the local community as represented through your local group and engagement activities: what are their values? Do they want to be a charity? Or a commercial company? A social enterprise?
Share offer
Assuming that your project wishes to raise ‘social equity’ through a share offer, the following advice has been offered.
- Set a reasonable and attractive level of ‘investment’ for the share offer. A lower level e.g. a minimum of £250, is more likely to attract more (particularly local) shareholders than with minimum of £500.
- The FSA maximum investment for this mode of share offer is £10,000.
- The share offer must be open to all members of the UK public, so this ‘pool’ should be exploited, but the more investors are local, the better. Settle’s shareholders are around 50% local, in Torrs the figure was slightly lower.
- The projects can expect to provide a return of around 7.5% to investors, seen as a good level of return between a bank rate and other investments. The 7.5% figure comes from a project lifetime of 10-25yrs, and ‘works’ under the IPS model.
- Returns to shareholders and to the community
- Set certain dates/deadlines for raising a set amount of money, and early on organise your marketing and promotion plan:
- Frame in terms of green debates e.g. about energy, climate change and energy security or self-reliance
- Identify your ‘target markets’, locally there should be many groups (local residents; local businesses via Chamber of Commerce; local landowners; local ‘greens’, including FoE; schools’ forum; PTA; Churches Forum; WI; Rotary Club; local politicians etc) and regionally or nationally, other groups (county-wide ‘greens’; FoE Regional coordinators; non-local green investors; investors in similar projects elsewhere)
- Promotion – utilise public events for stalls, and set up public meetings, stress the idea of active support, i.e. ‘come along if you want to support it!’
- Press – go for saturation coverage especially in local newspapers.
- Website (if used) - try to get and maintain a national focus.
- At the outset, work out the budget for all this and the (human) resources available in your group.
- Ensure that your group includes people who can deal with the media and the public - a public face, and (perhaps a different person) a media coordinator, who will chase up media contacts.
- The promotion plan should include the following aspects, which can obviously double as engagement activities more generally:
- Press – build good contacts, regular supply of newsworthy releases and photo opportunities, identify spokespeople
- Email – create database and send out at regular intervals
- Word of mouth – invaluable free form of publicity – check people have background info
- Events – Information Days, Launch Event, Open Evening, Site tours
- Public Meetings – local council, Chamber of Commerce, WI etc
- Website – regularly update, create links to other websites
- Publicity – Prospectus and flier – designed for web and hard copy; consider posters and leaflets
- Local Newsletters – council publications etc
For more details, you may wish to look at the documents at the following website [http://www.wessexrt.co.uk/resource.html], produced by the organisation that offered support and advice to the two H20PE-facilitated community hydropower schemes. Their page at [http://www.wessexrt.co.uk/nfm.html] offers more advice on their approach to ‘new financial mechanisms’ specifically adapted to help social enterprises and community groups who face high initial costs.
The documents produced in the Settle Hydro Share Offer:
A Revolution in Energy Production (A Community Hydro Electric Scheme for Settle) (3.4 MB)
